Category Archives: Investing

Is Your Business Safe from Climate Change?

By: Anne Coglianese

Climate change poses global threats to the environment, but do you know how it will affect the quality of life where you live and work? If you own a business, do you know how climate change will affect your bottom line? A recent report called Risky Business: The Economic Risks of Climate Change to the United States helps businesses identify and prepare for the specific, local risks that climate change poses.

To the average citizen, climate change may feel abstract, and many people believe that only coastal communities will be affected. However, the Risky Business report draws attention to effects far beyond sea level rise, including mortality, storm surge, crop yields, and energy, to name just a few.  For the first time, individuals can narrow in on their region to learn which issues are most relevant in their state, discovering how closely climate change will affect all of us.

The report was released by the Risky Business Project, started in the fall of 2013 when the nongovernmental organization Next Generation paired up with Bloomberg Philanthropies and the Paulson Institute to research climate change’s economic threats. The report stresses “this is not a problem for another day. The investments we make today—this week, this month, this year—will determine our economic future.”

The Risky Business Project’s website makes the group’s report highly interactive and more informative. Due to the many videos, images, and charts found on the website, visitors can easily digest information on climate change risks.  For example, the website contains a video designed to help individuals understand the progression and threat of extreme weather changes.

What makes the report truly unique is the focused analysis provided. By breaking the US into regions and states, Risky Business targets the climate concerns in specific parts of the country as well as nation-wide.  The website then allows individuals to scroll through date on their prospective locations.

The report focuses on climate risk education in order to provide businesses with the information necessary to begin taking action to sidestep catastrophe. It highlights three areas to reduce risk: business adaptation, investor adaptation, and public sector response. Throughout various sections of the report, one thing becomes clear: a shift towards sustainable business and investment needs immediate action.

Former New York City Mayor, Michael Bloomberg, a co-chair of the Risk Business Project, and a key player in the development of this report, recently stated in an interview:

Damages from storms, flooding, and heat waves are already costing local economies billions of dollars—we saw that firsthand in New York City with Hurricane Sandy. With the oceans rising and the climate changing, the Risky Business report details the costs of inaction in ways that are easy to understand in dollars and cents—and impossible to ignore.

To learn more about climate change and find your business’ next move, visit the Risky Business Project website.

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The Win-Win-Win of Impact Investing

By: Nathan Sell*

Ask not what your investment dollars can do for you, but ALSO what they can do for others, and the environment. That’s the idea behind Impact Investing, an emerging paradigm shift in philanthropy. This form of socially responsible investing generates both measurable social and environmental impact as well as returns on investment. Mark Tercek, CEO of the Nature Conservancy and former Managing Director at Goldman Sachs is at the forefront of linking business and the environment for a better world as he discusses in his recent book “Nature’s Fortune.” Tercek, and the new wave of impact investors are proving that your investments can make money AND do good.

Impact investing in the environment is quickly coming to scale as the value of ecosystem services to clean air and water, armor shorelines, as well as climate change mitigation and adaptation is being realized. Cities like Philadelphia are leading the way in green infrastructure investment. Over the next 25 years, Green Stormwater Infrastructure will help the city to combat the extreme weather patterns as well as prevent Combined Sewer Overflows resulting in greener cities and cleaner waters for which the initiative is named.

Novo Nordisk entered China in 1994 and immediately noticed that a diet high in starch was leading to diabetes in a large portion of the population. Combined with rapid pathogen spread due to urbanization, the health of the people in China was (and continues to be) at risk. Novo Nordisk put their efforts toward alleviating some of these health concerns. By training doctors in diabetes care and prevention, the company has helped to save over 140,000 life years. The shared value of impact investment ensures companies like Novo Nordisk remain profitable while helping the communities in which they work.

Impact investing also has the potential to bring promising technologies to scale. Without investment, it’s possible that companies like d.light may never have gotten off the ground. With the help of investment, this for-profit social enterprise has been able to sell affordable solar lamps to those without reliable power. The result? D.light is bringing safe, bright and renewable lighting to people around the world, allowing students to do their homework, families to cook, and an overall better quality of life to over 34 million people.

