ETF Spotlight: Socially Responsible Investing

December 19th at 7:26am by Tom Lydon

Socially responsible exchange traded funds have been pummeled this year as governments curbed spending and reduced subsidy handouts to clean energy companies. However, green investments may see brighter days ahead if United Nations members honor a new climate deal.

Recently, over 190 U.N. countries came to an agreement on the global warming issue, committing to reduce greenhouse gas emissions, reports Nina Chestney for Reuters. Negotiations on the finer details will begin next year and should be signed by 2015 at the latest. An international accord would clarify national policies and boost investments into the industry.

While renewable energy investments, like wind and solar, will be affected by short-term economic factors, green technology will have a solid backboard to recover.

“EU and national policies will remain the primary driver for investment in clean tech, at least until the detail and strength of international political commitment behind the deal becomes clearer,” Richard Salomone, energy adviser at EEF, said.

“It is better than nothing but will not open floodgates and allow vast amounts to be invested in next few years,” Richard Nourse, managing partner at Novusmodus, said in the article.

HSBC projects $10 trillion in capital expenditures will be allocated to low-carbon energy between 2010 to 2020.

Currently, the weak global economy and record low carbon prices have kept many clean energy firms from investing and growing their businesses. The solar industry has been particularly hard hit as prices on their panels dropped around 40%. [Solar ETFs are Worst Performers in 2011]

  • Powershares WilderHill Clean Energy Portfolio ETF (NYSEArca: PBW): down 51.3% year-to-date
  • Powershares Global Clean Energy Portfolio ETF (NYSEArca: PBD): down 41.3% year-to-date
  • iShares S&P Global Clean Energy Index Fund ETF (NYSEArca: ICLN): down 46.1% year-to-date
  • iPath Global Carbon ETN (NYSEArca: GRN): down 56.0% year-to-date

Powershares WilderHill Clean Energy Portfolio ETF

For more information on socially responsible investments, visit our socially responsible ETFs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.