Green Companies: The Unsustainable Investment

“Green” investments did not just appear out of thin air. They are the result of an ideology called environmentalism. This ideology has been impregnated into the psyche of many investors for years. The result? Many investors have abandoned the profit motive in favor of:

1. Maximizing “social good” and;
2. “Green” technologies that must be propped up by government subsidies.

These kinds of investments set investors up for failure and are often outperformed by “non-green” counterparts when subsidies and actual profits are taken into account.

The Rebirth Of An Ideology

In 1962, Rachel Carson’s book, Silent Spring, resurrected some very old ideas from 19th Century Germany. What were those ideas? Essentially, that  human beings are arrogant by nature and that the Earth needs to be protected from Capitalism and greed. While Carson’s supporters are quick to point out that she was not against technology as such, it is well-known that she had serious criticisms about “the gods of profit and production,” and wrote that, “The ‘control of nature’ is a phrase conceived in arrogance, born of the Neanderthal age of biology and philosophy, when it was supposed that nature exists for the convenience of man.”

Those ideas gave birth to government organizations like the Environmental Protection Agency, whose job is to “police” America and protect the environment from human beings. We even have environmental terrorist organizations like Earth First! who openly admit to using acts of violence to accomplish their goals (a throwback to an old German idea of “ecology by force”).

Philosopher Paul Taylor in Respect for Nature: A Theory of Environmental Ethics, writes:

The ending of the human epoch on Earth would most likely be greeted with a hearty ‘Good riddance!’

In a review of Bill McKibben’s The End of Nature, biologist David M. Graber writes (Los Angeles Times, October 29, 1989):

Human happiness [is] not as important as a wild and healthy planet. . . Until such time as Homo sapiens should decide to rejoin nature, some of us can only hope for the right virus to come along.

 

Most individuals who believe in environmentalism are not extremists. They don’t believe, as McKibben does, that we should hope for the right virus to come along. They don’t explicitly hate human life, but they do implicitly  support an evil ideology. One consequence of this is a wellspring of mismanaged companies propped up by government subsidies. These companies provide investments focused on charitable giving, maximization of social utility, and “fairness.” These investments are focused on anything and everything except profits. This is bad for you if you’re an investor who wants to maximize profits.

Since these “green” companies put profit maximization in the back seat and focus more on “social responsibility,” you could do quite well without the premium of “going green.” In fact, the most profitable companies don’t worry about “social responsibility” (or only give it lip service) and instead focus on maximizing long-term profits to shareholders.

Consider the 2011 bankruptcy of Solyndra, a “green” company that was focused on solar power. In 2009, the company received $535 million dollars from the U.S. Government in the form of a guaranteed loan. Despite all of this funding, the company still failed. In response to Solyndra’s bankruptcy, Tyson Slocum, director of the energy program at Public Citizen, is quoted as saying “You can’t end loan subsidies for renewable energy. That would be a disaster.” Indeed it would be a disaster — for renewable energy companies. They just can’t survive without your tax dollars.

Compare this failure against the backdrop of oil companies that exist without any government subsidies and that succeed, year after year, while maximizing profits for shareholders. For example, at the end of 2003, Exxon Mobile had a share price of about $36. As of this writing, its share price is hovering around $90. That’s an amazing return of almost 250 percent for investors – plus the company pays dividends.

Which would you rather own? A company that went bankrupt, providing no viable energy for you, or a company that spits out cash left and right while enriching your life at the same time?

In your search for the perfect investment strategy, adopt a rational approach to investing. You may not win any awards, but you will be investing in companies that work for your benefit, and are motivated by money to become more and more efficient and thus more and more profitable without going artificially green.

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September 5th, 2013 | by David | No Comments