Resilient investments for a low carbon future

Helene Winch, investment specialist at Low Carbon shares her thoughts on divestment and why the finance community should look to make more responsible investments for a low carbon future.

It’s hard to ignore the widespread, global attention that the divestment movement is generating. Bill Gates, Rockefeller Foundation and the Norwegian government are a few of the high-profile individuals and institutions openly supporting divesting from fossil fuels. Such positive action can only help in combatting the negative effects of climate change.

Fighting carbon emissions is a worthy cause, but more needs to be done to reach out to institutional investors who need proof that stable, low-risk, inflation-linked returns are to be had from divesting in fossil fuels, and reinvesting in climate solutions, such as large scale solar or onshore wind. If we are to move to a low carbon economy, we must invest heavily in low carbon assets at scale. We need buy in from the investor community to truly achieve this at a low cost.

The benefits of investing in renewable energy as a climate solution are clear. Renewables have a strong, proven track record. Solar PV, for example, has been generating electricity for over twenty years. Renewable energy is typically a stable source of power, and can generate electricity all year round with minimal operational cost. Oil prices are volatile – you cannot guarantee stable high returns. Over 40% of electricity demand has been met by renewable energy generation in recent years suggesting that renewable energy is a core infrastructure asset that is here to stay.[1]

We need more investors to lead the charge in showing more risk-averse investors how to invest into renewables. A recent poll suggested that nearly a third of Britons agree that renewable technologies would yield the greatest returns for pension investments. Our FTSE 100 will not be dominated by BP, Shell or fossil fuel companies in the future.

We also need governments across Europe to mirror France, where institutional investors are now called upon to disclose the carbon intensity of their investments. Legislation like this can create a positive momentum for renewable energy investment in Europe.

Investing in renewable energy presents strong growth opportunities now, and for future generations. We hope to see more leading investors and financial institutions educate the industry on the benefits of renewable energy investment as a critical climate solution.