By Thomas Kostigen
“By investing in low-carbon and clean-tech innovation, as well as in carbon-intensive companies that are transitioning to net-zero, we can pave the way to a better future. A future that focuses on a triple bottom line: planet, people and profit.” That is the view Lombard Odier, the Swiss private bank that has been in existence since 1796, is taking to the 2021 economy.
It’s a view that is steeped not only in global opportunity, but addresses growth as well as risk, which often don’t go hand-in-hand when discussing taking less risk with an investment portfolio, not more. But taking a more conservative approach to investing while at the same time jumping on the growth train, is exactly what this venerable Swiss institution is advising clients to do.
“Our current economic model is wasteful, idle, lopsided and dirty. It is WILD. But we believe a transition is underway to a circular, lean, inclusive and clean economic model,” Lombard Odier writes in a special series for the Financial Times. They call the latter model CLIC.
A WILD economy is catchy. And so is a CLIC economy. Moreover, CLIC is also a sly reference to clean tech. And just one look at the segments of the investment markets the Swiss firm is eying shows what the FT aptly dubs a “rethink.”
“There is a transition happening. It’s already underway,” says Kristina Church, head of sustainable solutions at Lombard Odier. “As greener becomes cheaper, that’s exactly when investors can wake up and say ‘this isn’t about ethical investing, this is about returns.’”
She says that in 2021 we’ll begin to see investments flow heavily into nature, as well as into climate.
The Biden administration has certainly made clear its intent to support climate change. And the private sector is joining the movement. BlackRock chief executive Larry Fink recently said that he is encouraging the managers at his firm, which controls $9 trillion, to require better greenhouse gas emissions reports from the companies in which they invest and how these companies plan to mitigate their carbon footprints. Additionally, several major New York City pension funds representing nearly half a trillion dollars of assets said they plan to divest of fossil fuel companies. They join a chorus of others who have made similar commitments. And there is a boon in environmental, social, and governance mutual funds.
But it’s not just energy and tech that will likely make investments “CLIC” with investors. Agriculture, drones, efficiency management, and other areas also can open markets to new investors. Take insects. There is big opportunity for this as a protein source for animal feed.
Or take drones. They create farming efficiencies and logistic efficiencies. Or clean water. As a commodity, it’s in high demand.
To be sure, a financial advisor can best guide you as to which companies are leading the charge in the CLIC economy. One thing to note is the lens that WILD provides. This is a good filter for what NOT to invest in.
Lots of pundits can give you their opinion on what to invest in; it’s rarer to hear what to avoid. And why. We are going to take this tack over the next month to better avoid the traps of WILD investing and better position your capital for the CLIC economy that has arrived.
Thomas Kostigen is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Thomas is a best-selling author and longtime journalist who writes about environmental, social, and governance issues.