Invest according to your political views, and you’re unlikely to make money. Companies that appeal to left-wingers or to right-wingers might be good or bad investments, but the fact of being, on current politics, clean and union-friendly for the left or oily and gun-friendly for the right is neither here nor there. What matters is their ability to make money and how highly they are valued.

This has been rammed home for environmentally-minded investors in the past year, as a coordinated selloff in anything with green credentials crushed the idea of making money while doing good.

It turns out that the real world is tougher than advocates of ESG—environmental, social and governance—investing claimed. The lessons have been hard, but should remind investors in the sector of some of the basic facts of investing. The fall in prices has improved the outlook for the stocks.

This year has been almost universally bad for clean investments. The two worst performers still in the S&P 500 are solar companies Enphase Energy and SolarEdge Technologies, down 60% and 70%, respectively. Hydrogen stocks have fallen sharply, led by Plug Power, which warned it might not survive. Wind-farm developers have been doing so badly they have pulled out of some contracts, with Denmark’s Ørsted off 48% in dollar terms and Florida-based NextEra Energy off 29%.

Electric cars have disappointed too, hitting startups and suppliers and pushing the price of lithium ores, used to produce the battery metal, down by three-quarters or more, although market-leader Tesla’s stock has been an exception.

Just as there was a coordinated green selloff, there has been a coordinated partial rebound in the past month or so.

This provides the first lesson: debt. The clean-energy sector is dependent on vast amounts of borrowing, so high interest rates really hurt. Roman Boner, who runs a clean-energy fund at Dutch fund manager Robeco, points out that major projects are typically financed with 80% debt, so rises in financing costs have a big impact on competitiveness.

Investors who bought into green stocks probably didn’t think they were making a leveraged bet on Treasurys, but that is what they ended up with. It isn’t only about corporate financing costs, either. High borrowing costs hit consumer demand for rooftop solar and for electric cars, both of which are often leased, since leasing costs depend on the cost of debt.

At a very high level, this is about long-term thinking. Low rates encourage investors to think long term, because they make future profits almost as valuable as current profits, and encourage borrowing to try to secure those future profits.

High rates encourage short-term thinking, by making profits today far more valuable than future profits—why bet on the future when you can earn 5% from Treasury bills? Short-term we get fossil-fuel profits, while long-term we get either clean energy or global warming; recently investors have been encouraged by rising rates to think short term.

The second lesson: government. Ronald Reagan overstated it when he said: “The nine most terrifying words in the English language are: ‘I’m from the government, and I’m here to help.’” But investors who rely on state subsidies to ensure profits leave themselves at the mercy of both fickle politicians and the bureaucrats Reagan was concerned about. This year’s selloff has been worsened by the bureaucrats and their failure to provide the details of many of the subsidies promised in last year’s badly named Inflation Reduction Act.

“We’re still hoping to get them by year end,” says Ed Lees, co-head of the environmental strategies group at BNP Paribas Asset Management. The next problem might be the politicians, at least if Donald Trump wins the presidency and torches the IRA. Lees thinks this will be hard, because so many IRA-subsidised projects are heading for Republican states. But Trump certainly has no sympathy for environmental causes.

The third lesson is the one most relevant to buying today: valuation. Buying stocks when they are trendy and wildly overpriced is a recipe for disaster. Perhaps the most extreme example of late is the L&G Hydrogen Economy ETF, launched in London at the height of clean-energy excitement in February 2021. It plummeted from day one, never regained its launch price, and is down 55% since then.

“We’ve seen a very harsh reality check,” said Sonja Laud, chief investment officer of L&G Investment Management.

The question is whether the hype has left. Laud worries that one year of high rates won’t have crushed all the excesses built up in 12 years of near-zero rates. But clearly valuations are much lower than they were, and she is hopeful there are opportunities to be found now.

“The huge green premium you had previously is no longer there,” says Velislava Dimitrova, who runs sustainable funds at Fidelity International. Clean-energy stocks are “much more interesting than they used to be—I don’t believe that renewables are dead.”

