Gifts to the Future "Your retirement plan may be fueling the climate crisis. But it doesn't have to." - As You Sow If you're lucky enough...

Eye-popping graph from sifted.eu... All VC investment in climate fintech through the end of 2020 totalled $.41 billion. From 1/21-6/22 VCs...

Per new research by Morgan Stanley, utilities that accelerate their shift from coal to renewables can not only save billions of dollars for electricity consumers, they can simultaneously return sizable profits to utility investors. The faster the utility decarbonizes, the more favorable the returns.

While the current global COVID19 pandemic has not been linked to climate change, climate is expected to directly the spread of pathogens and disease. Exact impacts are hard to predict, but seasonality (flu), wildlife habits (for vector-borne diseases like malaria), and unstudied effects on human-to-human contagions are all possible results.

We need grid-scale battery projects for wind and solar to successfully displace oil, gas, and coal, but banks have been reluctant to get into financing such projects. As lenders become more familiar with the industry, and as constituent parts become less expensive, unlocking more bank financing could spur faster growth in the sector.

“Warming potential” – putting the estimated climate impact of portfolios into degrees of warming – could be a meaningful way for financial institutions to measure and track climate risk. In May 2019 Mirova research used lifecycle data, estimates of induced and avoided emissions, and the IEA climate scenarios to create a very clear temperature marker for portfolios. Major indexes (S&P 500 and MSCI World equity index) had warming potential around 5.0°C. Knowing that insurer Axa, at 3.3°C and 2.9°C, used the measure to commit to reaching a 1.5°C Paris Accord target (albeit, by 2050) demonstrates its value.

To understand shifts in the climate economy, You Need to Read up on BlackRock CEO Larry Fink. I have a podcast and a quick article to help: New York Times’ The Daily podcast Can Corporations Stop Climate Change? by Michael Barbaro and Andrew Ross Sorkin (transcript here), and Bloomberg Green’s Elizabeth Warren Urges BlackRock’s Fink to Back Disclosure of Climate Risk by Saijel Kishan.

A report by JP Morgan economists David Mackie and Jessica Murray and dated January 14, 2020 takes an unequivocal and damning position on the threat fossil fuel development poses to the world and to the economy, stating that policy must change. JP Morgan is a major financier for such development, and in the report “the investment bank says climate change ‘reflects a global market failure.’”

Utilities continue to invest in new gas power plants and other infrastructure even though the writing is on the wall that they are likely to become un-economical before they’ve served out their useful life, therefore generating extra financial burden on utilities that would likely be passed along to consumers. Investors should be concerned. There’s a significant risk that gas plants will go the way of coal plants, but only 18% of utility professionals surveyed listed this as a “top concern.”

Linking to several outlets’ coverage this time — there are a lot of angles to this one. On the same day a study showed that the BP-contracted Deep Water Horizon oil spill was 30% worse than thought (oops), BP’s new CEO Bernard Looney announced the company’s “Ambition” to become net zero by 2050. (“Reimagining Energy” on BP.com).

The ambition is significant – nearly the most promised by an oil major to date – but, why not a goal or target? Will BP make enough impact to meaningfully help slow the climate crisis or is this more PR?