Marketing; don’t brand your fund green, but leverage independency
24 maart 2010
Two different messages today in the Dutch newspapers on green investing. De Pers (a free daily) refers to the announced listings of two green energy funds (Engyco in the UK and Enel Green Power Italy). This news paper also refers to funding efforts of Eneco in the Netherlands. Let’s wait for the hype to come, is the conclusion of the article.
The Financieele Dagblad writes about the end of Greenbay (a sustainable hedge fund) because of a lack inflow of funds. “A ‘chicken and egg’ story”, according to the fund manager, “because big investors would be interested to invest of the fund would be bigger.” Not exactly a hype.
So what to make of this? I believe these developments are a sign that green investments should be appreciated similarly as any other asset class. There are winners and losers. Hypes may occur, or they may not. As early as 2007 we have been warning for a hype in green investments.The combination of big words and lots of liquidity could be a dangerous cocktail. Therefore we promoted a focus on clear targets, ratio instead of emotion and feasibility tests in public dialogue. Liquidity surpluses have evaporated the last few years, this has helped de-hyping.
On the other hand there are clear signs that many investors are not ready for sustainability, while investment opportunities for green type of opportunities are growing. Scarcity is increasing. Innovation is needed. Dependency is may harm economies. The Financieele Dagblad today covers a story on T Boon Pickens, the US oil billionaire who is investing heavily in sustainable energy. However his focus is “energy independency” not “green”. See also our previous blog.
I think this argument of energy independency is more powerful to seduce investors than “green ambitions”. For many green is about emotion, fuzzy math and thus a tough business case. Energy independency seems to be a more tangible cause. Politicians will understand that there is an immediate self-interest, not an unclear future general cause. The green effect of both strategies may end up to be similarly, but the attractiveness for investor may be quite different.
My naïve and simple conclusion: If I wanted to set up a green investment fund, I would never use the word green, but energy independency. It just flies better.
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