In the bond market, investors are no longer paying much if any “greenium,” or extra price for green bonds. In stocks, it is harder to judge: The S&P Global Clean Energy index trades at a discount to the global market on some measures, but not others, making it difficult to conclude that the sector as a whole is a wonderful bargain.

Still, it is good news for buyers that the hype has evaporated. Investors who care about profits more than purpose can finally consider clean-energy stocks again.

When the South American nation of Guyana wanted to sell millions of carbon-offset credits to preserve its rainforests, government officials knew they had a problem: The country’s lush Amazonian forests were actually in good shape.

Guyana’s rate of deforestation was already low, meaning its forests wouldn’t yield much under standard methodologies for calculating carbon credits. So its government chose a new method that allows a large adjustment for countries with healthy forests. The change raised the credits that Guyana could issue sixfold. Guyana sold 37.5 million of them last year to U.S. oil giant Hess for at least $750 million, and is now shopping the remaining two thirds to countries facing pressure to comply with the landmark Paris climate accord, officials say.

That agreement calls for governments to adopt national plans to limit greenhouse-gas emissions and allows them to pay for emission-reduction projects elsewhere in the world to offset their own pollution. Credits for each ton of emissions cut can then be traded between countries. It is as if the emission reduction happened in the country buying the credit, not the one selling it.

Guyana is among the first in a long line of developing-world countries expected to cash in on credits compliant with United Nations agreements. Some officials worry the U.N. risks giving its seal of approval to credits for forests that aren’t under threat. At the COP28 climate summit under way in Dubai, negotiators are debating how much scrutiny carbon trading should face from U.N. experts and the public to prevent the mechanism from becoming a loophole in the Paris accord.

“If we play that game—every country gets to come in and pull an arbitrary methodology out of the ether, apply it to their forest areas and say give me credits—we’re never going to get anywhere,” said Kevin Conrad, the climate envoy of Papua New Guinea.

For now, the Paris accord imposes relatively little oversight on the market. Credits are required to undergo review by a panel of experts. But at last year’s COP in Egypt, governments decided that the experts wouldn’t be allowed to review the “appropriateness” or “adequacy” of projects.

That is fuelling fears the accord opens the door for polluting countries to buy lower-quality credits from poorer nations to meet their own emissions targets, undermining the Paris accord ambition of limiting global warming to 1.5 degrees Celsius above preindustrial era temperatures. Some developing countries are pushing for the right to keep much of the information around offset projects confidential. Companies would end up buying the credits, critics say, that would support spurious greenhouse-gas reduction claims. Hess said it would apply Guyana’s credits to its goal of completely offsetting its emissions by 2050.

“There is very little oversight of the process,” said Jonathan Crook of Carbon Market Watch, a Brussels-based nonprofit. “Some countries could set a higher bar, but there’s a risk that others do not.”

Guyana is in talks to sell credits to Singapore, which is evaluating whether it will accept the adjustment for low deforestation countries, an official involved in the talks said. The U.N.’s civil aviation agency last year said it would accept Guyana’s methodology under new regulations it set to limit emissions from international flights, making Guyana’s offsets the first eligible under the rules.

Switzerland is moving to purchase the first credits under the Paris accord, for non-forest projects in Ghana, Thailand and Vanuatu. The credits will then be used by Swiss companies to comply with the country’s greenhouse-gas limits under the Paris accord.

The Swiss government is refusing to invest in forestry projects because of uncertainties around the baseline against which the lack of deforestation is measured. Switzerland also has concerns around whether protections for forests are long term—a tree cut down or destroyed in the future would release the planet-warming carbon dioxide it has absorbed over its lifetime.

Corporations over the past decade have invested billions of dollars in greenhouse-gas offset projects in the developing world. Those projects yield so-called voluntary carbon credits: The companies are under no legal obligation to buy them but do so because of public commitments they have made to offset their carbon emissions.

Academic research and media reports have cast doubt on the impact of many of the projects underlying these credits. The problems were particularly acute in projects to prevent deforestation. Because such programs typically cover relatively small areas within a larger forest, they risk pushing logging and clear-cutting for agriculture into other sections that aren’t protected by a project.

Guyana’s project is designed to address some of these problems. It is one of the first to cover an entire nation, eliminating the possibility that deforestation could be displaced within the country. Covering around 45 million acres, it is one of the world’s largest forest-protection projects, according to Trove Research.

