Wanna cut carbon? Build an Earth Day portfolio.
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The global downturn is cutting traffic, factory output, and other business activity, which means that emissions of greenhouse gases are growing more slowly or even falling.
But the downturn has also decimated investment in clean energy, causing some clean-energy investors to reexamine their assumptions. Worldwide investment in the first quarter of this year fell $13.3 billion, a plunge of 44 percent from the previous quarter and 53 percent below a year ago, according to one estimate [pdf].
Silver lining vs. green future
So which is better for the environment? A recession-related fall in emissions now – or continued strong investment in clean energy for the future?
Continued investment in clean energy, New Energy Finance, a London-based clean-energy research group, concluded last month. The sector should get more than a $150 billion boost from stimulus plans from governments worldwide. But it will take time to get back on a growth path toward $350 billion annual clean-energy investment by 2020.
"Even that is not sufficient to achieve a peak in carbon dioxide emissions before 2020," the group said in a recent letter to investors.
Other studies suggest that cuts in emission will have to be far more draconian to avoid catastrophic climate change.
What you can do
This being April 22, you can help by building an Earth Day portfolio. We asked the Calvert Group, which offers sustainable and responsible mutual funds and other investments, to pick three companies that belong in that portfolio. Here's what Calvert's Paul Hilton, director of advanced equities research, and Lily Donge, climate-change analyst, selected:
Johnson Controls (JCI) – A leading automotive supply company, including batteries for hybrid cars, JCI is making a name for itself in energy efficiency. It provides building-efficiency consulting and services to other companies worldwide and publishes a detailed sustainability report based on Global Reporting Initiative (GRI) guidelines with aggressive goals and timetables.
First Solar (FSLR) – A top solar name, it makes solar-power modules using an innovative and highly efficient thin-film semiconductor technology that can be applied to different materials, even rounded edges of buildings and tinted windows. Its solar panels use mining waste and are cheaper to produce than traditional silicon-based solar panels.
Timberland (TBL) – Although not directly related to clean energy, the outdoor apparel company is pushing hard to promote it. Timberland recently joined BICEP, a group of companies pledging to take the dialogue on climate change further, pushing for more aggressive greenhouse-gas targets and a cap-and-trade system that auctions allowances. The company also provides a green "nutritional label" for its boots, so consumers can see how ecofriendly its products are.