Since COP21 in Paris two years ago, renewable energy and its importance in mitigating climate change has really hit the mainstream. In the past, however, renewable energy was still niche and investments into renewables were ridiculed. Many investors thought of such investments as merely greenwashing, or that at best they would allow investors to feel they were ‘doing the right thing’.
That has changed dramatically: investments in renewable energy are not only sustainable and protect the environment, but are also lucrative. So lucrative, that Shell has invested 1.7 billion US dollars into a new unit of the company that will specialise in renewable energy projects. Shell is not alone in this; last year, Total bought out battery producer Saft for 1 billion US dollars. Financially, even political bodies are taking this direction, as the EU works towards integrating sustainable finance into its financial framework.
These investments recognise a bigger concern of these companies: oil is no longer consistently profitable, and success in the long run requires independence from oil price shifts. BP found this out the hard way after 2015 turned up a loss of 6.5 billion USD, in contrast to profits of 3.8 billion USD the year before.
With increasing awareness amongst consumers and high profile events such as COP23 in Bonn this and next week, a similar shift can also be seen for private investors. Suzanne Buchta, managing director, green bonds, at Bank of America Merrill Lynch says:
“I think they like to devote their fixed income dollars into things like cleaner air, more open space, better biodiversity protection and better use of resources.”
In 2016, around 95 billion USD were invested in green bonds, more than double the year before. The increase is necessary: it is estimated that to keep global warming below 2˚C, a further 5.3 trillion USD will need to be invested in zero-carbon capacity. Nevertheless, the high minimum investment sums required for such bonds exclude most private individuals.
Instead, these environmentally-aware investors are turning to crowdinvesting, a form of alternative finance that is becoming increasingly popular and allows private investors to participate with investments from just 500 €. One example that combines sustainable and profitable investments is www.ecoligo.investments: on the platform, private investors can invest in sustainable solar projects to power businesses and industrial customers in emerging markets. In addition to receiving attractive returns of more than 5% p.a., investments in the projects on the platform support climate change mitigation and sustainable economic growth in developing countries. Find out more here.
ecoligo is a complete digital solution for financing and delivering solar projects for businesses in emerging markets. By removing the barriers that prevent such projects from being realised, ecoligo brings low-cost electricity to these businesses, helping them to grow and boost the local economy. Find out more at ecoligo.com.
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