Guyana has some of the most pristine forests on the planet. They have been mostly spared the rampant logging and clear-cutting seen in neighbouring Brazil. Guyana lacks rich soil suitable for large-scale agriculture, a major driver of deforestation, scientists say.

“These are among the poorest soils on the planet,” said Janette Bulkan, a Guyanese forestry expert at the University of British Columbia.

Critics say issuing credits for protecting such forests violates a core principle of carbon crediting: They should only be issued for emissions that would have happened without the project.

Guyanese officials say its forests are nevertheless at risk in the near future without intervention. The country’s economy is growing quickly, as is global demand for the commodities that could be extracted from its rainforests. Guyana is also reaping a windfall from oil discoveries off its coast that are now being pumped by Exxon Mobil and Hess.

“Guyana’s forests offer opportunities for a wide range of goods and services, and development opportunities for opening up areas for industry and manufacturing,” said Pradeepa Bholanath, who oversees climate policy at Guyana’s Ministry of Natural Resources.

Guyana’s credits have been calculated by Architecture for REDD+ Transactions, a program run by the U.S. nonprofit Winrock International. The program’s methodology allows countries like Guyana that have had little deforestation in the past to issue credits against a predicted future level of deforestation under a formula devised by Winrock.

Winrock and other advocates of the methodology say the money allows much-needed climate finance to flow to rain-forested countries, even if they haven’t experienced past deforestation. Guyana has already received more than $100 million in its deal with Hess. Officials say that money is reaching tribes that live in the rainforests and being used nationally for forest preservation and renewable energy projects.

Think appearances don’t matter if you’re applying for a job online? New research shows that looking the part is very much part of the equation.

Your credentials and referrals may get you on the shortlist. Even if the whole process takes place online, though, it’s rare that a hiring manager won’t check out your LinkedIn profile. Making the final cut can come down to nailing a specific professional look, according to a new study published by the Harvard Business School.

Analysing 63,000 job openings and the more than 160,000 freelancers who applied for them over a six-month period, researchers found that certain accessories or physical features gave candidates an edge in landing the job—even after controlling for race, age and gender. Researchers used computer vision technology and machine learning to help classify which attributes made someone be perceived as a better fit for a job, then examined what role that played in hiring.

Different jobs favoured certain looks. The analysis showed that men wearing glasses and having a computer visible in the photo were perceived to be a better fit for a software programming assignment than men without glasses, boosting their chances of getting it. A beard gave them a slight edge, too.

With design and media-related jobs—one of two broad job categories examined in the study—flashing a smile and using a photo with high image quality was also important. Women sporting reading glasses and an “artistic” look were seen as a better fit for graphic design jobs than other women.

The researchers, from Harvard and the University of Southern California, found that certain photo features could tilt the selection process when profiles included equally high ratings from previous clients. The advantage could be roughly the equivalent of a 5% pay differential.

On the other hand, the study suggests that looking the part for a job doesn’t rely just on a candidate’s gender, ethnicity and age. Rather, paying attention to the details of a profile photo can go a long way, recruiters say.

“We would be fooling ourselves to say it’s not part of the package,” says Jessica Vann, founder of Maven Recruiting Group, a San Francisco job-placement firm. While not as important as job or communication skills, “it’s a piece, for sure.”

It’s generally a good idea to have a neutral background and no children, pets or celebrities in the photo. Vann, whose firm specialises in placing executive assistants and chiefs of staff at Silicon Valley companies, says she has counselled job seekers to eschew an obviously AI-generated photo or tone down the makeup.

In a CivicScience poll of more than 2,000 people conducted online last week, about half of respondents said they had used a professional-looking photo of themselves in some capacity; 82% agree that appearance makes a difference in a job offer.

Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating because of race, gender and religion, among other factors. But other aspects of personal appearance—whether height, weight or hairstyle—aren’t necessarily covered by the federal statute, says Steven Pearlman, a labor attorney at Proskauer Rose in Chicago. Plus, it’s often difficult to legally prove whether such biases were the reason for a candidate’s rejection.

