Climate Change Solutions: 5 Areas that Are Making a Difference

Man looking at windmills

Climate change can no longer be ignored, and corporations and other sources of private capital are investing in ways to make a difference. Here are some examples of sustainable solutions that could help.

CONSIDER THESE FIGURES: By 2050 there could be as many as 1 billion climate refugees fleeing water scarcity, crop failure and rising sea levels.footnote1 In the U.S., extreme weather events already cost anywhere between $300 billion and $500 billion every five years.footnote2 And almost one-third of the world’s population is exposed to deadly heat levels for at least 20 days a year.footnote3

“Climate change is not just an environmental issue,” says Savita Subramanian, head of Environmental, Social and Governance (ESG) Research and U.S. Equity and Quantitative Strategy for BofA Global Research. “It has strong implications for society at large.” Its potential impacts on both humans and the global economy are nothing short of seismic.

The economics of climate change solutions have been shifting for the better. This problem used to be very expensive to address. That’s not the case anymore.
Haim Israel | Head of Thematic Investing, BofA Global Research

Why investors are paying attention

As the world looks to develop solutions to these challenges, investors could have an important role to play, says Haim Israel, head of Thematic Investing for BofA Global Research and lead author of a wide-ranging report on the topic titled “Emission Impossible?” He points to three key developments that are pushing climate change to the front of many investors’ minds.

“First of all, there’s public understanding that climate change is not a myth,” he says. That is driving activism at all levels and prompting companies to raise capital for clean measures such as supporting reforestation, shifting to renewable energy sources or simply being more transparent about their carbon footprint. “Secondly, Wall Street and the capital markets are getting behind finding viable solutions, and we are seeing more money going to companies that have environmental policies,” Israel says.

The third, and most fascinating, development is that “the economics of climate change solutions have been shifting for the better,” Israel says. “This problem used to be very expensive to address. That’s not the case anymore.” He notes that it’s now cheaper to produce energy from renewable sources, like solar and wind, than fossil fuels. In the U.S., there are now three times as many clean energy jobs as there are in the fossil fuel industry.footnote4 As a result of these changes, Israel’s team calculates that the climate solutions market could double from around $1 trillion at the start of 2020 to more than $2 trillion over the next five years.

We continued to see strong investor interest in sustainable investments, even during the dramatic sell-off that started earlier this year.
Savita Subramanian | Head of Environmental, Social and Governance Research and U.S. Equity and Quantitative Strategy, BofA Global Research

Climate change and the coronavirus

But how do we stay focused on the long-term (or even medium-term) picture when more immediate concerns, such as the coronavirus pandemic, are creating economic disruption and uncertainty? Subramanian notes that ESG exchange-traded funds saw continued inflows during the recent market turmoil (based on weekly flows between January 9 and March 18, 2020footnote5). “The idea that climate concerns go away during times of stress is false,” she says. “We continued to see strong investor interest in sustainable investments, even during the dramatic sell-off that started earlier this year.”

Additionally, the pandemic has sped up the adoption of many climate-friendly and energy-efficient solutions, some of which may be here to stay. “The pandemic has really hastened the mission to have a lower carbon footnote from both a technology and an industrial perspective,” Subramanian notes. “Companies have realized they don’t need to fly people out to Hong Kong five times a year and can do a lot more through video conferencing and chats and apps on their phones than they have in the past,” she adds.

5 industries creating climate solutions

While some potential energy-efficient solutions—such as increased investment in public transportation—may be adversely affected by the coronavirus in the near term, Israel believes the world will continue to seek out ways to reduce its carbon footprint. “It’s not just our kids’ problem anymore,” he adds. Here are a few of the promising areas that Israel says could play a pivotal role in driving climate solutions now—and into the future.

Renewable energy. Annual wind and solar energy volumes are expected to double over the next 10 years, as improvements in efficiency, scale and equipment prices should make these sources even cheaper. footnote6 These are also complementary energy sources, which suggests that they will develop in tandem: Wind power tends to work better in the winter and at night, and is more abundant in colder regions and coastal areas; solar, meanwhile, works better in the summer and during the day, and tends to be more abundant inland, in dry and desert regions.

Electric vehicles. Similarly, annual electric vehicle sales, which currently number around 3 million this year, are forecast to grow dramatically in the coming decade, reaching as high as 43 million by 2030.footnote7 Some of the transition may come from an unlikely source: the increased development of large electric vehicles such as SUVs, trucks and vans. For commercial vehicles—whether designed for ride-sharing or long-haul transport—the fuel savings would be significant, thus potentially hastening the switchover.

Energy storage. Much of the growth of the electric vehicle market will depend on the increased production of more powerful and cheaper batteries. And while the challenges of storing the energy created by wind and solar have hampered their advancement in the past, with better technologies and evolving energy and climate policies, renewed investment in storage could set the stage for a major transition to renewables.

Meat alternatives. Animal products represent around 15% of global greenhouse gas emissions, while animal farming contributes significantly to deforestation and land use. These are some of the reasons behind a growing trend toward reducing our reliance on meat and other animal products, along with the development of meat substitutes such as plant-based burgers.

Vertical farming. Meanwhile, vertical and greenhouse farming technologies use much less water and land, and are more climate-resilient than traditional open-field farming. They also require less transportation, since urban and greenhouse farms can be built closer to population centers. The one drawback: These new farming technologies tend to use more energy—something that renewable sources, like solar and wind, could potentially help supply.

The bottom line is, everything in our planet is connected. And as the Earth’s climate changes, every corner of society—wealthy or poor, giant corporations or solitary individuals—will be affected. This also means that everyone will have a role to play in helping build a more sustainable world in the coming years. “The 2010s were a lost decade when it comes to ameliorating climate change,” says Israel. “As we head into the 2020s, we need to move forward very fast.”

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United Nations University, 2017.


Nature Climate Change, Mora et al, 2017.


BofA U.S. Equity & Quantitative Strategy and SimFund, 2020.




BloombergNEF, Deloitte, IEA.


Originally published 08/03/2020