2nd September 2009
Whether or not the science of climate change is valid, financial markets still need ways to assess the risk of carbon liability.
One option is to make socially responsible investments (in stocks, exchange-traded funds and mutual funds) in which the underlying businesses are involved in improving the environment (solar, bio fuels, bio mass, wind energy, best environment practices, etc). That is companies that are developing alternative energy technology and the best environmental practices.
Second Option is emissions trading markets. A carbon "cap and trade" system puts limits on emissions while pushing green investment, because market forces will pick the best clean technology.
The ideal trading market will have low volatility and high liquidity, as well as a derivatives market and contracts that can be traded anywhere in the world, no matter where clean technology is used. That will keep the cost of green capital low and the investment rate elevated.
There is nothing surprising about approaching global warming from a financial perspective. But ignoring climate change could result in serious consequences.
You can contact Eco Ventures India, for more information on "Green Finance" at, ecoventures@ymail.com.
