Investing on the Right Side of History

By Joshua Burguete-Kirkman & Lassi Noponen

Investing your money in stocks always has its risks. It is difficult to know what is the next big thing; speculative bubbles pop; government policies affect growth assumptions; and global events always seem to have a way of raining on a market’s parade.

Yes, investing on stock exchanges the world over has its risks, but it also has its rewards, not only for successful speculators, but for those who recognize critical moments in history, the changing of paradigms, and points in time that reveal new ways of capturing value.

The future cannot be forecasted from rear view mirrors, and history is glittered with moments of gold where those who understood the new reality over the horizon made what seemed like bold investments at the time in ideas, technologies or business concepts that others simply couldn’t see. As veterans of cleantech investing, we at Cleantech Invest believe that we are in one such moment in time where the new reality over the horizon is there for the taking, for those who dare seize the opportunity.

Investing into the cleantech journey now is investing into inevitable growth, and investing on the right side of history.

We believe that entirely new cleantech industries will emerge and many very valuable cleantech companies will rise and become the ‘blue chips’ of the future. Investing into the cleantech journey now is investing into inevitable growth, and investing on the right side of history.

This reality ahead of us is the Cleantech Paradigm.

Business Logic for the Benefit of the Environment

Big corporations have been unable to see (or have been in denial) of the cleantech revolution (as well as their internal need for corporate renewal), and they are now rushing into the cleantech space. Some are doing ‘too little too late’, and many with a tool kit from the past.

The combined impact of the Internet and the low cost of technology has seen the ‘rules of the game’ change (quite fundamentally) to the disadvantage of incumbent corporations. New industries will emerge and new entrants can now capture global digital markets. This has happened in internet and gaming businesses, and is now also happening in energy and resource efficiency too.

Companies producing energy efficiency “negawatts” can even grow larger and more profitable than traditional utilities.

The energy sector for example develops very rapidly but largely outside of the traditional utilities. Companies producing energy efficiency “negawatts” can even grow larger and more profitable than traditional utilities. In addition, the sale of pre-owned, inexpensive products (such as clothing) has gone online and the best companies such as Swap.com are growing extremely fast and creating entirely new industries in the process.

There is a rush into investing in clean technologies that is driven, despite the policy talk, by pure business logic rather than subsidies.

But maybe that is not enough to convince you. What other evidence do we have of this cleantech paradigm over the horizon?

Global Climate Policy is Now a Thing

Politicians often like to see themselves as ‘leaders’, but to a certain extent they are really ‘followers’ who deliver what voters want

World leaders came together to sign an agreement that would provide the architecture for limiting greenhouse gases, and this is a good sign. The Paris Agreement has exceeded all expectations, and now it is in effect. Environmental awareness is no longer a fringe issue now, and with the US and China signing a bilateral agreement on climate, the world’s two largest polluters have begun a virtuous cycle that could see this cleantech paradigm arrive sooner than most believed possible.

Politicians often like to see themselves as ‘leaders’, but to a certain extent they are really ‘followers’ who deliver what voters want, and what voters seem to want is reflected in the rising environmental awareness growing among the general public across many parts of the world.

Of course, the election of Donald Trump will put some stress on certain international agreements, but the rest of the world will continue to progress this agenda with or without the US at the table. We believe that the new US administration will not make as many ‘dramatic’ policy changes as some fear, as it just does not make any business sense. We have gone past the point of no return and fighting back would destroy the competitiveness of the US economy in the longer run.

This process of global policy development has been painfully slow and stunted at times, particularly by recalcitrant world leaders with vested fossil fuel interests behind them. But say what you want about the setbacks and slow pace of change, the fact is that we are there, now.

No matter how you choose to look at it, technology is always optimizing something, and it is very difficult to see that this ‘something’ could be anything else but energy and resource efficiency.

For Millennials, battling climate change is a top priority and politicians and businesses have to take this into consideration no matter what their campaign promises were in the past. Even with a potential US exit from the deal, the world is together on the pages of the Paris Agreement today and this strengthens our case for a cleantech reality over the horizon. No matter how you choose to look at it, technology is always optimizing something, and it is very difficult to see that this ‘something’ could be anything else but energy and resource efficiency.

Domestic Carbon Taxes and Finishing Off Coal Are No Longer Such Bad Ideas Either…

The mainstream is beginning to understand better why a carbon tax is necessary and more people are okay with it — ‘carbon’ has somewhat emerged as a legitimate ‘Tax Cow’ you could say!