Impact investing may prove better for people and the planet than charitable giving. Investing in businesses that do good by people and the planet can ensure the success of their mission, allowing for long term solutions, rather than a potential band-aid in the form of a grant or gift. If your investment could benefit the triple bottom line, rather than just YOUR bottom line then you’ve found the rare win-win-win scenario. The next time you invest, think strategically about what your money can really do.

*Nathan is a recent graduate of the Master of Environmental Studies program at the University of Pennsylvania and a current ORISE Fellow with EPA Water.

A Global Push For Climate Finance

By Aubrey Sherretta

June 3rd 2014 marked the launch of the Global Innovation Lab for Climate Finance, a partnership between the US, UK and German governments with several private sector representatives to develop and promote climate finance instruments globally.  The lab includes leaders from governments and financial institutions who will identify and analyze financial opportunities for private investment that could have large-scale impacts on both climate change mitigation and adaptation.  Overseeing the analysis of proposed climate finance instruments are the Climate Policy Initiative and Bloomberg New Energy Finance.

Lab Principal Purna Saggurti, chairman of global corporate and investment banking at Bank of America Merrill Lynch said: “We look forward to sharing our experience from structuring and financing numerous transactions in clean energy, green bonds, and environmental markets.”  Bank of America, a Wharton IGEL corporate advisory board member, along with Merrill Lynch have already committed to mobilize 70 billion dollars for low-carbon business opportunities.

Large-scale investments are required to reduce emissions and adapt to the effects of climate change, according to the United Nations.  The Global Innovation Lab for Climate Finance’s push to incentivize climate investment may be viewed as a major step towards mitigating the adversities of a changing climate.  The lab has already attracted more than 80 ideas for potential climate finance instruments from the public and private sectors, and hopes to attract billions in private investment for climate-conscious investment opportunities in developing countries.  Changing the dialog around climate change from financial burden to opportunity may be the greatest motivator to bring about a new era in climate action.  Keep an eye out for chosen ideas to be released by the lab in the coming weeks.

Also, stay tuned for Knowledge@Wharton Special Report on this topic coming later this year.

Can You Leverage a Social Enterprise in the Era of Crowdfunding?

by Ron Ben-Zeev*

stack-of-coins

That is the question I asked myself a few months ago. I was listening to Brian Meece, Founder and CEO of RocketHub, the third largest such platform in the U.S., who was speaking at a Start-up Weekend event I co-organized in Orlando, Florida.

Crowd funding or crowdfunding (alternately crowd financing, equity crowdfunding, or hyper funding) describes the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations.

As Brian was speaking, my mind was spinning in many directions. Can this help my start-up? How? Can the funds raised make a true difference or is the potential exposure enough? Continue reading

Of Climate Change and International Policy Architecture

by Samantha Guidon*

StavinsERobert Stavins, Albert Pratt Professor of Business and Government, Harvard University. Courtesy of Stephanie Nam/Penn Law.

On February 27, 2013, Harvard University’s Albert Pratt Professor of Business and Government Robert Stavins came to Penn for a presentation entitled “Climate Change, the IPCC, and International Policy Architecture” as a part of the Risk Regulation Seminar Series, an initiative jointly sponsored by the Penn Program on Regulation, the Wharton Risk Management & Decision Processes Center, and the Wharton Initiative for Global Environmental Leadership (Wharton IGEL). Continue reading

Challenges and Opportunities of Investing in Cleantech and Renewable Energy

By Zhan Zhou*

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Based on the database of the Cleantech Group, there are about 19,200 cleantech companies in the world, of which over 1/3  are based in the United States.[I] Despite some minor setbacks, there is no doubt that cleantech has become one of the most targeted sectors for both public and private investment. A few numbers can shed light on the fact that the cleantech industry has emerged to be a fast-growing industry of great political and environmental significance:

