Climate Change is finally investable

Social mood is changing and the theme has commercial relevance

Climate change has never been taken seriously on Wall Street. With good reason. The theme just never presented itself as investable. We believe this is changing. The social mood is changing. People are becoming sensitive about it. We are probably already at a stage, where companies will not openly talk about emitting CO2 or doing other things that contribute to climate change.

Even though the doubters are still questioning the science, the popular belief system has shifted. This is key. It’s similar to the tobacco industry in the 70s or the current state of the sugar industry. When shifts like that occur, investors can make money.

Take the sugar industry for example. The key is social change, i.e the fact that people are sensitized towards an issue. How can you make money with that? You can short sugar sellers such as Coke, Pepsi or Mars. But most likely this will not work. These companies have been preparing for this for a long time and they know how to react. The way to make money is to invest in sugar substitutes, because not matter how hard Coke & Co. will fight against accusations of health issues related to sugar. One thing is clear. They will be desperate to diversify their portfolio.

We believe similar things will happen with the fossil fuel industry. They will become much more aggressive in diversifying their portfolio out of fossil burning fuels.

One beneficiary could be solar. The industry is technologically advanced and enjoys popular support. We also believe that domestic oil and gas will continue to be lucrative. Gas will be crucial for the electrification of transportation. Solar alone cannot carry the weight and gas is an elegant alternative. It is domestic, abundant and doesn’t pollute as much as other sources.

Another beneficiary is Tesla. The company is a leader in the electrification of transportation and through its purchase of Solarcity also in Solar.

There is much more to climate change than Tesla, Solar and Gas. We will continue to publish updates on interesting and investable situations related to climate change. What’s important for now is the fact that the sentiment is changing towards acceptance of the problem.