Fund Times

Grantham: Protect the Planet, Profit From Green Causes

Alec Lucas, Ph.D.

This analyst blog is part of our coverage of the 2018 Morningstar Investment Conference. 

"We are racing to protect not just our grandchildren, but our species. So, get to it!"

That's how Jeremy Grantham, chief investment strategist and director of Grantham, Mayo, Van Otterloo & Co., concluded his keynote speech at the 2018 Morningstar Investment Conference. Getting to it, for Grantham, means voting for green politicians, regardless of their party affiliation, and lobbying asset management firms and advisors to be greener.

Grantham's passion to go green has deep roots in research. In his view, decarbonization and the transition to renewable energy sources, including 300-yard-high wind towers, is inevitable. The race we face is to make that transition before the effects of carbon dioxide raise the globe's temperature to such an extent that feeding the population in 2100 becomes very difficult, if not impossible. 

Lamenting the lack of communication between climate and soil scientists, for example, Grantham notes that the more frequent heavy downpours of rain that accompany a warming climate exacerbates the problem of soil erosion and in turn leads to a decrease in agricultural production.

Climate change isn't our only problem, according to Grantham. We also face the threat of toxicity. Environmental toxins, he avers, have already shown their ill effects in declining sperm counts (down 50%) in the developed world and in severe population losses among the flying insects (down 75%) responsible for pollenating our food.

The silver lining is that investors can do more than just advocate for green causes. They can also profit from these trends, dire though they may be. Divesting one's portfolio of oil and chemical companies, according to Grantham, is unlikely to harm future returns much and may well help them. Even more, investors can profit from looking for companies well-positioned to make money from a greening planet. Investors who realign their portfolios along these lines, Grantham suggests, will both be able to leave their grandchildren a planet they can live in and some money they can live on.