Impact Blog
Need to combat global warming heats up

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      By Jade Huang, Portfolio Manager, Calvert Research and Management and Chris Madden, Portfolio Manager, Calvert Research and Management

      Washington - We are already seeing the effects of global warming through more extreme weather, rising sea levels and diminishing Arctic ice, according to the Intergovernmental Panel on Climate Change (IPCC). The IPCC's Special Report on Global Warming of 1.5 °C concludes "human interference with the climate system is occurring, and climate change poses risks for human and natural systems." It is imperative that society - governments, businesses and investors alike - drive resources toward finding solutions to stem the warming of the planet.

      A matter of degree(s)

      The report finds that limiting global warming to 1.5 degrees Celsius would require rapid and far-reaching shifts in energy use and sourcing across land, industry, buildings, transport and cities. To cool down the ill effects of an overheating world requires concerted, collaborative efforts on the part of governments and industry.

      Global policy makers can make meaningful changes to our energy system by supporting investment in new infrastructure that is smart, reliable, efficient and clean. We need targeted policies, incentives and taxes to reduce or remove carbon.

      The private sector has to step up its responsibility. Once the primary cause of greenhouse gas (GHG) emissions, corporations have begun to take meaningful strides to reduce their environmental impacts. The Sustainability Accounting Standards Board (SASB) has identified energy management as a material issue for industries from chemicals to hotels and lodging. More than 100 businesses have joined the RE100, a collaborative effort committed to using 100% renewable energy.

      A role for investors

      Investors can exert influence by driving capital to companies that act to limit their energy consumption, reduce CO2 output, or provide alternative energy sources or energy storage solutions. In our view, the energy system is already beginning to transform. The use of coal has declined significantly in developed markets, while the use of clean energy is on the rise. In 2017, investment in clean energy was over $330 billion, with solar fuel seeing a significant price drop.1

      At Calvert, we are helping our clients invest in companies at the forefront of creating innovative clean energy and energy-saving products and reducing their own energy footprints.

      Through the Calvert Global Research Energy Index,2 we focus on identifying companies involved in:

      • Renewable energy sources, which contributes to the growth, innovation and commercial adoption of the solar, wind, biomass, waste-to-energy, geothermal, biofuels, hydropower and landfill gas-recovery industries.
      • Technologies to minimize GHG emissions, provide energy storage solutions and distribute renewable energy sources, which are critical to building a sustainable future.
      • Energy efficiency, which reduces the need for energy and, thus, GHG emissions. Calvert actively supports investment in companies delivering products and services that improve energy efficiency across economic sectors.
      • Cleaner modes of transport for cargo and people through electric vehicles, which reduces the global demand for fossil fuels. Along with cars, we are seeing a race to supply the trucking industry with electric vehicles, and shipping companies continue to add alternative fuel vehicles to their fleets.
      • Operational efficiencies focused on reducing energy consumption throughout their operations and supply chains and increasing the use of renewables to dramatically decrease their carbon footprints.

      Bottom line: In our view, the continuing decline of renewable energy prices and the increased demand for less carbon intense energy sources is a strong long term investment thesis. Responsible companies actively addressing global energy challenges with innovative technologies and products may offer investors significant rewards.