Author Archive

Jim Cummings

Welcome to my archive of newsletter articles and blog posts. For more information on my service offerings, please go to my advisor webpage.

ExxonMobil drops ball on its “carbon asset risk” report

Exxon tigerWEBFor a couple weeks last month, it looked as if ExxonMobil might be changing its stripes.  In response to shareholder advocacy by Arjuna Capital and As You Sow, the energy giant agreed to complete a Carbon Asset Risk report.  The idea behind such shareholder initiatives is to force companies to take an honest look at how their asset base could be impacted by climate change, or in this case, the adoption of carbon-reduction policies such as a carbon tax or cap-and-trade system; presumably, if such policies succeed at reducing the use of oil and gas, then companies like ExxonMobil would see their untapped reserves and undeveloped leases fall in value.  As a press release from Arjuna and As You Sow put it:

World governments agree that if catastrophic warming over 2°C is to be avoided, no more than one-third of current proven carbon reserves can be burned. These reserves, currently on the balance sheets of the 200 largest coal, oil, and gas companies are valued at $20 trillion. Yet, a recent Unburnable Carbon report calculates that in 2012 alone, the 200 largest publicly traded fossil fuel companies collectively spent an estimated $674 billion on finding and developing new reserves – reserves that cannot be utilized without breaking the world’s carbon budget.

Well, the report that resulted fell far short of expectations.  Rather than look at how a societal commitment to leave oil and gas in the ground would affect its bottom line, ExxonMobil reported that, in its estimation, policy changes that would sharply cut carbon emissions—and so the value of its assets—are “highly unlikely.” According the the company, our need for energy will drive CO2 emissions upward until at least 2030.

Natasha Lamb of Arjuna, while encouraged that ExxonMobil did anything, was clearly disappointed: “The question is not whether or not we’ll face the low carbon standard, but whether they are prepared to address it. We need to know what’s at stake,” she said. “But at least now investors know that Exxon is not addressing the low carbon scenario and (is) placing investor capital at risk.”

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Ikea, Google Embrace Wind Energy

By Greg Garvan

TX WindFarm4CROPIn a very progressive move, Ikea stores have bought an almost finished wind farm in Illinois.  The wind farm will meet about 18 percent of the company’s total global demand, and more than 150% of the company’s U.S. electricity consumption from 38 stores, five distribution centers, two service centers and a factory.  But this isn’t just a feel-good headline opportunity for Ikea; they’ve set a goal of owning enough renewable generation to equal their entire corporate energy demand by 2020. This could represent a model for other corporations to invest deeper into alternative energy, and take full responsibility for their energy use.  What a great way to see them use their money to really make a difference!

UPDATE: Google is continuing its similar initiative, entering into a contract with an Iowa wind farm to supply enough electricity to fully supply the first phase of its new facility in Council Bluffs, Iowa, and to make wind-powered energy a cornerstone of the company’s future growth in the state.

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Garvans featured on The Plenty Project

NI’s South Carolina team was recently highlighted by The Plenty Project, an online project aimed at supporting economic and environmental reforms:

The Buddhist ideal of “loving-kindness” is not only useful for social change, it helps with happiness, too. This ethic of wishing peace upon all beings on earth is also a practice to acknowledge that another’s contentment enhances one’s own. It awakens a sense of interdependence, common among world religions. Charles Eisenstein translates Jesus’ Golden Rule to, “As you do unto others, so you do unto yourself,” meaning, impoverishing another also impoverishes oneself. Indigenous traditions emphasize kinship among the human, winged, finned, furred, and even leafed creatures of the earth, along with rocks, soil, wind and water. Even physics and chemistry show that the molecules making up human cells are built from atoms borrowed from trees and animals and dirt.

Despite this interconnectedness, the ideal of rugged individualism defines America. As a nation, we believe utterly in our freedom to create the lives we imagine, and the world is indubitably made richer through our strivings. Where do these two ideals meet, and how might they open a path forward?

Brady Quirk-Garvan and his father Greg run Money With a Mission in Charleston, SC, a financial management firm that specializes in helping people align their money with their values. Brady worries about the majority of the population that doesn’t make it into their door, who might be interested in and benefit from a conscious money strategy but are unaware that they actually have surprising levels of control over their lives and the forces that influence them. For example, Greg and Brady can build a retirement portfolio devoid of fossil fuel investments, so a person isn’t saving for paradise on the one hand while funding climate unpredictability on the other. Artists, farmers and entrepreneurs seek help making a living at what they love, while others want to work less and spend more time with family. Other people trade eating out for cooking, go car-free (like a 6-person family in Huntington, WV!), or get engaged with public zoning decisions.

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High-speed trading fading a bit, but upping the ante

An article on The Atlantic’s website caught our eye a while back, offering a couple of fresh perspectives on one of the financial world’s more unsavory practices, High Frequency Trading. This is the computer-driven “innovation” that can by and sell stocks at truly inhuman speeds, down to milliseconds.  As author Matthew O’Brien notes:

It’s Wall Street at its most socially useless. HFT funds aren’t allocating capital to where they think it’ll be most productive. HFT funds are allocating capital to where they think other people will put it 50 milliseconds from now. It’s a tax on everybody else.

While close to half of all stock trades are now part of this rush for making huge numbers of tiny profits, the good news is that HFT trading is slowly losing steam from its initial peak a few years back, now that they’re competing not just with humans and good-old-fashioned computerized trading, but with other HFT algorithm-bots.  Yet apparently, these outfits continue to milk their technical edges; the article concludes with reports of purchasing new public data a few seconds before it’s widely released, thus giving the bots more than enough time to get a jump on their human competitors.

