He is asking for banks to publicly disclose their coal loan exposures and significantly increase the applied
risk-weighting of these coal loans. Sounds prudent to me.
The more honest approach is to admit that shifting your investments will make you marginally less diversified and exposed to marginally greater idiosyncratic risk, but to weigh the tradeoffs and to do it anyway. The tradeoffs include the possibility that the remaining investors who do not choose to starve the industry have greater investment upside by being able to buy at a less competitive/lower price.
It's far easier, and safer, for me (many of us) to invest in broad market index funds though. I have neither the skill nor time to track individual companies. I'm just trying to have enough money for basic cost of living when I'm 70, I only make about 34k a year (and turn 35 this month) and am unable to even adequately fund my retirement so I can't afford to gamble on random renewable energy companies
I'm guessing I'm invested, via such funds, in numerous fossil fuel companies. It's just gotta be that way for a lot of us.
You can do both (sort of) through an ESG weighted ETF.
ESG stands for" Environment, Social, Governance", and represents the inclusion of these factors in the construction of the portfolio. This is actually quite a big trend in Finance these days, and it's reasonable to believe that ESG ETFs could even outperform the broader market if you think the trend will continue/accelerate.
I should say, these funds don't always completely remove exposure to coal companies (for example), but would at the very least down-weight them relative to a broader market index.
This kind of “divestment” is doing literally nothing to fight climate change. You’re just offering stocks in fossil companies at bargain prices, making them more attractive to hold by increasing ROI. Nothing changes in real economy, everything operates as usual.
> Nothing changes in real economy, everything operates as usual.
FWIW,
"As time went on, though, it became clear that divestment was also squeezing the industry. Peabody, the world’s biggest coal company, announced plans for bankruptcy in 2016; on the list of reasons for its problems, it counted the divestment movement, which was making it hard to raise capital. Indeed, just a few weeks ago analysts at that radical collective Goldman Sachs said the “divestment movement has been a key driver of the coal sector’s 60% de-rating over the past five years”."
I'm not selling them at a loss, if I can't get what I paid for them it means they are by definition worth less. Because I do not want them anymore it mean that that market has one less buyer so demand decreases by at least one. If hundred investors came to the same value judgement, the demand decreases by 100. What you are saying is that supply and demand does not matter in a market and I suspect it does.
"In his letter to Carney, dated Feb. 28, Hohn warned that British banks were “highly likely” to suffer losses on coal financing as the cost of renewables continued to fall and regulations on air pollution and carbon emissions tighten."
If that's the case then Hohn shouldn't even need to push this agenda at all. Coal usage would go down dramatically naturally based on market competition from renewables based on his own statement. Either he doesn't believe that, or he does and there's something else going on.
I think it's mostly to do with timing. What he is highlighting is risk mispricing when it comes to coal loans (that aren't properly disclosed to shareholders of banks). But the effects of this mispricing - and market competition from renewables can take years to play out.
In the meanwhile, climate change doesn't wait - if we want to have any chance of not going beyond widely accepted atmospheric CO2 limits, it's important no new fossil fuel infrastructure is built.
After so many fires in Australia, how come there aren't any protests to decrease coal mining? Yes, most of that is exported and producing money for mining companies, which pay AU taxes and employ miners. But still, that's a small fraction of AU population.
I was reading a book to my kids yesterday that had an opening rant about how the wildfires over Australia are a massive problem and our forest management system is a disgrace globally. Flying at 10000 feet led to coughing and choking, seemed like it was everywhere in the country.
The author was Jacques Cousteau, the book was written in 1973.
Australia’s been dealing with giant wildfires forever. It’s not clear whether the fires are getting bigger or smaller with time, what impact forest management has in same, and whether smaller fires closer to population centers get more press and then make it seem like the problem is worse when it may not be.
Global heating is a slow burn, but we’re all poised to read any climate tragedy on it.
There were plenty of protests, but the lobby is strong. The current chief of staff for the Prime Minister is the same guy who, whilst at the Minerals Council, supplied the then-minister (now PM) with the coal to take into parliament and tell people “don’t be scared of coal”.
The tentacles from the industry into our political system run deep.
