Financial History 142 Summer 2022 | Page 23

values and investment returns . Other trends are more challenging to predict but are , for investors , of equal or even greater importance .
Trend No . 2 : Technological Innovation
Rapid innovation in low-carbon technologies is a second climate trend and , from the perspective of investors , the most important . For example , renewable solar and wind power is undercutting fossil fuels using advanced technologies to drive down the cost of energy to the point where competitors become insolvent . In 2020 , for the first time ever , renewable energy generated more electricity in the United States than did coal , and five American coal companies filed for bankruptcy in a single year . Even the largest companies are experiencing setbacks . ExxonMobil , the longest serving member of the Dow Jones Industrial Index , was replaced because of declining market value . After nearly 300 years , the fossil fuel industry in America is being superseded by cheaper , cleaner technologies .
In the automobile industry , the newest electric vehicles outperform gasolinepowered cars through quicker acceleration , better handling and lower operating costs . Tesla was the first modern electricvehicle company , incorporating innovative battery technologies and software into its automobiles . To the surprise of many investors , Tesla surpassed GM , Volkswagen and Toyota to become the world ’ s most valuable automobile company . Technological innovation by one company has upended an entire sector , leaving traditional auto companies scrambling to play catch-up .
Perhaps the most surprising technological innovation is in the food and agriculture sector , where consumption of meat substitutes is threatening an industry that has existed since the dawn of human civilization . Investors see the potential for this innovation to disrupt an entire industry . Beyond Meat , a leading producer of plantbased meat substitutes , enjoyed the most successful initial public offering ( IPO ) of any American company since 2000 when it went public in 2019 , more than doubling in value before shares even began trading .
Companies have always faced the risk of technological innovation from
Tesla Motors CEO Elon Musk speaks at the company ’ s annual shareholder meeting in June 2013 . Tesla was the first modern electric-vehicle company and surprised investors by surpassing GM , Volkswagen and Toyota to become the world ’ s most valuable automobile company .
competitors . Now , innovators in electric power , transportation and food are experiencing rapid growth because they offer consumers a superior product while addressing climate change . Investors are supporting this trend by providing growth capital , just as early investors did for James Watt and the inventors behind the Industrial Revolution . The result is an upending of asset values as nimble entrepreneurs challenge traditional industries .
Trend No . 3 : Evolving Social Norms
Greta Thunberg , a high school student from Sweden , became the face of a global movement of young people who are addressing climate change through their use of social media to profoundly alter attitudes toward action on climate change . Even Forbes , a publication aimed at America ’ s wealthy , published an article titled “ Why Greta Thunberg Is Totally Correct in Her Latest Climate Change Tweet .” Thunberg and the millions of people who have attended her rallies represent a third trend influencing the flow of capital : evolving social norms .
Many Americans have long regarded climate change with skepticism . Support for government action reached a low in 2012 , when only 25 % said global warming should be a top priority for Congress . But that has changed , primarily due to the concerns of Gen Z and Millennials . By 2020 , 52 % of Americans surveyed said climate change should be a top priority for Congress , and among American youth , support is much stronger for climate activism compared to that of older generations .
Young people are often idealistic , but this generation ’ s idealism is affecting businesses and investors in ways not seen before . In a tight labor market , employers are finding that sustainability matters to potential employees , and in highly competitive sectors it also matters to consumers . Younger Americans prefer to work for , and buy from , companies that act on climate change .
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