What is Cleantech
Cleantech is an investment philosophy used by investors who wish to profit from environmentally friendly companies. The term stems from "clean technologies." Cleantech firms seek to increase performance, productivity and efficiency by minimizing negative effects on the environment.
BREAKING DOWN Cleantech
Clean technology is generally used to describe companies that deal in energy, water, transportation, agriculture and manufacturing. The term is often interchanged with "greentech," or "green technology." Several variations of the term can also be used in writing, including "clean tech" or "clean-tech."
The term has its origins in the venture capital (VC) investment community, so it is a little different from the way it is defined when compared to many green businesses, which focus more on sustainability rather than profitability. It has grown to include high growth industries like solar, wind, biofuel and water purification.
History of Cleantech
There is no one person or group that has been credited with coming up with the term, which first started to be used in the late 1990s and early 2000s.
Nick Parker and Keith Raab helped popularize the term cleantech. The two, who founded Cleantech Venture Network in 2002, defined cleantech as technologies that were both green and clean. These included solar, biofuels, fuel cells, water remediation, and renewable power generation. Many investors were turning to these industries after the tech bubble collapsed in 2001.
Several blogs were also dedicated to the sector in the mid 2000s, including Clean Break by Canadian journalist Tyler Hamilton, and Cleantech Investing, which was written by venture capitalist Rob Day.
Investment in Cleantech
Investment in environmentally friendly companies has grown and there are now many funds wholly aimed at investing in these types of securities.
According to the Global Trends in Renewable Energy Investment 2018 report released by UN Environment, global investment in renewables surpassed $200 billion in 2017, while $2.9 trillion has been invested in sources like solar and wind power since 2004. The report said that China was the largest investor in the world in the sector, with about $126.6 billion invested in 2017. The United States, however, continues to show a decline in industry investment, which dropped to $40.5 billion in 2017.
Investors who are looking to pad their portfolios with cleantech companies can find them listed on some of the major stock exchanges across the world. There are also mutual funds and exchange traded funds (ETFs) that are specifically dedicated to cleantech companies. The Toronto Stock Exchange (TSX) and the TSX Venture Exchange boasted more than 103 clean tech and renewable energy companies that were actively traded as of 2016 — the most listed on any exchange group in the world.
One of the largest companies in the sector listed on the exchange group in 2017 was Village Farms International. As of June 27, 2018, the company had a market capitalization of $307 million and was trading at $6.76 per share. Trading volume as of that date averaged at about 541,269 shares. The company, founded in British Columbia, Canada, owns and operates agricultural greenhouses, and produces and markets tomatoes, peppers, and cucumbers, as well as power.
Since investment in the sector has been steadily on the rise across the globe, so too has demand for the number of jobs. Some of the positions in the sector include management, development, engineering (civil and process engineers), technicians (wind and turbine technicians) and manufacturing. Many jobs in the cleantech industry require special training and the development of expertise in the sector.