Invest in the Planet

Give your portfolio a greener tint, and make some money, too.

- NELLIE S. HUANG and JOHN WAGGONER

Part of modern life is worrying about environmental calamity: Millions of tons of garbage in the ocean, dwindling resources, and horrendous natural disasters brought on by rising global temperatures. We all want to save the world, and we all have different thoughts on what the danger is and how to fix it.

But money talks, and these days, the chatter is all about climate change. Investors poured more cash into funds that invest with sustainability in mind in 2019 than in the previous two years combined. The reason? “Climate awareness,” says Jon Hale, head of sustainability research at investment research firm Morningstar.

In 2019, the planet recorded its second-warmest year since modern record-keeping began in 1880, according to two independent studies by scientists at NASA and the National Oceanic and Atmospheric Administration (the warmest was 2016). In Australia, extreme heat and high winds fueled gargantuan brush fires that killed at least 24 people and devastated wildlife, with the final economic toll yet to come.

Meanwhile, according to insurance giant Aon, flash floods in the U.S., China, India and Iran accounted for some of the priciest disasters in 2019, tallying combined losses of $53 billion. All told, 2019 closed the costliest decade for natural catastrophes yet. Earthquakes, tsunamis, tropical cyclones, flooding, wildfires, droughts and extreme temperatures contributed to $2.98 trillion in economic damages and losses, $1.1 trillion more than in the previous decade.

Those costs will keep rising and could impede the rate of economic growth in this century unless we grapple with climate change now, says the U.S Global Change Research Program, a congressionally mandated group. Certainly, more investors are addressing the issue through their portfolios. “Call it a tipping point if you want, but concern about climate change is top of mind for all investors,” says Morningstar’s Hale.