(March 24 update) We present here recent anecdotals on the subject of climate change. It’s a topic that affects many industries: insurance, real estate, energy (renewable and non-), food, water, national defense, to name a few. Investment opportunities arise when there is a divergence of opinion, as is uniquely the case in the United States (unlike the other nations on Earth) on the subject of climate change. There’s an argument to be made that investors who accept the settled science are likely to get more of that alpha everyone wants, but that is a tale still unfolding, albeit with increasing speed.
Institutional Investor, 24 March: Climate change can affect muni ratings. Weather and water — too much or too little — will be key drivers of muni ratings. What happens to a city’s tax base when it becomes too wet or too dry?
The Guardian, 24 March: http://www.theguardian.com/environment/2015/mar/24/us-coal-sector-in-terminal-decline-financial-analysts-say Wherein it is observed that the coal industry has lost three quarters of its value in five years.
Gizmodo, 18 March: story about the effects of warm water melting the underside of Antarctic ice. The take away — additional rise in sea level of another 10 feet over the centuries. The bright side — it won’t affect your time at the beach this summer.
Asyousow.org, 16 March: reports SEC ruled against Chevron and for Arjuna Capital who initiated a shareholder resolution asking Chevron to distribute capital to shareholders in light of concerns about Chevron’s spending on high-cost, high-carbon projects, including Arctic drilling, tar sands, and other ‘unconventional’ fossil fuels. Chevron challenged the resolution at the SEC to keep it off the shareholder ballot. The SEC rejected Chevron’s challenge, recognizing shareholders right to be heard on this important issue and clearing the path for a vote at Chevron’s annual meeting.
The Guardian, 15 March. Key quote: “We support divestment as it sends a signal to companies, especially coal companies, that the age of ‘burn what you like, when you like’ cannot continue,” said Nick Nuttall, the spokesman for the UN framework convention on climate change (UNFCCC). http://www.theguardian.com/environment/2015/mar/15/climate-change-un-backs-divestment-campaign-paris-summit-fossil-fuels
Tampa Bay Times, 8 March: employees of Florida’s Environmental Agency said to have been prohibited from using terms ‘climate change’ and ‘global warming’: http://bit.ly/181pt46. We can only wish the northeastern states would have outlawed use of the words ‘cold’ and ‘snow’. Might have made a difference in the winter.
Scientific American, 6 March article on intentional misrepresentations by paid shills for fossil fuel industry taking a page from the tobacco industry’s strategy. http://www.scientificamerican.com/article/how-to-win-friends-and-bamboozle-people-about-climate-change/
CBS News, 5 March. The story also notes that “The only developed nation in the top 20 countries most vulnerable to flooding damage was the the United States.” http://www.cbsnews.com/news/global-cost-of-flooding-to-increase-tenfold-by-2030/
HuffPost, 4 March: Flooding Risks to Google’s Shiny New Mountain View HQ Assessments of flood risk now include rising water projections
Reuters, 27 Feb: Most Americans see Combating Climate Change as a Moral Duty
from the National Academy of Sciences, 23 Feb: Climate Change in the Fertile Crescent and Implications of the recent Syrian Drought This discusses the link between social unrest and disruption and climate change as a cause. The US Department of Defense sees similar links as a threat to American national security.
Rolling Stone, 12 Feb: The Pentagon & Climate Change: How Deniers Put National Security at Risk. Wherein we learn how military readiness is being impacted by sea level rise, how the military can’t use the word ‘climate’ in discussions with Republicans controlling Congress, and how deniers are now obstructing the military’s ability to secure vital American interests.
The Takeaways from All This
Some general themes:
- The stranded asset story — unusable carbon assets facing downward valuation revisions.
- Early trend towards divestiture of carbon assets from some institutional portfolios.
- Insurance industry on the forefront of arbitraging the financial implications of climate change.
- Climate denier efforts to avoid recognition of science, fueled by, well, carbon fuel interests. Any similarity to the tobacco lobby’s effort to dismiss medical links between cigarettes and cancer? You be the judge.
- Anecdotals on marginal changes around the Earth influenced by climate effects.
Follow Doug Friedenberg on Twitter @JigsawCapital