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Faith and Money series to feature NI’s Andy Loving

NI’s Andy Loving and Susan Taylor serve on the board of directors for the Faith and Money Network, which “equips people to transform their relationship with money, to live with integrity and intentionality, and to participate in creating a more equitable world.”  For years, they’ve participated in, and at times led, programs sponsored by FMN, which create an open and trusting atmosphere in which participants explore their relationship to money in terms of biblical, social, environmental, and social justice dimensions.  A big part of the work is looking directly at the ways our attitudes, assumptions, and habits about money affect our lives and relationships.

This winter, FMN is taking this work to the airwaves, with the production of a 13-segment web radio series and podcast.  Episode 6, debuting on February 10, will feature Andy, sharing his experiences with community investing and banking. You can listen to all episodes at VoiceAmerica; click on episode link for episode descriptions and streaming audio.  The series, or individual episodes, are also available as a podcast in iTunes.

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International lenders turn away from coal

A series of announcements over the past several months has highlighted the degree to which investment in new coal-fired electric plants has dried up.  In June, the Obama administration announced that the US Export-Import Bank would no longer fund coal plants that lack carbon-capture technology (several administration initiatives are meant to spur demand for, and thus research investment in, this still-developing capacity).  In July, the World Bank announced it would fund new coal plants “only in rare circumstances,” to meet basic energy needs, while it would support retrofits, noting that “efficiency improvements at existing plants are among the most cost-effective means of reducing local and global environmental impacts of coal.”

And last fall, the European Investment Bank, the EU’s main lending arm, said it would also stop financing most coal power plants, in order to meet climate targets. “The vote to introduce an emissions performance standard represents a step-change in the EU’s fight against climate change and puts the bankers ahead of politicians in terms of tangible action,” said Ingrid Holmes, of environmental think tank E3G in a statement.

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NI wins Best for Communities designation

B corp Logo large copy

This year’s B-Corp awards once again tapped Natural Investments as one of their recipients.

We were honored as one of 61 Best for Communities companies, a nice complement to last year’s Best for the World designation!

Recipients are companies scoring in the top 10% of scores in each category among over 850 Certified B Corporations, spread across 60 industries in 29 countries.  As an indication of the growth of this type of initiative, 10,000 companies utilize the B Impact assessment for their own internal purposes. See Natural Investments’ B-score page here.

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NFL and other sports leagues tackle climate challenges

Sports leagues are stepping up to the plate as advocates for sustainability efforts, including reducing carbon emissions and solid waste at their facilities.  As noted by the National Journal (more at link):

Representatives from five of America’s major sports leagues hit the Hill on Thursday to discuss the work they’re doing to reduce their greenhouse-gas emissions. The National Football League is measuring the greenhouse-gas effects of the Super Bowl this year, and last year it conducted solid-waste management and recycling at all major Super Bowl facilities. Major League Baseball stadiums have adopted solar panels. And the National Basketball Association has come out in support of Environmental Protection Agency standards to reduce carbon pollution from electric power plants.

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Global water issues? There’s an app for that.

Calvert recently released “Water Investing,” an app for Android and Apple devices that serves as both an elaborate marketing brochure and as a good introduction to global water issues.  A few years back, Calvert joined many other brokerages in offering a “water fund” (there’s even a NASDAQ US Water Index).  These funds focus on companies working in water purification, sewage treatment, and delivery to point of use.  At Calvert, of course, these general criteria are supplemented with SRI principles, including the conviction that water is a human right; as is also often the case with leading-edge investing, the fund description commits only to “strive” to include only companies that share this conviction and to create partnerships with NGOs working on water issues.  This post is not an investment recommendation (that’s a discussion to have with your investment advisor), but we do find the app to be an innovative approach to sharing information on an important topic.

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After downloading the app, you’re offered a brief introductory video (apparently filmed at California’s former Owens Lake, a poster child for unsustainable water management), along with a page or so of information on key water-related topics.  Other sections include an introduction to Calvert’s water fund, and a simple little game that overlays rippling water on whatever your device’s camera is pointing at (you can run your finger through the “water” to create complex optical effects).  But the most useful part of the app is a couple of water-issue news feeds: a collection of Calvert analyst tweets on water issues, and a news feed dubbed “The Daily Drip,” where you’ll find one story a day ranging over the full spectrum of topics from local and state water management to global and legislative developments.

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Several perspectives on the SEC’s new crowdfunding proposal

Our friends at BALLE gathered together a range of responses to the SEC’s proposed rules to govern direct investment in companies via crowdfunding platforms.  We’ve been touting this change for several months, and are excited about the potentials here, especially for facilitating investment in small local companies.  However, as is often the case as good ideas wend their way through the regulatory maze, what comes out the other end is not always quite what we may have hoped or imagined it would be.

Currently, companies seeking public investment must be registered with the SEC, a costly and involved prospect, but one that originated in response to the bad old days when fraudsters bilked hard-working Americans out of their life savings via investment opportunities in baldly invented companies (ah, for the simplicity of making up a company for Aunt Dee to purchase shares of in her living room, rather than having to employ the sharpest minds of a generation to invent convoluted new investment instruments traded among giant banks!).  The very rich are already allowed to invest in small privately-held companies; this “venture capital” avenue provides initial seed funding for new companies, the majority of which end up failing, with a few succeeding wildly enough to keep venture capitalists in the black.  Opening the door to allow those with moderate incomes to invest in smaller or start-up companies carries many risks, along with many opportunities.  The SEC proposal aims to limit such speculative investment to a small portion of any individual’s annual income, and to create some oversight by channeling investment through new and existing crowdfunding portals, which themselves must be SEC-registered.  Not surprisingly, many observers are not impressed by the ways the SEC proposal balances these risks and benefits.

Click on through for our brief summary of the key points made by the five commentators that BALLE points to.

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