Three Key Lessons From Warren Buffett That Climate Investors Must Learn

The news of Warren Buffett’s impending retirement has led to a flood of writings about his accomplishments and failings (yes, there have been a few), as the Oracle of Omaha holds a strong place in the hearts of many investors out there. Many over the years have looked for inspiration in his writings and actions as one of the most successful investors of our lifetime.

Buffett, a figure synonymous with long-term value and business fundamentals, might not be the first name that comes to mind when we think about climate investing. After all, he’s been famously cautious—some would say skeptical—about renewable energy and electric vehicles. But scratch the surface, and Buffett’s approach offers three key lessons that every climate-focused investor should take seriously. These principles may not scream “invest into breakthroughs”, but they whisper something more powerful: business fundamentals, and durability.

1. “Be fearful when others are greedy, and greedy when others are fearful.”

This oft-quoted Buffettism is particularly relevant in the climate investing space, where capital has poured into and then run away from sectors like EVs, hydrogen, and carbon capture with dizzying speed.

Consider what happened in 2021 and 2022: a frenzy of SPACs and public listings promised revolutionary green technology returns, only to see valuations collapse as companies failed to deliver profitability. A Buffett-minded investor likely would have held back from that SPAC wave — not because the technologies weren’t promising, but because the exuberance outweighed the fundamentals.

Today, as the climate investment landscape cools, policy headwinds catch headlines, and valuations deflate, the fearful are retreating or waiting on the sidelines. That’s the moment a Buffett-style climate investor leans in. Not to chase the next hype cycle, but to identify businesses with proven cash flows, strong value propositions, and management teams who understand capital discipline.

For instance, instead of the flashiest nuclear startup that won’t generate revenues for a decade even if successful, a climate investor might look at companies building boring-but-essential water treatment solutions, or firms with a solid existing footprint in renewable project development and operations. These aren’t the shiny new thing that business journalists like to write about, but they’re more likely to survive — and thrive — over the medium and perhaps even the long term.

2. “Our favorite holding period is forever.”

In the climate world, short-termism can be lethal for investors. Political winds shift, hype cycles emerge and collapse, and exit windows can be very narrow. That’s why Buffett’s emphasis on owning companies, not just trading stocks, offers a powerful mindset shift.

Buffett looks for durable competitive advantages — brands, cost structures, solid customer bases — that can stand the test of time. Climate investors should do the same. The temptation to jump in and out of the “next big fast-growth market opportunity” is strong. But we’ve now all seen how quickly the latest hot sector can become an obvious “dog” and then later on become hot all over again. As always, being early looks an awful lot like being wrong. Jumping in and out of sectors and companies may be intellectually stimulating, and perceived momentum is always a siren’s song for investors. But long-term value is built when you partner with companies solving tough, systemic problems over years, not quarters.

Take waste-to-value – a sector that rarely gets the buzz that solar or wind do. “One man’s trash is another man’s treasure”: Companies that get paid to take in waste and then also paid for what they produce from that waste often have long-term contracts, high recurring revenue, and a built-in advantage: they save customers money. That’s an economic value proposition you can measure.

Instead of chasing the “next Tesla” bump, climate investors should channel Buffett by asking: will this company still matter 10 years from now? Does it have a strategy to adapt and compound value in an evolving policy and technology landscape?

3. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Climate investors, like all investors, can fall into a trap: assuming that the execution potential of a particular company is either inherently unknowable or fixable, and so what really matters is the idea.

But of course, there are a million patentable ways to turn a photon into a kilowatt-hour (for example). In the energy, food, water, waste and transportation sectors, what proof is there that the “best idea” usually wins, commercially? No, in these huge, hard-to-change industries, superior execution is what wins. And of course, just like with houses or even personal relationships, “fixer-uppers” are rarely turned into massive winners, at least within any single investor’s holding period.

Buffett’s advice? Don’t compromise on the quality of a company and management team just because you think they have a good idea. That wind turbine startup might have a really cool new design that appeals to your “inner engineer”, but if its margins are slim, its technology unproven, and its management team inexperienced, even the most amazing new way to turn wind into power won’t deliver shareholder value.

Instead, climate investors should look for businesses with already-exhibited operational excellence. Even at a pre-revenue stage, for those who want to tackle angel or venture capital investments into “hard tech”, you can find early evidence (or the lack thereof) of the ability to hit promised milestones, deliver clear investor updates that aren’t obvious spin, and prior commercial success at other companies.

Yes, the fixer upper will be a lot cheaper to invest into than the company with clear signs of existing strong execution capabilities. Obvious advantages are obvious to all observers, so the companies with obvious advantages do get bid up. Yet, Buffett has long said that time is the friend of the wonderful company and the enemy of the mediocre. Climate investors must be similarly discerning. Pick the right businesses and management teams, even if they aren’t the cheapest to back.

In the end, the climate crisis demands urgency. But climate investing demands patience and a consistent focus on what’s real.

Buffett’s principles weren’t written with the climate in mind, but they’re precisely what climate investors need: discipline in a market full of noise, a focus on fundamentals over fashion, and a belief that true value takes time.

While it’s still a smart bet in my personal opinion that the global investment megatrend around massive shifts toward environmental sustainability – doing more with fewer natural resources – is real and magnificent, let’s not forget that investing is still about owning great businesses. And great businesses, as Buffett reminds us, are built to last, not to shine brightly like a shooting star. After all, shooting stars shine so brightly because they are in the process of burning up.