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You are here : IndiaNotes >> Market Action >> Fundamental

Global warming mutual fund: Time for this concept in India?

Bharat Vasandani | 01 Apr, 2014  | Follow Author | Add to my Favourites 
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I came across the news recently that “Ice cream makers, FMCG cos & dairy suppliers are building up inventories fearing El Nino backlash” in economic times. Industry experts expect a long summer with below-normal rainfall, setting the stage for higher sales of ice creams, juices and soft drinks and prompting companies to plan for higher purchases of fruit pulp and milk powder to meet higher demand.


[El Niño is a band of anomalously warm ocean water temperatures that periodically develop off the Pacific coast of South America. Extreme climate change pattern oscillations fluctuate weather across the Pacific Ocean which results in fluctuating droughts, floods, and crop yields in varying regions of the world.


Updated forecasts by the Australian Bureau of Meteorology (BoM) say that the chance of an El Nino occurring later this year in 2014 has increased. A likely rain deficit being generated in India will be recorded mostly in the country’s West and North-West during the impending monsoon, says Asia Pacific Climate Centre based in Busan, South Korea].


Fruit juice and concentrate manufacturers, who see 50-70 per cent of their sales in the April-June quarter, expect sales to rise.


On the other hand, while a hot summer raises demand for thirst quenchers, Coca Cola is also concerned about the impact of low rainfall on rural incomes. The fear is that a good monsoon and a good harvest ensures prosperity for rural India, which then translates into higher disposable incomes and higher spend; but with delayed rains, the rural income may get impacted thereby affecting spending power.


This is a small example of how climate change [global warming] is impacting businesses.


There is another side to the story; if on one side, businesses are getting negatively effected by climate change then there are companies that are benefiting/looking to benefit from climate change.


If companies are benefiting from any opportunity/concept; can investment concepts be far behind? Can we look at mutual funds that have the mandate to invest in companies benefiting from global warming?


Some of us may say that this might encourage global warming. But this is not true; we already have venture capitalists and private equity companies investing in companies that offer services/products helping society fight global warming. This financing helps develop the ecosystem required for further growth of global warming fighting products/concepts/services.


I did some research on this and looks like I am not the only one that thinks on similar lines. Work has already initiated on this front.


The Credit Suisse Global Warming Index, Exchange Series is an equally weighted index consisting of 50 exchange-listed companies that have a focus on products related to minimizing global warming. Companies included in the index come from both the demand and supply side of climate change. Some provide efficient energy-consumption solutions, while others improve the supply of energy-efficient technology or environmentally friendly power sources such as biofuels or fuel cells.


Global Warming Mutual Funds can help encourage larger companies to look at opportunities that arise from fighting global warming

 




About Bharat Vasandani

Bharat comes with 10 years of experience in business consulting, investment banking, and media. The last few years have been focused on India’s power sector; with special attention to business consultancy in the field of renewable energy and cleantech. Bharat has studied his Bachelors in engineering followed by a Masters in International Business. For more information please visit his blogs at www.bharatbizthoughts.wordpress.com and www.bharatvasandani.wordpress.com.


For more information, please contact [email protected]


Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.




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