There are frequent protests against coal mining and for climate action. Turns out "carbon capture and storage" works after all, just on politicians, not coal.
There is. The protests especially have affected the large public international miners (BHP, Rio Tinto, Glencore, Anglo-American). One problem is is that when these companies leave thermal coal market by selling coal mines, the companies they sell the assets to aren't exactly suspectible to protests in Australia. For example, Yancoal, the buyer of Rio Tinto's assets, mainly answers to the Chinese Communist Party.
Dwarfed by China, which has no need for outside finance of any power infrastructure.
In North America and Europe I would rather see these billionaires donate to land conservation which is as big a direct environmental issue as climate change. Bezos' $10B would have gone a long way to saving Florida's Everglades or helping the Lousisiana coastline.
He's not running the businesses, he's just an investor. The former gives him power to do something about it, the latter gives him plausible deniability.
The people who rely on cheap energy for warmth and going about their day to day activities will lose out big. When money is tight, any increase in expense can be life changing. On the other side, investors and climate activists worldwide benefit
Or how to make investing into coal plants more profitable for those who don't buy into this guy's campaign. One would expect this to reach Nash equilibrium with barely any change.
Readit News
He is asking for banks to publicly disclose their coal loan exposures and significantly increase the applied risk-weighting of these coal loans. Sounds prudent to me.
Shift your investments from fossil to green. If you can't find enough worthy greens, shift it to anything else. Some say it won't impact your returns: http://www.lse.ac.uk/GranthamInstitute/news/the-mythical-per...
Move your deposits and savings to a more sustainable bank. It's very easy to do yet quite powerful https://fairfinanceguide.org
What's the source for this? There was a post from a few months ago that said the opposite.
https://news.ycombinator.com/item?id=20998948
The more honest approach is to admit that shifting your investments will make you marginally less diversified and exposed to marginally greater idiosyncratic risk, but to weigh the tradeoffs and to do it anyway. The tradeoffs include the possibility that the remaining investors who do not choose to starve the industry have greater investment upside by being able to buy at a less competitive/lower price.
I'm guessing I'm invested, via such funds, in numerous fossil fuel companies. It's just gotta be that way for a lot of us.
ESG stands for" Environment, Social, Governance", and represents the inclusion of these factors in the construction of the portfolio. This is actually quite a big trend in Finance these days, and it's reasonable to believe that ESG ETFs could even outperform the broader market if you think the trend will continue/accelerate.
I should say, these funds don't always completely remove exposure to coal companies (for example), but would at the very least down-weight them relative to a broader market index.
FWIW,
"As time went on, though, it became clear that divestment was also squeezing the industry. Peabody, the world’s biggest coal company, announced plans for bankruptcy in 2016; on the list of reasons for its problems, it counted the divestment movement, which was making it hard to raise capital. Indeed, just a few weeks ago analysts at that radical collective Goldman Sachs said the “divestment movement has been a key driver of the coal sector’s 60% de-rating over the past five years”."
https://www.theguardian.com/commentisfree/2018/dec/16/divest...
If the majority of money was locked up in coal, there would be no capital for new types of power generation.
You’re argument sounds like it might even be crafted to make people think divesting is pointless but it can’t be.
Money is actually finite and therefore can be distributed in different ways.
If that's the case then Hohn shouldn't even need to push this agenda at all. Coal usage would go down dramatically naturally based on market competition from renewables based on his own statement. Either he doesn't believe that, or he does and there's something else going on.
In the meanwhile, climate change doesn't wait - if we want to have any chance of not going beyond widely accepted atmospheric CO2 limits, it's important no new fossil fuel infrastructure is built.
The author was Jacques Cousteau, the book was written in 1973.
Australia’s been dealing with giant wildfires forever. It’s not clear whether the fires are getting bigger or smaller with time, what impact forest management has in same, and whether smaller fires closer to population centers get more press and then make it seem like the problem is worse when it may not be.
Global heating is a slow burn, but we’re all poised to read any climate tragedy on it.
In North America and Europe I would rather see these billionaires donate to land conservation which is as big a direct environmental issue as climate change. Bezos' $10B would have gone a long way to saving Florida's Everglades or helping the Lousisiana coastline.
https://www.gov.uk/coal-health-compensation-claims