Clean energy sources are primed for accelerated growth in the next two years, creating an investment opportunity that should pay substantial returns, according to iClima, a financial firm that concentrates on ESG investment.
Advisors should steer their clients to clean energy resources and the infrastructure needed to support them for their long-term investments, said Gabriela Herculano, co-founder and CEO of iClima, a female-led, green fintech firm focused on climate change investments. The London-based firm is an ETF sponsor that partners with ETF issuers. It owns the information technology and the research involved in making investment decisions.
IClima recently launched two ETFs in the United States, having already offered the products in Europe for two years. The idea for the firm and ETFs was formulated when Herculano was advising a family office and she could not find the type of investments she wanted.
“There were no popular financial products that were designed to solve the climate change problem from a positive standpoint,” Herculano said in an interview. “The funds were backwards. They were looking at firms that were trying to remove carbon from the atmosphere or ones that were trying to reduce their carbon emissions, rather than at innovative companies that were trying to prevent carbon from being released in the first place.”
“Greenhouse gas emissions are accelerating the rate of climate change faster than ever before and this problem presents a lucrative opportunity for companies that are finding ways to meet the demand for zero-emissions products and services, all the while generating revenue,” iClima said in a statement. “A big consequence for 2022 is that it will be the year where we will see a massive acceleration of the transition” from brown (carbon-producing) companies to green companies
For instance, by 2035, the vast majority of electricity will be produced by solar and wind, followed by nuclear, hydro and natural gas sources, she said, with only a small portion coming from coal and oil. Herculano said advisors and investors should be ready to take advantage of that shift.
The ETFs released in the United States are the iClima Global Decarbonization Transition Leaders ETF (CLMA), and the iClima Distributed Renewable Energy Transition Leaders ETF (SHFT).
“We developed the methodology to find measureable companies that are forward looking,” Herculano said. “We look for companies that can preclude emissions from ever taking place. That makes us very different because we believe the best way to reduce carbon in the atmosphere is to never put it there in the first place.”