A Green Investment Strategy of the Wealthy, for the Rest of Us
Investing is all about the future, and a growing number of Canadians are putting their money on a cleaner, greener future.
With the rapid shift from oil, gas and coal to cleaner sources of energy like solar, wind and geothermal, investors of all sizes are seeing an opportunity. Major institutions like banks and pension funds have already entered the market in a big way. Just last year, global investment in clean energy reached $333.5 billion, overtaking investment in fossil fuels for the first time.
But for smaller investors looking to participate in this growing market, finding good opportunities can still be frustrating.
How are major investors doing it?
Until recently, one of the main ways to invest in clean energy has been available to only the wealthiest individuals and financial institutions: investing in clean energy infrastructure projects.
Investing in clean energy infrastructure has traditionally meant committing millions or having the deep expertise to understand the systems and technologies involved. Products like green bonds that are backed by those low carbon project are growing in popularity–the Canadian green bond market reached $56 billion last year—but those too are generally snapped up in minutes by institutional investors.
Canadian clean energy investment company CoPower is changing that.
A clean energy investment opportunity for everyone
For everyday Canadians wanting to put their money to work for a good return and green benefits, CoPower’s Green Bonds present a compelling opportunity.
Individuals with as little as $5000 can invest in a 6-year Green Bond that offers 5% annually or a 4-year Green Bond that offers 4% annually. And in order to help investors meet their personal financial goals, bonds can be customized in a variety of ways. Both products are TFSA and RRSP eligible and bondholders can opt to receive quarterly fixed payments of simple interest, or reinvest and compound those payments for a higher payout at the end of the term.
CoPower’s innovation lies in bringing together investors seeking positive impact and clean energy projects seeking financing, but in order to make its bonds suitable for retail investors, the company has adopted an investment policy of ‘boring is better.’
The bonds are backed by loans to real clean energy and energy efficiency projects sourced and evaluated by the company’s team of project development and finance professionals. CoPower’s current Green Bond loan portfolio includes over 750 projects including simple LED retrofits in condo buildings across Canada, community solar in Ontario, and residential geothermal installations in British Columbia and Quebec.
The company focuses on financing projects like these that use commercially available technologies. In general, projects hold contracts for the sale of clean energy or efficiency services, ensuring stable, predictable revenue streams. As the project developers repay their loans to CoPower, those revenues flow through to bondholders as interest payments.
In a time of public stock markets fluctuations, Green Bonds offer another advantage. As a private investment–in other words not traded publicly–CoPower Green Bonds give investors an opportunity to diversify their portfolios and shield returns from market downsides. It’s important to note that as a private investment the CoPower Green Bonds must be held to maturity and investors will have less information to go on than they would with a public company.
An investment in a greener future
Investing is all about the future, but beyond predicting where the market will go, a growing movement of investors are also asking ‘what kind of future?’
While the financial reasons to invest in clean energy are compelling in their own right, more and more investors are attracted to the opportunity to make a difference for the climate. Even more so after a summer of wildfires and heatwaves.
It’s going to take a lot of money to keep our climate cool. At CoPower we believe green bonds offer a powerful way for investors of all sizes — not just big banks and governments — to be part of the solution. Why shouldn’t we all stand to profit from the greatest wealth creation opportunity and environmental call to action of our time?