Trudeau’s decision to legislate a carbon tax is important because it signals to other world leaders that such legislation is now politically palatable, rather than poisonous.

The Canadian Prime Minister Justin Trudeau has been able to see legislation for a carbon tax have mainstream support, taking Canada from being viewed as the home of tar sands and climate denial, to now a leader on a progressive platform. This turnaround is astonishing to say the least, and while Canada is not the largest economy in the world, Trudeau’s decision to legislate a carbon tax is important because it signals to other world leaders that such legislation is now politically palatable, rather than poisonous.

This is no less evident than what has been seen in the recent move by legislators in Finland, who are discussing the complete removal of coal-fired electricity from the grid by 2030. The opposition to this proposed move is organising its counter-offensive, and it will be a tough fight ahead to see it through. We cannot turn back the wheels of history, and such extremely harmful energy forms will eventually be phased out globally.

The promise made by President-Elect Trump about supporting coal was just campaign rhetoric to grab votes in coal mining states.

In the US, the promise made by President-Elect Trump about supporting coal was just campaign rhetoric to grab votes in coal mining states. The reality is that coal is terminal and investors are already moving on to bigger, shinier and cleaner energy investments. Having said that, if Trump overturns the Clean Power Act, natural gas will get an extended life-span that will harm US companies who want to develop green energy. Our latest episode of #cleantechandcoffee below discusses the ‘Trump Effect’ in more detail.

The Environmentally-Friendly Home Just Became Sexy.

Tesla gave us all a glimpse of the cleantech home recently, and it was damn sexy! The sleek lines of a Tesla EV on charge in the garage, hooked up to a Tesla Powerwall, with a design reminiscent of the Apple products that are universally accepted as ‘beautiful’ was quite a sight. But the game changing surprise of this cleantech home of tomorrow unveiled by Elon Musk was the technology feeding the electrons into the Powerwall — Tesla’s exquisite Solar Roofing product.

Tesla has made the cleantech home ‘sexy’ just like Apple did with computers.

Due to be available in a range of styles and colours, Tesla has removed the biggest barrier to many people going solar: the aesthetics of the solar panels themselves. Consumers want beautiful products. Steve Jobs and Apple knew this all too well and created tremendous shareholder value for investors by taking ‘ugly tech’ and turning it into ‘beautiful computing’. Solar is now getting the same treatment. Similar developments are happening in the gamification of energy efficiency technology for homes too.

It has always been understood that solar panels weren’t objectively beautiful, even though over a million homes in Australia and in the US have gone solar in the past few years. By designing roofing that cannot be faulted for its aesthetics, and which also happens to generate solar power too, Tesla has made the cleantech home ‘sexy’ just like Apple did with computers.

This ‘sexiness’ will be a contributor towards taking cleantech into the mainstream.

A Mirage? Or a Cleantech Reality in Waiting?

Don’t just take our word for it, do your own research and make up your own minds. The founders of Cleantech Invest made their decision years ago when they embarked on this journey, despite what the mainstream thought of it.

The pages of history turn quickly, and be assured that a ‘cleantech reality over the horizon’ will soon enough be a cleantech paradigm shift of the past.

It hasn’t always been smooth sailing and it has had its ups and downs, but the growth in portfolio company revenue doesn’t lie. Cleantech Invest is still here and getting stronger as our portfolio companies grow and perform above and beyond our expectations. The pages of history turn quickly, and be assured that a ‘cleantech reality over the horizon’ will soon enough be a cleantech paradigm shift of the past.

We believe that entire new cleantech industries will emerge and many very valuable cleantech companies will rise and become the ‘blue chips’ of the future.

Investing into the cleantech journey now, is investing into inevitable growth and investing on the right side of history.

Lassi Noponen is the Chairman of the Board of Cleantech Invest. Currently based mainly in LA managing our pop up office in the US, you can follow Lassi on Twitter to keep up with his activities, or connect with him on LinkedIn also.

Joshua Burguete-Kirkman is a Communications Advisor to Cleantech Invest who also works with a number of environmentally-driven social enterprise in Australia, namely Resource Recovery Australia and Soft Landing.

Joshua will bring some of his own perspectives to our Cleantech Invest blog on the topics of the environment, policy, and maybe even some surfing too!

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