With markets for solar energy, wind energy and fuel cells expected to grow to $100 billion by 2014 and past returns estimated at 30%, some large institutional investors are taking notice of the environmentally friendly technology sector.
For example, at a conference last month sponsored by the UN Foundation, two dozen institutional investors pledged to commit $1 billion to the sector over the next 12 to 18 months.
And since 2002, $3.5 billion has been invested in clean technology, according to CleanTech Venture Network LLC, Lansing, Mich. CleanTech matches investors with clean technology firms.
CleanTech officials estimate that between 1994 and 2002, the median investment return for initial public offerings of companies in the asset class was 5.3 times invested capital; from mergers and acquisitions of portfolio companies, 4.3 times invested equity.
Already pension plans have taken action to reduce the environmental risk in their portfolios as plaintiffs or co-plaintiffs in lawsuits, putting public company investments through environmental screens and placing environmental initiatives at shareholder meetings. Now, institutional investors are looking at so-called clean technology as an investment opportunity.