Sunday, February 18, 2007

UBS Report: "Climate Change: Beyond Whether''

At the end of January, UBS Wealth Management Research issued the research report, "UBS Research Focus – Climate Change: Beyond Whether," which looks at research on climate change to offer a detailed, sector-by-sector breakdown identifying key investment opportunities and risks for the individual investor.

According to the January 31 release- “Whether or not you agree with the view that human activity is influencing the climate system is largely irrelevant to the investment thesis. What is important is that numerous policies to combat the threat of global warming are converging to influence people’s behavior, alter the risk profile of various businesses, and improve the investment outlook for others,” said Klaus Wellershoff, global head of UBS Wealth Management Research, and Kurt Reiman, head of thematic research for UBS Wealth Management Research.
According to the report’s findings, investors who seek to incorporate climate change risks and opportunities into their portfolios have options that span a wide range of asset classes, including:
Equity-related strategies include underweighting sectors, industries and companies that are highly carbon-intensive and have little potential to adapt to new technologies;
Investment in companies exposed to renewable and low-carbon energy production and energy efficiency;
Investment in theme funds focusing specifically on climate-change mitigation;
Investment in equity baskets, certificates and indices on specific investment areas such as white biotech, photovoltaics, and biofuels;
Investment in venture capital firms and private equity funds focused on environmental technology;
Socially responsible investment (SRI) funds and indices that follow one of three approaches: one that includes only the best companies, one that excludes laggards in the field, and one that focuses on the highest improvement potential;
Fixed income strategies that reduce exposure to companies that face heightened credit risk because of future policy measures and un-hedged exposure to severe weather events, such as hurricanes and floods;
Investment in renewable bonds issued by governments and project development companies to finance specific clean energy projects.

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