Brent McCreary, a theatre ticketing director in New York, has found certain photo details can swing a hiring manager’s decision either way. His professional profile picture usually shows him with a favourite celebrity. At one point it was Britney Spears. Now it’s Kelly Clarkson.

The choice worked against him when he lost out on a revenue management job at a theme park three years ago. In the rejection note, the interviewer suggested a more professional LinkedIn photo.

A month later, though, the executive director of a San Francisco-based streaming platform contacted him. The job he’d applied for was already filled but she noticed his photo. “Your personality and background seem so fun and special,” she wrote in a LinkedIn message. When another project-management job opened soon after, McCreary got it. The job turned out to be a better fit for him, too, he says.

“The company I ended up working for was one where I kind of jelled with the organisation,” he says.

Looking the part is often informed by stories and stereotypes, career coaches say. “You see it in books and movies,” says Catherine Fisher, a LinkedIn career expert who studies data and trends on the professional social media network.

Every industry has its own sartorial vibe, from the fleeced vests and sweatshirts of Silicon Valley to the traditionally suited-up finance crowd in New York.

“You always think hoodies are related to tech companies, but that doesn’t mean I have to wear one,” Fisher says. By the same token, angular bobs and big sunglasses have come to be associated with the fashion industry, though “not everyone in fashion looks like Anna Wintour,” she says.

That’s rapidly changing as home and work life become more mixed, Fisher says. More than half of working Americans say that how they present themselves at work has changed since the pandemic, according to a poll of 2,000 people conducted last year by LinkedIn. Two-thirds said they thought that managers and co-workers were more accepting of different ways of dressing and styling than several years ago.

Alice Stephenson, a 42-year-old lawyer, says that for much of her early career, she dressed the part and concealed her piercings and tattoos. “I wore a stereotype of what a professional looked like,” she says. “I never felt comfortable or able to express my own individuality or creativity through my appearance.”

That changed after she started her own law firm. In her photo on the firm’s website, in her email signature and on LinkedIn, she is wearing a friendly smile, a blue sleeveless dress and a visible sleeve of tattoos.

“I want to look friendly and approachable,” says Stephenson, who lives in Amsterdam. “That’s key to my brand.”

Retailers are making modest predictions about the holiday shopping season—and their stocks are going gangbusters in response.

Victoria’s Secret, Foot Locker, Ulta Beauty and Dollar Tree are among the companies that offered somewhat mixed assessments of the state of the shopper last week. Yet each received an ovation from investors.

Traders have piled into stocks en masse since a softer-than-expected inflation reading on Nov. 14 bolstered wagers that the Federal Reserve is done raising interest rates and is poised to cool the economy without tipping it into a recession. Treasury yields have sharply declined as well, giving equities a second wind.

The S&P 500 has risen 4.1% since the report, extending its gains for the year to almost 20%.

Many depressed sectors of the market, such as retailers, have risen even faster. The SPDR S&P Retail exchange-traded fund—which includes 78 retailers, from department stores and other apparel companies, to automotive and drugstores—has jumped about 13%. Victoria’s Secret has soared 52%, Foot Locker is up 50%, Ulta has risen 21% and Dollar Tree has added 12%. (Three of the four stocks have suffered double-digit percentage declines this year.)

Americans slowed their spending in October, according to last week’s consumer-spending data from the Commerce Department. But the early readings from the holiday shopping season have been more encouraging. U.S. shoppers spent $38 billion during the five days from Thanksgiving through the following Monday, up 7.8% from the same period last year, according to Adobe Analytics.

Many investors closely watch consumer spending because it is a major driver of economic growth. If spending is too strong, the Fed could be forced to raise interest rates again. Whereas, if spending is too weak, it could be a sign that the economy is entering a recession.

In the coming days, investors will look at U.S. service-sector activity for November and Friday’s monthly jobs report as they try to assess the strength of the economy and the market’s trajectory.

“The consumer has been resilient throughout it all,” said Jay Woods, chief global strategist at Freedom Capital Markets. “The economic news is now starting to back that up, that, ‘OK, we aren’t going to be in a recession. Things are getting a little bit better.’ And these stocks that had been beaten-down are finally catching a bid.”

