Owing to my limitations, I’m going to have to keep this one rather general. I can’t really speak / write with much measure of comfort or authority or depth on matters that pertain to global financial markets and institutional investment and the like. If left to my own devices, I’d otherwise steer clear of the topic area since it’s far more helpfully addressed by other contributors here.
However, for those of us who consider ourselves to be environmentalists, we do well to at least pay attention to the signals that big money interests are broadcasting, to the best of our abilities. I think the argument -- and an understated one at that -- can comfortably and credibly be made that our progress in environmental (read: energy, climate) policy is not hampered for want of ingenuity.
No, what impedes our moving forward most of all are well-funded individuals, groups, and even entire industrial sectors who perceive their vested interests as tied to head-in-sand maintenance of the status quo ( cough! KOCH INDUSTRIES cough cough), and who would perversely plow vast financial resources not into adapting or redesigning, but into shoring up keeping things precisely as they have been, consequences and mounting scientific evidence be damned.
So then. Back to big money’s signals on environmental matters. I caught one such signal late last week that struck me as worthy of attention within the context of a Warming Wednesday offering.
The opening paragraphs to Mike Foster’s article for Financial News (full text behind registration wall) follow.
Institutional investors need to shift 40% of their portfolios into climate-sensitive sectors, including infrastructure and agriculture, to safeguard returns against the impact of global warming, according to consultant Mercer.
Mercer is the biggest investment consultant in the world. Its approach, backed in a report by global institutions managing $2 trillion, marks a radical shift of attitude towards climate change by institutions from governance to mainstream investment thinking.
Its 40% recommendation, designed to preserve a 7% a year return, is the result of a sophisticated investment modelling technique that Mercer will introduce to its clients this year. Using advice from the Grantham Research Institute, it has calculated that weather extremes, for example leading to floods and food shortages, could contribute 10% to portfolio risk by 2030.
I’m hopeful that someone, or several, will give the brief article a read and include your thoughts and insights, especially those of you who are far more conversant than me in global financial market matters.
I’ll need to leave it to those who are better informed in global investment markets to surmise what impact such analyses may have, if other wealth management consulting firms are likely to sound comparable gongs, and if those they advise will embrace the recommendation to restructure their portfolios per the realities of a changing climate, or if they’ll be dragged to adapt kicking and screaming.
It’s worth noting, even with my layman’s eye, what I don’t see: even a hint of altruism, of considering the environment or climate with a need to do the right thing for the planet, not the faintest pluck of heartstrings being pulled.
Nope. What we have here are the cold, detached calculations by those whose job it is to tell people and institutions who have or who manage wealth how to hang onto it.
The signal is loud and clear: climate change is coming after your portfolio.
Perhaps we can now dispense with the hoary old chestnut, that tired canard, that dog that won’t hunt: the lie that the environment and the economy sit on the balance scale’s opposing trays.