Investing In A Clean Energy Economy: A Response To Laudate Deum

Oct 12, 2023 | Climate Change

Recently, Pope Francis released his second climate crisis letter, “Laudate Deum.” As a sustainable financial advisor who was raised Catholic, I have thoughts!

As the Pope rightfully stated, the shift towards more sustainable energy is about “the care of our common home”. And like any good home improvement project, its benefits are twofold:  your home becomes a more enjoyable place to live, and you earn a financial return on your investment. It’s analogous to putting solar panels and a battery on your house – you no longer have to worry about power outages caused by extreme weather, and you reduce your electricity bill and increase the resale value of your home. In the same way, the advancements in renewable energy technologies, coupled with their decreasing costs, present a robust opportunity to make our planet more livable and create good jobs and good investments.

The non-economic benefits include the following:

– Reduced Air Pollution: Transitioning to cleaner energy sources will significantly decrease air pollution, improving quality of life for thousands of people who won’t get allergies, asthma, lung cancer, or other respiratory and cardiovascular diseases.

– Energy Independence: Shifting to renewable energy reduces dependence on foreign oil, bolstering national energy security. Currently, the United States imports about 41.63% of the oil it consumes. This means that we are dependent on foreign countries to meet a significant portion of our energy needs. And that means that foreign wars or oil embargoes can raise the prices American consumers pay for energy. And that gives foreign leaders a lot of influence on our politics and our lives. But renewable energy sources like wind, solar, nuclear, geothermal, and hydroelectric are widely available and dispersed throughout the United States. Shifting to these sources would make our energy system more resilient to disruptions.  It would also allow us to align our energy use with our values. You want to stick it to Putin for invading Ukraine, or Mohammed Bin Salman for murdering Jamal Khashoggi? Here’s your chance. You want to minimize the chances of another American invasion of the Middle East, with all the loss of human life war entails, here’s your chance.

The potential economic benefits are nearly as impressive. The Bureau of Labor Statistics (BLS) forecasts that renewable energy jobs are some of the fastest growing in the country. Employment opportunities for solar photovoltaic installers will grow by 22% from 2020 to 2030. Even better, wind turbine technician jobs will likely grow by 45%, potentially making that the fastest-growing job in America.

Why? Necessity. To preserve human life on earth, our government is aiming for 100% clean energy by 2035.  Achieving that goal will necessitate significant investments in renewable technologies, translating to millions of new jobs.

For those inspired to invest in this transformative shift, consider the following avenues:

  1. Renewable Energy Companies: Whether it’s through direct investments in companies or via mutual funds or ETFs with significant allocations to the renewable sector, there’s no shortage of opportunities here.
  2. Climate Change Opportunities: Investing in funds that own companies already positioned to benefit from the need to adapt to, or mitigate, climate change can be another strategic move. 
  3. Shareholder Advocacy: A third approach is to invest in funds that use their ownership stake in companies to persuade those companies to change the way they do business so that instead of causing harmful climate change, they begin adapting to the problem or mitigating it.

Pope Francis has written that “We must move beyond the mentality of appearing to be concerned but not having the courage needed to produce substantial changes.” He is right. And there are investment options that are intended to earn a good return while also enabling us to stay within recommended limits of global warming. Some investment options have a significant track record and are thus less risky. Others are new to the market (reflecting a growing demand on the part of the people) and are thus more risky. So there are lots of ways to get involved and become part of the solution. But what is required of all of us, as the Pope said, is courage.

To wrap up, investing in the clean energy economy is not only environmentally prudent but also financially savvy. For those interested in diving deeper into sustainable investing, aligning with a financial advisor who specializes in this area can be invaluable. By strategically channeling our funds, we can play our part in paving the way for a cleaner, more sustainable future for all of us.