Yahoo! Finance and The Week The Trend Desk

In 1987, Michael Douglas won an Oscar for his star turn as Gordon Gekko, a rapacious corporate raider, in Oliver Stone's "Wall Street." Douglas took home the Best Actor statuette in no small measure because of a single scene. You probably remember it. Gekko strides before a shareholders meeting at Teldar Paper, a company he hopes to acquire. And in a booming voice, he distills for those assembled his economic philosophy: "The point is ladies and gentlemen that greed, for lack of a better word, is good. Greed is right. Greed works."

Eighteen years and a few business cycles later, it's time to update Gekko's credo. Amid rising gasoline prices, worries about global warming, and a growing consumer interest in sustainability, the market for environmentally friendly goods and services has become one of the fastest growing and most lucrative businesses of our time.

The point, ladies and gentlemen, is that today green is good. Green is right for the bottom line. Green works for investors.

Why are things like renewable fuels and recycled materials, once the province of the hippie set, suddenly attractive business opportunities? Two reasons: Supply and demand.

On the supply side of the equation are concerns about the availability and cost of energy. Cal Tech Vice Provost David Goodstein argues in his book, "Out of Gas," that "the world will soon start to run out of conventionally produced, cheap oil." And most observers agree that we haven't confronted energy challenges like the ones we now face since the mid-1970s. Gas prices are climbing. Turmoil in the Middle East has raised questions about whether foreign oil will continue to flow. Meanwhile, demand for fossil fuels is surging thanks in part to the explosive growth of China and India.

However, where pundits see crisis, several companies spy opportunity. For instance, GE has launched an ambitious initiative called Ecoimagination. Over the next five years, GE will double its investment, some $1.5 billion, in energy efficiency and environmental technology. The company, which is already in the wind turbine business, is investing in clean coal, clean water, and hybrid locomotion. GE is pursuing these business lines not as acts of charity, but because these projects can boost profits in what CEO Jeff Imelt calls a "carbon constrained" world. Nor is GE alone. BP and Shell are also investing billions in renewables.

At the same time, many smart entrepreneurs are chasing the sun. After all, the sun is a darn good energy source. It's free, clean, and plentiful. Enough sunlight falls on the Earth in a single hour to provide power for the world for a year. That's why Bill Gross, who founded Idealab, has launched Energy Innovations, a company that is using a panel of sun-following mirrors to capture solar energy. Nanosolar, another startup, is developing nanotechnology based materials to improve the efficiency of solar panels. Cypress Semiconductor recently announced plans to spin off its solar subsidiary, SunPower, and take it public. And the list goes on. Who's financing these solarpreneurs? It's not a band of granola-munching do-gooders, but some of the top venture capital firms in the country. Last year, VCs poured more than $500 million into alternative energy startups. According to one survey, 21 percent of venture firms now plan investments in this industry. And VCs, we all know, abide by another Gekkoism: "It's all about the bucks, kid. The rest is conversation."

But conversations around the kitchen table are also propelling this trend. Many consumers are responding to concerns about supply by changing the nature of their demand. Take a Toyota Prius. In fact, taking a Prius -- from your neighbor's driveway or co-worker's parking space -- might be the only way you'll get one. Toyota doesn't have enough of these fuel-efficient hybrid cars to meet the extraordinary demand. Other carmakers are racing to catch up. Honda, for instance, has staked much of its future on the newly redesigned Honda Civic hybrid.

Auto dealerships aren't the only place where consumers are demanding products that are fuel-efficient and environmentally sensible. The biggest trend in architecture these days is green design. Faced with rising bills and a warming planet, homeowners and builders are crafting dwellings and offices that are astonishingly energy efficient -- some of which occasionally produce more energy than they consume. Furniture, too, has moved in this direction. Herman Miller's popular Mirra chair, a successor to the fabled Aeron, is crafted largely from renewable, environmentally sensible components. Ninety-six percent of the chair is recyclable. Even fashion is acquiring a tinge of green. Designers such as Oscar de la Renta and Diane von Furstenberg have introduced planet-friendly duds, while Bono and his wife have launched Edun, their own "eco-fashion" line.

We've seen this trajectory before. Personal computers and the Internet began on the fringe, the specialized realm of a few countercultural, in-the-know folks. But before long, PCs sprouted on middle-class desktops and grandmas began sending email. Likewise, not too long ago, only committed tree huggers were willing to pay a premium or deal with the hassle of solar panels or recycled carpet squares. But now, those items -- driven by expanding demand and rising supply -- are moving from exotic and high-priced to mainstream and mid-priced.

Even the environmental movement, never known for its embrace of commerce, has been jolted into this new way of thinking. "The first wave of environmentalism was framed around conservation and the second around regulation," Van Jones, an environmental activist in northern California, has said. "We believe the third wave will be framed around investment."

Gordon Gekko, were he to reappear today, would no doubt appreciate that perspective. Greed is still good, he'd tell us now. But these days, green is even better.