Solar panels become a investment paradise

Without wanting to praise those who led the argument that climate change is the most serious issue facing the human race, it also represents one of the biggest investment themes for the next 20 years.

As such, it is time investors understood how and why climate change and investing are related and how they can adjust their portfolios accordingly.

This is not just about socially responsible investing or even whether you believe the scientific evidence. As an asset manager we have a fiduciary responsibility to provide investors with the best risk-adjusted returns looking at market trends and emerging sectors. It is becoming apparent that our responsibility extends to include environmental considerations in this analysis.

To many in the industry this seems counter-intuitive, particularly alongside the conventional wisdom that sensitivity to environmental factors detracts from investment returns. The oft-stated reasons behind this thinking being that either environmental rankings in stock selection are negatively correlated with the price performance of stocks, or the environmental screening resulting from SRI diminishes the opportunity set of companies that an investor can buy.

Whatever your personal take on climate change, it is clear we have reached a tipping point in public and political opinion. This is fuelling a change in consumer and investment trends, which will not only continue but accelerate in the years to come. Investors need to understand how the companies in which they place their money are rising to the challenge.

This is driving increased demand for agricultural equipment. Most likely this will support demand for AGCO’s products for years to come. While not obviously a company benefiting from climate change directly, its business is being favourably affected by shifts in demand prompted by climate change.

Source - Heatmyhome