This week, 100 Women in Hedge Funds and Levenfeld Pearlstein LLC coordinated an event with the Chicago Climate Exchange (CCX) to present investment options while improving the environment. Exchange Chairman and CEO Richard Sandler addressed about 40 women on the future of his company, the environmental benefits, and how to get involved in saving the planet.
The event took place at the Chicago Yacht Club on Wednesday evening, April 16, 2008, in a room above Lake Michigan. With windows as walls, the room emphasized Sandler’s speech about the importance of the environment. As he talked about carbon trading and saving the environment, the audience looked out at the sand and water just beyond him.
Richard Sandler believes that the capital markets can solve global warming and make money doing it. He explained his theory on wealth creation, which grew out of the economic situation in the 1960’s. He said that fifty years ago, wealth was concentrated in the manufacturing industry. He explained that the ‘70’s were about commodities and then in the 80’s the market moved into the commoditization of financial products such as interest rates and derivatives. In the 90’s, he said, the commodities of information like Google and Yahoo ruled. What does he say about the 21st century? He believes that wealth will be created in the commoditization of air and water.
Back in 1999, Sandler and friends received grants for $12,000 from the Joyce Foundation. The not-yet exchange invited companies from all over Chicago to discuss how they would cut carbon emissions. In 2003, they took those ideas and launched the Chicago Climate Exchange.
The exchange works by asking their member firms to pick a reduction target. If by a certain time the member does not achieve their goal of reducing emissions to a certain level, they must buy another firm’s share. Since inception in 2003, the CCX has been able to reduce 180 million tons of emissions. Their members also have a goal to reduce 6 per cent of their carbon emissions by 2010.
Some of their firms who participate include chemical plants such as DuPont and automotive companies like Ford Motors and Rolls-Royce. Additional members include Motorola, Baxter and Bank of America.
The exchange has some political ties that have helped them gain stature in the financial markets. Chicago’s Mayor Daley is an honorary member of the exchange and Treasury Secretary Henry Paulson lead the initiative when Goldman Sachs became a founding member. They have also worked with John McCain and Joe Lieberman. Their political involvement goes back to when they received their initial grant from the Joyce Foundation. Barack Obama sat on a committee that awarded the exchange $4000.
Richard Sandler believes there is money to be made in saving the environment. By breaking down trading barriers, the exchange has made it easy from anyone in the derivatives or stock market to get involved. The exchange trades in futures, options, Exchange-Traded Funds and the Dow Jones Sustainability Index. If you are interested in investment opportunities and improving the environment, the Chicago Climate Exchange has a fund for you.
If you are one of the Glass Hammer’s readers from across the pond, you can investigate their sister exchange, the European Climate Exchange.