Sunday, November 10, 2013

Fossil Fuel Investment, the Tip of the Iceberg

While college students are pressuring many of their schools to divest from holdings in fossil fuel companies, there are collaborating efforts being launched by institutional investors by assessing the entire portfolio's carbon intensity, not simply fossil fuel holdings.. Companies that perform those assessments, TruCost, Bloomberg, and yes, even Bank of America - Merrill Lynch are getting lots of business as investors are beginning to see the possible calamities that climate change is threatening to unleash upon us.
 portfolios just released by the United Nations Environment Programme's Finance Initiative, sheds some light on the forces driving this movement. As I noted in an earlier blog, Pax World Fund has started this and gone even a step farther in seeking to make a carbon neutral fund.

Events like Typhoon Haiyan as noted below by Weather Underground's chief climatologist, Jeff Masters today, is perhaps just another reason the investing community is getting more interested in carbon intensity of their portfolios.

Extreme damage in the Philippines
With a preliminary death toll of 1,200, Haiyan already ranks as the 8th deadliest typhoon in Philippines history. The deadliest typhoon in Philippines history was Typhoon Thelma of 1991, which killed between 5101 - 8000 people, reports wunderground's weather historian Christopher C. Burt in his latest post on Philippines typhoon history. Haiyan will become the deadest typhoon in Philippines history if the estimates today of 10,000 dead hold up. Bloomberg Industries is estimating insured damages of $2 billion and total economic damages of $14 billion, making Haiyan the most expensive natural disaster in Philippines history. This is the third time in the past 12 months the Philippines have set a new record for their most expensive natural disaster in history. The record was initially set by Typhoon Bopha of December 2012, with $1.7 billion in damage; that record was beaten by the $2.2 billion in damage done by the August 2013 floods on Luzon caused by moisture associated with Typhoon Trami.

Figure 2. A Filipino boy carries bottled water amongst the damaged houses where a ship was washed ashore in Tacloban city, Leyte province, central Philippines on Sunday, Nov. 10, 2013. (AP Photo/Aaron Favila)