If you are quite new to the topic of green investments and are looking to put your money in green companies, this new book by Nick Hanna is an excellent crash course to get you started.
Even if you are an experienced investor, you may still find it a fascinating read and can sure learn a thing or two about dominant green technologies as well as the new ones which hold a great potential for the future.
The author starts by discussing financial instruments which a green investor can use to take part in the green revolution:
While private equity funds present a realistic proposition only to high net worth individuals, green funds & stocks make this niche a lot more accessible to the average investor.
The second part of the book is divided into 10 chapters focusing on the following green industries:
Each of these chapters have similar analytical structures and provide:
So let's take a look at one chapter - Solar Power.
This chapter alone contains almost 30 pages of focused analysis of the solar industry, and is broken down into:
- Investing in solar power
Expansion of the solar sector
Incentives from Asian governments
US growth forecasts
The MENA boom (MENA: Middle East & North Africa region)
What experts say about the solar sector
Solar technology and companies
Silicon photovoltaic solar panels
Solar manufacturing equipment
Concentrating solar power (CSP)
Concentrated photovoltaic (CPV)
- Companies to watch
So you can imagine how much you can learn from just this one section of the book.
You can expect something similar for other chapters as well.
The third part of the book is a Directory of listed companies, green funds, green indices & ETFs, and green private equity firms.
The directory of listed companies provides an outline of "a green investable universe".
You'll find it extremely useful to get an idea which companies are already there for you to start from. Of course, this is just an outline, and the author advises that you do further research before committing your funds to certain stocks.
The fourth part is Resources - a collection of information & news websites, green banking services, green microfinance institutions, and green financial advisors.
The reader will no doubt benefit from an obviously huge amount of research that went into the book.
The author provides a wealth of fresh information highlighting the developments in the green investment arena straight up to the date of book's publication in summer 2010.
He predicts trends and lets the reader know what to expect in the future.
He also talks about innovations & opportunities in each of the sectors and their respective sub-sectors. And if you are not sure about some technical definition, you can easily consult a glossary at the end of each chapter.
Each chapter is preceded by quotes that put each green sector into perspective for the reader.
It appears that the author has interviewed many green investment professionals to get their opinion on industry developments as well. The reader may certainly find their insights useful.
The author's knowledge and understanding of the industries he discusses shine through. I found myself totally engrossed in reading many chapters of the book instead of just skipping through it as I originally planned :).
The book is an easy and pleasurable read, with a layman's explanations of technical issues which really make these ideas "click" in the reader's mind.
I personally like Nick's subtle preference for pure-play companies - there is a much higher chance of them being truly green than large ubiquitous multi-nationals that "want it all". At the same time, they'll be riskier investments of course, than larger companies - green investors need to be aware of that.
I thank Nick for omitting nuclear energy and "clean" coal energy from his book.
Occasionally I see a mention or two of these two industries branded as renewable or green - this is a complete greenwash pushed by their lobbies. Nuclear and coal sources of energy are as bad as oil and gas, and maybe even more so. And I applaud Nick's honesty on that.
The author is also honest about the first generation of biofuels derived from palm oil, for example. He exposes the greenwash proclaimed by others who want to have us believe that such biofuels are somehow green. The fact is that they all ultimately lead to rainforest destruction in many tropical countries, not mentioning many other problems.
Instead, the author proposes that green investors give a chance to another type of biofuel - algae - which appears to have a big, and sustainable, potential.
I would like to add my own opinion on some points here as well.
It is so important to remember that many green industries are very resource-intensive.
For example, solar panels (both silicon-based as well as thin-film ones) use a whole number of chemical compounds, metals etc. A lot of these resources have to be mined in many developing countries which don't have stringent environmental standards to protect their environments.
It is very important for genuinely green investors to make thorough background checks on each company, to make sure they don't abuse their positions and don't destroy the environment while manufacturing "green" products.
Moreover, once you become a shareholder of a green company, you of course have the power to influence your company's environmental policies & standards.
The book focuses mostly on technological advancements which offer green investment opportunities.
There are many other green industries such as sustainable forestry investments, organic agriculture, carbon emissions offset projects etc which are not discussed in this book. Although most of them don't yet offer "easy-to-enter" routes for the average investor - like green technology stocks do.
Perhaps, this is an idea for Nick's next book :).
Talking about sustainable forestry investments ...
I noticed that the book has been printed on "sustainably sourced paper certified by the Forest Stewardship Council".
I do realise that FSC's certified paper may be the only source at the moment which has been certified "green" in some way or another. So the publishers wanted to use this type of paper for their book.
At the same time, I can't resist pointing out that the FSC has been exposed by many environmental organisations as the one that certifies primary old forest logging as "sustainable" which is not. This organisation has also been accused of being some sort of a front for logging-business interests.
Now there is even more reason to investigate genuinely sustainable forestry investments in more detail ...
I recommend that you read this book thoroughly 2 - 3 times. You'll certainly become proficient at understanding main technologies prevalent in green industries, as well as new developments that will be taking place in the future.
It will definitely be one of my desktop books for some time to come.