International scientific consensus has now reached a peak around the issue that human activity is contributing to the increase in greenhouse gases in the atmosphere, leading to warmer temperatures and unpredictable weather patterns.
In Australia, a combined report released in March 2010 by the CSIRO and the Bureau of Meteorology states unequivocally “It is very likely that human activity has caused most of the global warming observed since 1950. There is greater than 90% certainty that increases in greenhouse gas emissions have caused most of the global warming since the mid-20th century.”
There’s considerable debate across the world and in Australia about the most cost-effective way to solve the problem but it’s important to also count the cost of not doing something.
A major global transition is already taking place in the way we fuel our economies, moving us away from fossil fuels toward clean energy alternatives. Over 15% of all electricity in Denmark is now fuelled by wind. In Iowa 5.5% of the state’s electricity was generated by wind in 2007 but it has since doubled its cumulative wind installations. China’s renewable energy sector generates output worth $US17 billion and employs one million people. Of those, 600,000 are employed to make and install solar thermal products such as solar hot water systems.
Investment in renewable energy and clean technology helps to build the infrastructure that will create abundant, enduring sources of emission-free energy into the foreseeable future.
The increasing cost of finding scarcer and scarcer oil reserves, and our dependence on undemocratic regimes for oil imports is also driving countries toward “energy security” strategies.
Responsible investors believe that a fundamental economic shift of this dimension should be reflected appropriately in any diversified investment strategy. Because of this, most responsible investment portfolios include a positive focus on renewable energy and clean technologies and a growing number of funds are entirely dedicated to this sector.
But almost every industry will be affected by climate change. Carbon efficiency will become an important component of economic efficiency and productivity. Many ways of making money today won’t be profitable tomorrow.
In the automotive and aluminium industries, for instance, up to 65% of their value could be at risk if they fail to find ways to reduce their emissions and energy usage. Just as responsible investors want to be ahead of the curve in investing in clean technology, they want to avoid investing in companies that are not taking sensible, strategic moves toward energy efficiency.
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