Meme-stock millennials are rich, and scared of climate change
Welcome to Callaway Climate Insights. Your investment guide to climate solutions and ESG investing.
Callaway Climate Insights publishes Tuesdays and Thursdays for everybody. To get our insights and analysis every day, please subscribe.
Smoke from wildfires in western states is hitting many agricultural crops, but especially wine grapes, where valuable fruit and resulting wines have suffered from smoke taint. As climate change increases drought-fueled fires, it’s become a major threat to the multi-billion dollar industry. As grape growers harvest the 2021 crop, some are still feeling the effects that began four years ago with the Wine Country Fires in October 2017 that burned a quarter of a million acres, killed more than 40 people and cost an estimated $14.5 billion. Above, that fire tore through the Napa and Sonoma valleys. Photo: FollowingNature/flickr.
Time Magazine reported this week that 75% of young people are worried about the future and almost half of them say they worry about climate change everyday. Quoting a survey of 10,000 young people in 10 countries, the study dived into the concept of climate anxiety in the generation that might live to see the worst of it.
As I read that piece another email popped up in my box, noting how rich the millennial generation is, and getting richer, with some $68 trillion in wealth to be transferred to them in the next 20 years. Some 618,000 U.S. millennials are already millionaires, almost half in California, according to a 2019 report by Coldwell Banker Global Luxury and WealthEngine.
Young rich people on a mission tend to make focused investors. And as we’ve seen from the meme stock phenomenon, they are not afraid of risk. Something to think about when discussing how far the environmental, social and governance (ESG) investing movement has come in the past five years, and whether it’s just a passing fad or not.
In this edition, we look at how hedge fund Engine No. 1 is calculating value in its ESG holdings differently, as well as the explosion in the carbon offset markets, both the result of new money focused on climate change looking for opportunity. Indeed, if trading volumes on Robinhood are anything to go by, climate change solutions may someday be the ultimate meme stocks.
More insights below. . . .
Don’t miss The Great Repricing, a four-day virtual conference on ESG investing held by Gitterman Asset Management from Sept. 21-24. To get a 10% discount on tickets, use the code DavidC100 when you sign up here.
Don’t forget to contact me directly if you have suggestions or ideas at email@example.com.
ZEUS: Engine No. 1 framework a first step to ESG financial statements
. . . . Activist hedge fund Engine No. 1, which brought oil giant ExxonMobil to its knees this past summer with a successful campaign to replace three of its board members, is out with a new playbook on how to measure companies better for environmental, social, and governance investing (ESG), writes David Callaway. In the hot debate over corporate disclosure of climate risks and whether they should be part of financial statements, the new playbook, with attaches dollar values to pollution practices, is a step in the right direction. . . .
The carbon offset market is exploding, but in the wrong direction
. . . . In an interview with Carbon Direct founder Jonathan Goldberg about new technologies and lower costs in the carbon offsets market, Mark Hulbert looks at the potential for the booming market vs. the current abuses that are taking it in the wrong direction. Goldberg argues that in the absence of government intervention, abuses such as greenwashing and simply paying for pollution practices, are, ahem, offset by the way the Voluntary Carbon Market can illustrate how business can work to reduce carbon pollution and set the stage for a more rigorous set of actual reduction in harmful emissions. . . .
Thursday’s insights: U.S. offshore wind ventures stymied by costs
. . . . Good and bad news for U.S. offshore wind power future. First, Vineyard Wind, the first major American offshore generation project arranges full financing. Not so good: Bill White, head of offshore wind at Avangrid, part of European renewables giant Iberdrola — 50% owner of the project — told the Financial Times that White House-imposed local content conditions would hold back the development of offshore wind as well as raising costs. Who will blink first? Read more about it here. . . .
. . . . Is this a tipping point for tidal energy? A consortium has been formed to pump $31 million in a project off the coast of Scotland that will amass a giant array of floating turbines. Tidal energy has serious advantages over other renewables. Tides never stop, unlike sunshine and wind. And with hydro, as has been seen more and more, rivers dry up. British companies, not surprisingly, are at the forefront. Read more about who they are here. . . .
. . . . Biofuels have been all the talk in air travel this week after President Biden and the U.S. airline industry pinned hopes on making them the dominant aviation fuel. But biofuels are costly and almost as pollutive. The real future is electric aircraft – and one is on the horizon that is large enough to be meaningful. Read more about it here. . . .
Editor’s picks: IRENA says ‘leave coal behind,’ Indonesian court holds president liable for pollution
Court holds Indonesian president responsible for pollution
An Indonesian court ruled Thursday that President Joko Widodo and six other top officials have neglected citizens’ rights to clean air and ordered them to improve the poor air quality in the capital, according to published reports. ABC News says a three-judge panel at the Central Jakarta District Court sided with 32 residents who filed a lawsuit two years ago against Widodo and the ministers for environment, health and home affairs, as well as the provincial governors of Jakarta, Banten and West Java. The judges voted 3-0 in favor of the plaintiffs under the Coalition for the Clean Air Initiative.
License for temporary nuclear waste dump in Texas
The Nuclear Regulatory Commission has granted a license to Interim Storage Partners LLC to build and run a dump in West Texas that could hold spent nuclear fuel for up to 40 years. The Associated Press reports the facility could take up to 5,000 metric tons of spent nuclear fuel rods from power plants and 231 million tons of other radioactive waste. But, the report notes, the “decision puts the federal agency on a collision course with state officials in Texas, where opposition to nuclear waste storage has been building for years.”
Latest findings: New research, studies and projects
Climate change and fiscal sustainability
Both the physical and transition-related impacts of climate change pose substantial macroeconomic risks. Yet, markets still lack credible estimates of how climate change will affect debt sustainability, sovereign creditworthiness, and the public finances of major economies. The authors of Climate change and fiscal sustainability: Risks and opportunities present a taxonomy for tracing the physical and transition impacts of climate change through to impacts on sovereign risk, and then apply the taxonomy to the UK’s potential transition to net zero. Meeting internationally agreed climate targets will require an unprecedented structural transformation of the global economy over the next two or three decades. The changing landscape of risks warrants new risk management and hedging strategies to contain climate risk and minimise the impact of asset stranding and asset devaluation. Yet, conditional on action being taken early, the opportunities from managing a net zero transition would substantially outweigh the costs.
More of the latest research:
Words to live by . . . .
“Fortunately, nature is amazingly resilient: Places we have destroyed, given time and help, can once again support life, and endangered species can be given a second chance. … We must all join that fight before it is too late.” — Primatologist Jane Goodall.