L. Hunter Lovins
14 April, 2015
Don’t believe in climate change? Okay, let’s pretend it’s a hoax. From a purely financial perspective it doesn’t matter.
If it is a hoax, you’ll make a lot of money. If it’s the real and worsening catastrophe climate scientists believe it to be, you’ll still make a lot of money. Now let me present some facts to you on the financial case for getting out of fossil fuels (I am fine if you just view it as some bar talk).
There’s a strong and growing business case for climate protection. The 2014 report “Climate Action and Profitability” by the Carbon Disclosure Project showed how companies that integrate sustainability into their business strategies are outperforming companies who fail to show such leadership. Companies that are managing their carbon emissions and are planning for climate change enjoy 18% higher returns on their investment than companies that aren’t, and 67% higher than companies which refuse to disclose their emissions.
Something tells me, though, you are sentimental about your personal ownership in fossil fuels, right? If improving your company’s returns on investment does not interest you, how about the prospect of stranded assets? That’s investments that quickly turn out to be worth much less than expected.
In early 2012 Seeking Alpha, an energy industries financial advisory service with more than three million registered clients cautioned against panicking and selling coal stocks, concluding that even though Peabody Coal’s stock value had fallen 45%, it was nicely undervalued, and after all, such companies had always grown: “Currently, Peabody Energy’s share price is at just over $36 (£25), but I think it has the potential to hit the $45 barrier before the end of 2012 because its Australian interests are likely to be snapped up by China and Indian Steel companies”, the advisors wrote. Seems like a strong argument for staying invested in coal, doesn’t it?