Victoria’s Secret posted its second consecutive quarterly loss Wednesday, with the lingerie retailer facing a continued slump in sales. But the company forecast higher sales in the current quarter, sending shares up 14% the next day, their largest one-day percentage gain in more than two years. The stock is down 20% in 2023.

Footwear retailer Foot Locker said Wednesday that Black Friday sales were strong and it forecast an upbeat holiday shopping period, while reporting lower sales and profit for the third quarter. Its shares rose 16% that day, their biggest gain in more than a year, trimming their 2023 decline to 21%.

Cosmetic retailer Ulta on Thursday posted stronger-than-expected sales in the third quarter and raised the lower end of its sales and profit outlook for the year. The shares rose 11% in the following session, their best day since May 2022. They are up 0.6% for the year.

Dollar Tree reported Wednesday that same-store sales growth was weaker than analysts expected, but investors appeared to be encouraged that the discount retailer is seeing increases in customer traffic, even if basket sizes are shrinking. Its shares rose 4.4% that day and are off 11% in 2023.

Another reason why retail stocks have rallied? Warehouses have reduced merchandise, and store shelves aren’t spilling over with discounted goods.

John Augustine, chief investment officer at Huntington Private Bank, said higher interest rates and oil prices made him bearish on retail stocks over the summer. But with an easing macro environment, he believes retailers could be poised to do well.

“It seems like traffic is gonna be there for the holidays,” Augustine said. “Now can retailers make the same profit, earnings per share, with tighter inventory?”

Short sellers are licking their wounds after the recent rally. They lost about $120 million in November betting against the SPDR S&P Retail ETF, according to financial-analytics firm S3 Partners. That compares with a loss of $2.8 million through the first 10 months of the year. Short sellers borrow shares and sell them, expecting to repurchase them at lower prices and collect the difference as profit.

Many retail stocks still generally look cheap compared with the broader market. Victoria’s Secret is trading at 11.8 times its projected earnings over the next 12 months, while Foot Locker is at 16.2. The S&P 500’s multiple is 18.8.

Despite the recent excitement in markets, many investors caution that it is too soon to count on a soft landing for the economy. Jamie Dimon, chief executive of JPMorgan Chase, recently cautioned that inflation could rise further and a recession isn’t off the table.

In the past 11 Fed rate-hiking cycles, recessions have typically started around two years after the Fed begins raising interest rates, according to Deutsche Bank. This hiking cycle started last March.

“It’s not an all-clear resurgence trade that we’re in right now,” said Brock Campbell, head of global research at Newton Investment Management. “This is gonna be a much more idiosyncratic stock picker’s group for a while.”

LONDON—Fashion retailers have found a way to make their shops dazzle customers again: make them more like Apple stores.

Brands including H&M and Zara have closed hundreds of stores in recent years to cut costs as more shoppers turn to e-commerce. Now they are investing in those that remain to woo customers in ways they can’t online.

The new-look stores are typically larger and more spacious, offer services such as beauty salons, repair stations and coffee shops, and enable new digital features such as apps that allow shoppers to rummage virtually through the storeroom.

“Now it’s about engaging with consumers and giving them an experience,” said Henrik Nordvall, manager of H&M’s U.K. business.

At the brand’s recently redesigned store on London’s Regent Street, foot traffic matters more than sales figures, Nordvall said. While in-store sales are still strong, many customers spend time there developing an affinity with the brand and then buy clothes online later, he added.

The refurbished store is home to a floor-to-ceiling TV screen that the company says is the biggest in any store in Europe, a beauty bar for customers to book nail or eyelash treatments, and a rental section where shoppers can borrow selected items, especially relatively expensive clothes from H&M’s designer collaborations.

Since the changes, the average duration of a customer visit has increased substantially, said Nordvall, who declined to provide specific numbers.

By turning their stores into destinations that shoppers actively seek out and spend time in—a model that Apple honed with its roomy, landmark stores filled with usable gadgets—the fashion retailers are redefining the clothing store for the digital age.

Retailers once needed a large network of stores “to reach people, but now they have the internet for that,” said Patricia Cifuentes, an analyst at the asset manager Bestinver. “Now stores are about brand image. They’re like tourist destinations.”

