Climate pledge mapping begins; plus, why private equity is buying fossil fuels
Welcome to Callaway Climate Insights. Only 18 days until COP26.
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Above, the top performers in the Callaway Climate Insights Index year-to-date, as of Oct. 8, 2021. Materials used in the manufacture of batteries continue to dominate, with four of the top five performers involved in production and processing of lithium. Microvision, which develops Lidar sensor systems for use in autonomous driving applications, fills out the top five.
A lot being said this morning about the latest report from The Task Force on Climate-related Financial Disclosures, chaired by Mike Bloomberg, which found for the first time that more than 50% of the 1,600 companies surveyed disclosed their climate risks and opportunities.
As consensus on climate initiatives continues to elude governments, companies are increasingly playing an important role. Another report out today with less fanfare, but perhaps more potential impact, comes from Winmark Global in London, the largest network of C-Suite executives, run by John Jeffcock.
Winmark’s Climate Pledge Guide offers best practices for companies who want to make a climate pledge, engage their boards and management teams, and avoid falling into the greenwashing trap of making promises they can’t/won’t keep. It also includes, for the first time, a “pledge marketplace,” which divides pledges into four distinct categories.
As more companies make climate pledges and begin disclosing risk data, the potential for pledge mapping becomes more real, and Winmark is already engaged in early efforts to do such work in its Chief Sustainability Officers network. Investors able to access data on which companies fall into which pledge categories can get a much easier idea who is serious and who is not.
The inevitable march of data and AI in guiding climate commitments will become big sources of news as the $40 trillion environmental, social and governance investing (ESG) sector begins to mature. The more these efforts start to come together, the better for investors.
More insights below. . . .
I’m speaking on a panel next Wednesday, Oct. 20, on the media and covering the climate emergency, presented by Dataminr, my favorite source of real-time information, along with climate editors from CNN and Accuweather, among others. Don’t miss it. Register here:
Covering the Climate Crisis: A Real Time Emergency | Live Webinar (dataminr.com)
Don’t forget to contact me directly if you have suggestions or ideas at email@example.com.
ZEUS: Fossil fuels are the new newspapers
. . . . One of the more depressing things about the collapse of newspapers is the way hedge funds are strip-mining the remaining assets. Now we’re starting to see that with fossil fuel companies, writes David Callaway in his weekly ZEUS column. The phenomenon promises a messy transition as major oil companies sell assets to more secretive private equity and hedge fund buyers, and will push the move to renewable energy beyond the time frame considered vital to contain global warming. On top of that, oil and coal usage is surging as countries combat a global energy shortage. Renewable energy needs more government help . . . .
Why climate investors need to play the long game
. . . . This year’s surge in fossil fuel stocks, and corresponding decline in renewable energy shares are testing the resolve of sustainability investors used to unending upside in their ESG portfolios, writes Mark Hulbert. A shakeout of fast money in sustainable shares as soon as they stopped gaining was inevitable. Investors who claimed they were buying ESG funds in part to help support the battle against global warming face a defining decision about where they stand, Hulbert argues. . . .
EU notebook: France leads charge to keep Europe nuclear-friendly
. . . . A global energy crisis hitting Europe hard this month has reignited the debate within the European Commission over whether nuclear energy should be in the mix of renewable solutions, with France and Germany drawing battle lines on either side of the debate, writes Daniel Byrne from Dublin. Environmental ministers are also split on the plan to expand Europe’s carbon market, with detractors arguing the costs can not be sustained at a time when Covid and the energy crisis are pummeling economies. . . .
Thursday’s subscriber insights: Biden’s offshore wind moonshot
. . . . The White House’s announcement this week to develop large-scale wind farms along nearly the entire U.S. coastline was dramatic in scope, coming just before the UN climate summit. But given how long it took the pitiful number of current projects in the U.S., such as Vineyard Wind in Massachusetts, to get off the ground, it seems more pie-in-the-sky wishful thinking than an actual strategy. If President Biden thinks Congress is tough, wait until he gets a load of the local city councils in these coastal towns. A look at who does offshore wind right and what the chances are for success. Read more here. . . .
