Readers of this blog (but particularly clients) have come to know the significance of integrating responsible investments into wealth management. In adopting a forward-thinking approach to portfolio construction based on what we know is happening to our climate and natural resources, it is possible given the open architecture of the investment universe accessible to me to incorporate strategies that will participate in the energy transition already underway, but will increase in pace over the coming years and decades.

For the long-term investor, the growth potential of allocating capital to companies that are pioneering technologies in renewable energy, battery storage, water resource management, agriculture, electrical grid upgrades and transportation is exciting. The evidence-based need to decarbonize our atmosphere and oceans is irrefutable, and the flood of capital that will enter this space will create a positive feedback loop if it hasn't already. Whether because of the Biden Administration's focus on climate change as an existential crisis, or governments around the world coming to the realization that we cannot continue with the status quo inefficient form of energy generation (especially from coal and oil-fired plants) the investor wondering where the probability of a risk-adjusted return commensurate with their objectives will come need look no further. 

Back to the future

It is worth mentioning that harnessing the wind is nothing new to humankind. Whether to grind wheat, pump water, or sail the oceans, we have had the ability to develop technology to move forward. Wind turbines (whether on-shore or off-shore) are no different. With the advances in materials, undersea cabling and transmission, large wind 'farms' that generate gigawatts of energy are on their way to becoming a reality. The companies engaged in building out these projects are those that will grow their earnings exponentially over time. 

Hydropower is no different. Watermills built hundreds of years ago along rivers to capture some of the current's kinetic energy are still in existence today. Countries such as Switzerland and provinces like Quebec derive the vast majority of their power from the water held in reservoirs that spin turbines and run the pumps to refill those same reservoirs to create a close-loop system. Those capital investments made decades ago continue to pay dividends in providing a limitless carbon-free supply of power. Large infrastructure projects similar to those in Switzerland and Quebec are also part of the energy transition by avoiding future carbon emissions while also giving countries energy independence. For the publicly-traded companies in an industry with nearly-impenetrable barriers to entry that build these projects, the opportunity to expand their total addressable market is without limits.

Investing with intention and impact

Part of what makes my role as an investment advisor rewarding on a daily basis is in knowing I can make a difference in a client's future while also educating and informing them on how their investments can make a positive impact in the world. Having intention in my practice serves as one of the cardinal points that guide my approach and the advice that comes with my service offering as a fiduciary.  Describing the themes and strategies in portfolios and the reasons why they are there helps build the confidence required to maintain a long-term outlook irrespective of what the broad market does. 

 

If this is what you feel is missing from your current investments and wealth management, consider contacting me to schedule a conversation.