Not every retailer is following the approach of the big global fashion brands. Macy’s, for example, is opening smaller stores as a way of bringing its brand to places where customers run their daily errands. The electronics chain Best Buy is closing larger locations and opening small stores instead.

But for global fashion’s heavy hitters the shift toward fewer but better stores is well under way. While the investment could backfire if the stores fail to draw sustained traffic, for now the strategy appears to be working.

Inditex, the parent of Zara, has eliminated a quarter of its stores since 2018 and now has 5,745 locations across its brand stable, which also includes Bershka and Massimo Dutti. Yet the Spanish group’s total revenue from stores increased 8% in 2022 compared with four years earlier, with each store selling 30% more on average, Chief Executive Officer Oscar Garcia Maceiras said on a recent earnings call.

After closing its weaker locations and upgrading the rest, “We have been left with a network of bigger, better and more beautiful stores in the best retail destinations globally,” Garcia said.

Despite operating fewer stores overall, Inditex increased its capital expenditure budget for 2023 by 14% to 1.6 billion euros, equivalent to about $1.7 billion, half of which is earmarked to make improvements to stores.

Much of that money is being spent on the rollout of a new Zara store design—including at new U.S. locations in Baton Rouge, La., and San Antonio—to make the shopping experience more enjoyable.

Essential to the new layouts is making stores feel roomier by having more open space between displays so customers don’t feel crowded. With more open space, stores will increasingly have discrete in-store boutiques to highlight individual collections.

Zara has a team of in-house architects who design its stores, and uses pilot stores at its headquarters in Spain to experiment with new layouts.

Garcia, who regularly visits Zara stores around the world, said in a recent interview that store managers routinely tell him they want to expand because only larger stores are able to accommodate most or all of Zara’s range.

The Zara store in Miami is one beneficiary of the move toward bigger and better: It is doubling in size, according to Garcia, to provide the more spacious experience the company wants to deliver.

Bigger stores are more productive, Zara has found. Though stores are getting larger, sales per square foot is now up 16% relative to 2019, Garcia said.

Zara is cramming its stores with new tech such as automatic return and collection points, as well as self-checkout areas. Customers can use the Zara app to check the contents of the storeroom to see if an item is available in their sizes, for example.

H&M has shrunk its store count 14% from its 2019 peak to 4,375 outlets today. The company doesn’t break down its revenue into physical and online, and says the two parts of the business are complementary.

Increasingly, stores “are a way for our customers to get inspiration,” CEO Helena Helmersson said in a recent interview.

H&M upped its capital spending budget 43% for 2023 to roughly $1 billion, partly to push ahead with store modernisation.

Even before the Covid-19 pandemic, H&M’s leaders recognized it was time to update the physical store to offer a more engaging experience, said Nordvall, the U.K. manager. When the pandemic led to a surge in online sales, the company accelerated its effort to redesign its stores, he said.

The revamp of the Swedish brand’s store on London’s Regent Street was aimed at encouraging customers to spend more time there. It has a secondhand area, Lego sculptures in the children’s section and fitting rooms with a built-in selfie function.

H&M also uses the store to host events for shoppers who sign up for its membership program. In November, it held a party to mark the launch of a collaboration with the fashion house Rabanne.

The Japanese brand Uniqlo is still expanding in Western markets, where its footprint is significantly smaller than H&M and Zara, but it is also opening so-called destination stores.

The chain’s recently opened store in London’s Covent Garden is located in a converted Victorian-era carriage works building, where shop floors loop around a brightly sunlit courtyard beneath a vaulted glass roof. There is a Japanese tea shop upstairs with a rooftop balcony, and a florist downstairs.

Visitors can use a machine to print their own T-shirt designs, have clothes altered or mended at the store’s repair station, and lounge in comfy chairs while browsing coffee-table books.

While online sales are growing, destination stores “have become the driver of European earnings,” as well as places where the brand communicates what it stands for, said Taku Morikawa, the CEO of Uniqlo Europe, during a recent earnings presentation.

Only a memorable in-store experience will make customers trust and admire your brand, he said.