First, a bit of perspective on ESG. This investable theme is challenging even if one focuses solely on the E for environment or energy. Rating agencies have struggled with metrics to analyze public companies’ efforts to reduce their carbon footprint or even add women/BIPOC to their boards. Yet it’s estimated by 2025, there will be $53 trillion in ESG assets. This is not a question of whether ESG is good or bad. It’s simply an understanding of where money is flowing and to prepare for it.
As mentioned, there is a wide range of problems with ESG. Greenwashing, blackwashing or pinkwashing are examples of companies attempting to improve their images in this space without actually changing either their business model or reasons why they had a problem in the first place. As an example, protestors in June attempted to occupy London’s Science Museum. They wanted to bring attention to a new exhibition on the climate crisis that was being sponsored by Shell. All of this makes it tricky to invest in ESG to bring about reduction in carbon, increase in diversity or other social goals.
Many would argue that pecuniary or monetary goals are the only true measure for investors. Any other goals are not to be considered. Returns do matter. Yet, social goals matter to many investors and socially responsible investing has been around since the 1970s. This is not new. What is new is the dramatic increase in demand.
And there are loads of opportunities from this demand. From lower interest rates on “green bonds” (JPM) to the push to develop domestic lithium production in the US (CTR) to investments into EVs.
This week, I’ve been doing a series of YouTube videos on my must reads in the ESG space. You can check them out here. Below are the research pieces I’ve reviewed and like this week for ESG with some comments on them. Enjoy.
https://www.wsj.com/articles/socially-responsible-investing-11624288038
Good overview of what is happening with ESG and investors wanting returns. Lists SEC and other associations pushing for change.
https://podcasts.apple.com/us/podcast/weekly-economics-podcast/id970353148?i=1000527625789
Nice overview and history of greenwashing with a completely progressive bent, but still excellent
https://www.ft.com/content/a3d67827-1f79-4b18-8c36-f26e18ced9cf
Serious study on the declining returns to ESG investing. Great for anyone trying to model a portfolio.
Various academic studies have estimated the U.S. will need to double or even triple its electric transmission capacity to achieve the Biden administration’s goal of decarbonizing the nation’s economy by midcentury.
While Texas suffered devastating grid outages in mid-February, the state’s Competitive Renewable Energy Zones program — a project that resulted in more than 2,300 miles of new transmission capacity — could still serve as a national model for more grid buildout, asserted U.S. Rep. Marc Veasey, D-Texas. The nearly $7 billion effort was publicly funded to mitigate private risk, making Texas a national leader in renewable energy development.
The Future of Electric Power in the United States
Electric power is essential for the lives and livelihoods of all Americans, and the need for electricity that is safe, clean, affordable, and reliable will only grow in the decades to come. At the request of Congress and the Department of Energy, the National Academies convened a committee of experts to undertake a comprehensive evaluation of the U.S. grid and how it might evolve in response to advances in new energy technologies, changes in demand, and future innovation.
The Future of Electric Power in the United States presents an extensive set of policy and funding recommendations aimed at modernizing the U.S. electric system. The report addresses technology development, operations, grid architectures, and business practices, as well as ways to make the electricity system safe, secure, sustainable, equitable, and resilient.
https://www.bezerocarbonremoval.com/
Carbon Engineering, a firm looking to commercialize nascent “direct air capture” tech, just unveiled a new retail offering for its services in partnership with the firm BeZero Carbon.
Each Carbon Engineering Direct Air Capture (DAC) facility will permanently remove one million tonnes of carbon dioxide per year, the equivalent of 40m trees…climate action at megaton-scale.
Individuals & businesses can now pre-purchase DAC units, or buy the world’s premium removal basket via BeZero.
https://www.nature.com/articles/s41558-021-01077-8
https://www.nasa.gov/feature/jpl/study-projects-a-surge-in-coastal-flooding-starting-in-2030s
In the mid-2030s, every U.S. coast will experience rapidly increasing high-tide floods, when a lunar cycle will amplify rising sea levels caused by climate change.
High-tide floods – also called nuisance floods or sunny day floods – are already a familiar problem in many cities on the U.S. Atlantic and Gulf coasts. The National Oceanic and Atmospheric Administration (NOAA) reported a total of more than 600 such floods in 2019. Starting in the mid-2030s, however, the alignment of rising sea levels with a lunar cycle will cause coastal cities all around the U.S. to begin a decade of dramatic increases in flood numbers, according to the first study that takes into account all known oceanic and astronomical causes for floods.
https://www.nytimes.com/interactive/2021/07/07/climate/chicago-river-lake-michigan.html
Deep dive into Chicago’s problems with water and how the cycle of drought/flood will cause havoc overtime.
“Yet what happened in the Pacific Northwest the week before Independence Day was caused by the weather, not the climate. Simply put, a high-pressure dome built up over southern British Columbia. This caused strong downslope winds from the north.”
Hard to argue this point, but the bigger point is why is there a heat dome and why is it sitting there? Climate change has warmed the arctic and weakened the jet stream. This is why weather patterns have become more persistent. Rain bombs in Kansas, heat domes in Seattle and droughts in the West are emblematic of this change.
