For over twenty-five years, Green Century Capital Management has been a leader in shareholder advocacy. This year, Green Century focused on two themes: sustainable agriculture and climate change. As part of its climate change advocacy, Green Century has been diligently working to promote plant-based proteins—as well as the preservation of tropical forests, the reduction of food waste, and a renewable energy transformation.
Plant-based proteins have received media attention in recent years due to the growing awareness that meat production is one of the main drivers of deforestation in the tropics. Globally, the production of livestock for human consumption generates 14% of the emissions that cause climate change.
By working with investors and agricultural companies,
One year ago, in January 2018, three citizens locked themselves to the front entrance of a downtown Wells Fargo bank branch in the city where I live and work, Duluth, MN. The protesters prevented business from being conducted at the branch for three hours. The reason for their actions were simple and well-articulated: they were protesting Wells Fargo Bank’s financing of Enbridge Corporation Line 3, an oil pipeline that runs 1,097 miles from the tar sands of Edmonton, Alberta, to the Enbridge oil storage facility that sits about a mile from the south shore of Lake Superior, just a few miles away from the site of the protest. Environmentalists have deep concerns about the climate impacts of the tar sands, as well as the threat the pipeline poses to local waterways and Indigenous land rights. The police eventually came to the branch to remove the locks and arrested the protesters. All three were charged with misdemeanor trespass, disorderly conduct, and obstruction of justice.
A little over one year ago, President Trump reaffirmed his intention to withdraw the United States from the Paris Climate Accord. As if on cue, an iceberg the size of Delaware broke away from the Larsen C ice shelf in Antarctica, where temperatures have risen nearly five degrees on average over the past few decades. And Hurricane Harvey, Hurricane Maria, and Hurricane Florence wrought unprecedented destruction in rapid succession upon Texas, Puerto Rico, and North Carolina, respectively.
Scientists and researchers are still working to measure the astounding human and environmental toll from the hurricanes, which are considered to be climate disasters due to their intensity. Hurricane Maria resulted in nearly 3,000 deaths and left Puerto Rico without electricity, telecommunications, or water services for months. Hurricane Harvey caused at least 100 recorded releases of toxic chemicals in a region with 500 chemical plants and 10 oil refineries. NASA’s satellite images of North Carolina after Hurricane Florence show inky black currents of organic matter—mostly sewage from massive chicken and hog farms in the area—seeping into the blue waters of North Carolina’s coastline.
Recent catastrophes provide an opportunity to practice a future-planning mindset.
It’s obvious that significant Earth changes are occurring these days—in the past month alone, we’ve seen several major earthquakes, ravaging fires, devastating hurricanes, and torrential flooding. When we wrote The Resilient Investor a few years ago, we anticipated future volatility and uncertainty due to climate change and other factors, but we didn’t know how immediately prescient our insights would be. The September trifecta of superstorms in the Atlantic provided a stark reminder that as resilient investors, we must incorporate disaster mitigation, in addition to disaster preparation, into our financial analysis and planning—for there are few places in the world that will be truly “safe” from the impacts of climate change.
To this end, our top priority must be a bold adjustment in how we produce and consume energy. The good news is that businesses and local governments had already begun to take steps in this direction before our current, climate-change-denying Administration took power. In fact, despite a near-total absence of leadership by the federal government, Americans are on target to meet he 2025 CO2 reduction targets set by the Paris agreement (1800 million tons of CO2); by the end of 2016, we were halfway there. Carbon-based utility generation is down 25% already, ten coal plants are closing, and many states are setting aggressive renewable energy goals.
Both stock and bond markets finished the quarter with solid gains. Large company stocks in the U.S. were up 3.1%, while smaller companies gained 2.5%. Foreign stocks were in the black as well, up 6.1%. Bonds advanced 1.4%, even as the Fed raised interest rates.
