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Why green entrepreneurs don’t top our young rich lists

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The annual survey of our young rich – the under 41-year-olds who already have more money than most of us ever dream of – has been released and it tells a similarly grim story: If we want to be rich, we might be better off buying a coal mine, a fleet of bulldozers, or developing some software smarts.

Again, the BRW list of Australian Young Rich 100 is dominated by miners and the people that invest in the equipment that removes millions of tonnes of earth so they can get easy access to the target minerals and ore bodies. And there are the software kings, such as the whiz-kid owners of software sensation Atlassian, the retailers, the sportsmen, the property investors and the financiers.

Where were the representatives of the “green economy”.

Well, there was actually only one – Nick Armstrong, who turns out to be the youngest new entrant too. The 28-year-old sits at No 83 in the top 100 with estimated wealth of $22 million through his majority ownership of environmental commodities trading company COZero, along with Geoff Alexander.

COZero has already come into prominence for topping the BRW Fast 100 list in 2011, and claims a turnover of $200 million last financial year (although RenewEconomy suspects that this is the value of contracts traded rather than the company’s commission). It’s still impressive, given that Armstrong himself says that the introduction of a carbon price is positive, but the fixed price has not done much for volumes. A lot of its trade has been in renewable energy certificates.

Only one other young rich-lister appears to have anything to do with what might be termed the “green economy”. New Zealand born Steve Outtrim, who made the first part of his fortune with Sausage Software, remains at No 28, with estimated wealth of $65 million.

One of his current companies is energy systems consultancy ekoLiving, which boasts “smart home” technology packages that include security, convenience, entertainment and energy efficency, with motion- activated control of lights, blinds, fans, smart glass and air conditioning. Outtrim is also director of the not-for-profit humanitarian think tank, reallocate.org.

So is two out of 100 a fair return for the green economy, that multi-trillion market that is supposed to mark the impact of the new generation?

Well, it’s early days yet, and 2 out of 100 just happens to correspond with estimates by Deutsche Bank about how much the world’s  institutional investors allocate of the risk-weighted portfolio to the green economy.

This has been an enormous frustration to those hoping that the private sector and the influential investment community can swing behind the push to a low-carbon economy

The Climate Institute this weekend launched a social media platform designed to encourage members of superannuation funds to influence their managers to properly assess climate risk, the anticipated “carbon bubble’ and funnel more money into the low-carbon investments and the green economy.

The platform, dubbed “the vital few” – in reference to the limited number of years many scientists suggest we have to act to avoid the worst consequences of climate change – is sponsored by the head of the global trade union movement and other key civil society groups.

Julian Poulter, the executive director of the Asset Owner Disclosure Project, which TCI hosts, says pension funds have continued their fast and furious spending spree on high-carbon, high-risk investments “with little accountability for their impact on the long-term financial security of both individuals and the broader economy.”

TCI chief executive John Connor, whose organisation has been working on this for five years, since even lifting the allocation to low-carbon solution from 2 per cent to 5 per cent of the money managed by pension funds, insurers and sovereign wealth funds would add another $1.5 trillion into the market.

“That would fast track things … and provide a hedge against political risk,” Connor told RenewEconomy. “The sub-prime disaster is a poster child for this – climate risks are not being properly priced, managed or hedged, and are difficult to insure against.

Success in this initiative could also ensure there is an equal increase in representation on the Young Rich list next time, too – perhaps even the Forbes 100, where it seems you need to make your money through some other avenue before turning your attention to green issues.

In the meantime, young green entrepreneurs will have to rely on exactly that – the HNWIs (high net worth individuals) that have made their money elsewhere, but now have a safety net to afford such investments – such as Mike Fitzpatrick and friends who recently bought shares in Carnegie Wave Energy – or the few institutional funds that have been putting money where they think there future is.  

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