What is natural capital investment? It’s something we haven’t talked about in a while. But I read an interesting article the other day that made me want to bring up natural capital again.
If you’re unfamiliar, natural capital includes all the resources we use on a regular basis. These include things such as …
- Water
- Minerals
- Fish
- Trees
- Oil
- Soil
- Air
It also encompasses living systems, such as …
- Grasslands
- Wetlands
- Estuaries
- Oceans
- Savannas
- Tundras
- Coral reefs
- Rainforests
For years, little attention, if any, was given to natural capital. It was not valued. In fact, it was constantly being liquidated, further enabling the deterioration of ecosystem services that really represent the most important type of capital. Things like the regulation of atmosphere and climate, the cycling of nutrients and water, pollination, control of pests and diseases, and the maintenance of biodiversity.
These free, natural, and self-regulating services are worth trillions of dollars annually. Yet rarely has their value been reflected on balance sheets.
Take our oceans, for instance.
In a new report entitled State of the Oceans 2024, analysts noted that oceans are an essential component of the planet’s ecosystem – for oxygen, food, and water – and it is impossible to sustain life on Earth without them.
The direct global economic output of marine fisheries, coral reefs, seagrass and mangroves was $6.9 trillion in 2020. The global seafood market has an estimated value of $81.2 billion in 2023. Additionally, the marine trade and transportation sector generated $5.2 trillion worldwide in 2020. The economic value attributable to the oceans’ absorption of carbon emissions alone comes to $4.3 trillion.
Given the economic value of all the things for which we rely on the oceans, it would make sense that any degradation to our oceans would result in immediate action. But that really hasn’t been the case. And understandably so. Unless you work in commercial fishing or understand how oceans produce roughly 50% of all the oxygen on Earth, how would you even know that our collective treatment of the ocean has been quite dangerous?
Lack of education on this issue is one of the reasons highly pollutive industries can operate without having to account for their contribution to all the things that degrade natural capital. As well, it’s one of the reasons so few consumers consider how their purchases and daily habits affect the health of our oceans.
I don’t write these words to be critical or to be some annoying, overzealous treehugger. This is merely an observation of truth. And here’s another observation of truth: it is capitalism that is instigating alternatives to highly-pollutive industries. Alternatives that can allow us to lessen our damage to natural capital. I’m talking about things like electric cars, renewable energy, and new food technologies that allow us to decrease our reliance on fossil fuel inputs that contribute to the degradation of natural capital.
This is one of the reasons I started Green Chip Stocks nearly two decades ago: to profit from energy, transportation, and food companies that are providing alternatives to the highly pollutive energy, transportation and food companies on which we’ve long relied. It’s been one of the guiding principles of our investment strategy. And it has served us well. Although to clarify, any company in which we invest has to either be profitable or on its way to profitability. After all, investing in a company that’s doing right by the planet, but not doing right by shareholders, will not survive. Which is why this article is called “What is Natural Capital Investment.” Not “What is Natural Capital Divestment.”
But more importantly, this is why I’ve been a big supporter of Energea for a few years now.
What is Natural Capital Investment? It’s Energea!
If you’re unfamiliar, Energea is a company that allows individual investors, regardless of net worth, to invest in some of the most profitable solar projects in the world.
And what makes Energea especially attractive is that it offers a globally diversified portfolio of solar projects. This allows you to get the best returns based on where the company can get the best deals. In other words, the company is not limited by geography. If there’s a money-making solar project happening anywhere on the planet, Energea can access it.
It’s also worth noting that because Energea has the purchasing power to negotiate the best terms, it’s possible to get multiple double-digit returns. Year after year, and for up to 25 years in some cases.
Now, last weekend, I got word that Energea successfully turned on its Pedra do Indaiá project. This is a major development in its “Community Solar in Brazil” portfolio.
That particular portfolio offers an estimated 14% to 16% internal rate of return. So if you do a $600 investment per month, in ten years that’ll be worth an estimated $235,627.
That’s nearly a quarter of a million dollars from one investment. That’s not trivial. And you can still invest in this project, too. Here’s a link if you want to check it out.
While I understand that the concept of natural capital is new to some, the concept of utilizing free markets to create wealth is not. And there’s no doubt that you can make a lot of money by investing in companies that are providing products and services that lessen the damage we do to our natural capital. For me, it just doesn’t get any better than that.