Federal Reserve officials forged ahead with another interest rate hike in June, the third in six months, and maintained their outlook for one more hike this year. The Fed announcement struck a careful balance between showing resolve to continue increasing interest rates toward more historically normal levels, and acknowledging concern over unexpectedly low inflation this year. While we may think of inflation as a bad thing, the Fed sees benefits in it—in the right measure.
NI Managing Partner Michael Kramer sat down with Bill McKibben at the recent Finance for a Sustainable Future conference, and heard the case for divestment over engagement from the horse’s mouth, so to speak. See Michael’s June column on GreenBiz.com for the full story; here’s a teaser:
During the last 40 years, the SRI industry has used three primary strategies to foster change in the corporate world: engagement as shareholders to influence company and industry policies and practices; advocacy with regulators and policymakers to rein in abuses to protect share value; and divestment (what the industry refers to as environmental, social and governance portfolio screening). The challenge SRI investors always face is determining which strategy is appropriate for which circumstance. Historically, the SRI industry has preferred engagement, because one can use ownership to encourage companies to, for example, adopt ecological practices, embrace fair labor standards and improve diversity.
However, the core purpose of certain sectors – alcohol, tobacco, weapons, gambling, even nuclear power – have been widely accepted exclusions by SRI investors for their inherent harm or potential harm they cause to humanity. . . .And this was precisely the point McKibben made to the SRI industry: In this particular case, at this perilous moment in the history of this planet, engagement simply doesn’t achieve the desired outcome (at least, not fast enough). Past efforts to move fossil fuel companies into renewable energy or get fossil fuel companies to report on the impact of climate change on profitability largely have failed.
This week, the Investor Network on Climate Risk joined similar groups from around the world in releasing a comprehensive call for energy policies at the national and international level that will encourage increased investment in renewable energy solutions. The Global Investors Statement on Climate Change includes proposals and criteria for designing useful and forward-looking regulations and incentives that will support “investment-grade” climate change policy.
The 4-page Statement, signed by 285 investment advisors institutional investors representing more than $20 trillion in assets, and a detailed 44-page report have been sent by the sponsoring investor networks to the G20 and other governments in anticipation of the UN conference on climate change in Durban. The investor networks will use the statement and report as a central resource in their ongoing engagements with national governments.
The Statement says, in part:
Climate change presents major long-term risks to the global economy and to the assets in which we invest. At the same time, well designed and effectively implemented long-term climate change and clean energy policy (“investment-grade policies”) will not only present significant opportunities for investors in areas such as cleaner and renewable energy, energy efficiency and decarbonisation, but will also yield substantial economic benefits including creating new jobs and businesses, stimulating technological innovation, and providing a robust foundation for economic recovery and sustainable long-term economic growth…..With data from the IEA indicating that global energy-related emissions of carbon dioxide (CO2) in 2010 were the highest on record, it is clear that the need for action is urgent. However, current levels of investment in low-carbon technologies fall far short of what is needed. Private investment will only flow at the scale and pace necessary if it is supported by clear, credible and long-term policy frameworks that incentivise investments in low-carbon technologies rather than continuing to favour carbon-intensive energy sources.
Natural Investments, LLC, is pleased to be one of the signatories, on your behalf. For more, see the links above, or investorsonclimatechange.com.
With our political system tied up in knots, there‘s a growing sense of hopelessness about America being willing to come to grips with the climate crisis. For many of us, this issue is a moral imperative, as we’re wrenched by our compassion for all the beautiful creatures and ecosystems that are sacrificed on the altar of our inaction. But the morality-and-compassion approach isn’t gaining traction. Some surveys have shown a falling percentage of people who think climate change a serious menace.
We’re going to have to leaven our heartful responses with smarts. The broader public is focused on jobs, global competitiveness, and national security. There are plenty of conservatives, and even tea partiers, who can get behind these goals. What’s needed is a clear strategy and specific goals that link climate action with these more widely-embraced priorities.
This potential is what drives Bill Shireman, President of Future 500, a group that brings corporations and NGO’s together to forge unlikely alliances.