. . . . Call it the anti-Trump climate rule. The Department of Labor published new rules around retirement plans using environmental, social and governance investing strategies in their considerations, saying that they can, should, and might even be required to do so. The rule reverses the poorly-received Trump rule last year that prohibited plans from using ESG factors, although it still demands that they can’t sacrifice returns or take bigger risks in pursuit of ESG practices. Glad that’s clear. . . .
. . . . The timing could not be worse. Just ahead of COP26, energy supply chains are in turmoil, bringing shortages and higher prices. Which means nations, notably China, are reluctant to get rid of coal and oil companies are getting rich. Both of these are probable impediments to an embrace of renewables. Then there are financiers, who hate to see money pass by. Read more here. . . .
. . . . The anger around a proposed two-tier system for tax credits to EV buyers — $12,000 for purchasers of union-made cars and only $7,500 for non-union vehicles — was already hot. Now it’s boiling over, with manufacturers running TV ads in the DC market railing against the pro-union measure. There’s also controversy about other parts of the bill working its way through Congress. How will it play out? Read more here. . . .
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Editor’s picks: Uruguay’s renewable reach, GM rolls out electric Hummers
Watch the video: DW News reports Uruguay generates over 90% of its power from renewables. The country now wants to pass on its know-how, and is training special engineers for the task. But despite all its success, Uruguay still has to convince some of its own people.
GM’s new all-electric factory rolls out Hummers
General Motors' Factory ZERO has started producing 2022 GMC Hummer all-electric pickup pre-production models, while plant construction continues, according to a report from The Detroit Free Press. GM (GM) will start building sellable models at Factory ZERO soon, union and GM officials said. The plant, located in both Detroit and Hamtramck, has been undergoing $2.2 billion in retooling for 18 months so that GM can build all-electric vehicles there by year end, the report says. GM reportedly has about 10,000 pre-orders for the Hummer EV pickup, which starts at $112,595 for Edition 1.
U.S. roadways at greater risk of flooding, research says
Nearly a quarter of the road miles in the U.S. are at risk of becoming impassable during a flood, according to a new study that documents the vulnerability of key U.S. facilities such as roads, hospitals and power plants, according to a report from E&E News/ClimateWire. The analysis by the nonprofit First Street Foundation aims to fill a gap left by flood models that have focused on residential risk, the report notes. That includes First Street’s own analysis last year that showed far more homes are in danger of being flooded than the federal government projects. Using modeling that incorporates climate change, First Street’s latest report quantifies the huge current and future number of critical facilities and road segments that would be shut down by an average flood.
Latest findings: New research, studies and projects
Insuring natural catastrophes in the U.S.
With climate change, continued property development throughout the country, and a growing population, natural catastrophes are becoming more frequent and more damaging in America, writes author Christopher C. French of The Pennsylvania State University (University Park), Penn State Law. The most common natural catastrophes are floods, tornadoes, hurricanes, wildfires, earthquakes, and landslides. Of these, only wind damage and wildfires currently are widely insured, and insurers are decreasing their sales and renewals of policies that cover properties in areas prone to natural catastrophes. Consequently, about 50% of the billions of dollars in losses annually caused by natural catastrophes currently are uninsured. This chapter in the forthcoming The Cambridge Handbook of Disaster Law: Risk, Recovery, and Redevelopment addresses the existing state of the insurance market for natural catastrophes in America and proposes some new approaches to insuring natural catastrophes moving forward. Read the full paper here.
More of the latest research:
ESG and Sovereign Risk: What is Priced in by the Bond Market and Credit Rating Agencies?
Climate Change and Irrational Optimism About International Cooperation
Words to live by . . . .
“If governments fully deliver on the climate pledges they have announced so far, it would limit global warming to 2.1°C. Not enough to solve the climate crisis, but enough to change energy markets, including oil — which would peak by 2025 — and solar & wind, whose output soars.” — Fatih Birol, executive director of the International Energy Agency.