  • During 2012 alone, cleantech companies around the globe raised $6.56 billion of venture capital across 732 deals [II]
  • For the global Foreign Direct Investment (FDI), the cleantech sector ranked as the second largest sector after oil and gas by attracting $12 billion from the global FDI into the U.S. in 2011, making it the fastest growth sector for the past decade [III]
  • Through July 20th, 2012, the §1603 American Recovery and Reinvestment Act program had awarded $13.0 billion to nearly 45,000 renewable energy projects [IV]

Market Challenges
With a seemingly growing appetite for investment in cleantech, some important market challenges lie ahead. Continue reading

Clean Energy Challenges and Opportunities for Investing in Sustainability

by Sharon Muli*

BaxterJason Baxter of Drexel University

If the Earth had six massive solar installations measuring 200 miles long by 200 miles wide filled with 10% efficient solar cells, it could generate enough energy to meet global demand.  While this is a powerful vision that demonstrates the high potential of solar power, it sounds like a rather absurd thought. Yet this image raises a fundamental question; how can we take better advantage of solar power?

This issue was discussed during the Clean Energy and Sustainability Investing Workshop at the Wharton Social Impact Conference on November 16, 2012, organized by the Wharton Social Impact Initiative.  This year, the theme of the conference was “The Finance of Impact:  Innovative Approaches to Social Change”. The discussion of photovoltaics (PV) emerged as a clear example of how financial investments and technological development can lead to more sustainable change. Continue reading

Water: Emerging Risks and Opportunities Summit

by Samantha Guidon*

On February 8, 2013, with an imminent Winter Storm Nemo on the horizon, over 250 industry leaders and key players in the water sector came together at Goldman Sachs in New York City to begin the dialogue on addressing water risks throughout the country. Students from the Master of Environmental Studies at the University of Pennsylvania joined the Wharton Initiative for Global Environmental Leadership (Wharton IGEL) team in attending this event to gain key perspectives from leaders in the water sector. Entitled “Water: Emerging Risks and Opportunities Summit,” the conference identified areas in need of improvement and discussed opportunities from various points of view. A welcoming address from David Solomon, Co-Head of the Investment Banking Division at Goldman Sachs, established the overall goals of bringing together capital, technology, and policy in order to determine best management practices within the water sector. Continue reading

Five Insights from ACORE’s National Renewable Energy Policy Forum

by Candice D. McLeod*

Acore

On February 6th, the American Council on Renewable Energy (ACORE) held its 10th annual Renewable Energy Policy Forum on Capitol Hill. The event featured a host of industry, financial and government leaders, who spent the day discussing the progress of the renewable energy industry, from the industry’s current purgatorial state due to impending policy deadlines to the potential implications of the current fiscal and partisan climates.

The overall themes were clear – more financing options for renewables, renewable energy policy stability, and China setting the global rhythm.

Here are five main insights drawn from the forum:

  1. Renewable energy markets continue to grow significantly. Perhaps we should stop referring to them as “alternative sources” of energy
  2. Economic security -keep your eye on Iowa and rural America
  3. More policy stability, please
  4. More financing options -MLPs  & REITs
  5. Don’t throw the baby out with the bathwater

1. Renewable energy markets continue to grow significantly. Perhaps we should stop referring to them as “alternative sources” of energy

John R. Norris, Commissioner, U.S. Federal Energy Regulatory Commission (FERC) opened the panel Renewable Energy Market Growth with the statement, “[if] it wasn’t for an economy that’s walking with a limp and a dramatic decrease in natural gas prices, the renewable energy market would be twice the size.” Continue reading

UBS Q-series Inflection Points: Towards Sustainability

*by Candice D. McLeod

Last month, UBS hosted Inflection Points: Towards Sustainability at the Bloomberg headquarters, as part of their annual Q-series initiative. The Q in Q-series stands for asking questions, particularly tough questions, as noted by Penn alumna and UBS Head of Global Sector Research, Erika Karp, who helmed the event.

Erika Karp, UBS, Head of Global Sector Research

The event’s main tough question: How do companies not only identify the inflection points in the their industry –“defined as accelerating rates of system-wide change that alter the manner in which industry leaders think and act”- , but also leverage these changes into driving sales and profits? Continue reading