The Business Case for Climate Solutions
Early investors in climate solutions stand to make outsized profits over the longterm, but will the language shift to action when the short term costs are still 3x higher and beyond. While outlooks are shifting, when will behaviours follow?
The tide has turned now that the cost of climate solutions is lower than the cost of climate disruption and we’re starting to see big investment players considering their portfolio strategies accordingly.
Climate solutions are future profit centres
“Fidelity’s new policy comes as client interest grows in how companies approach environmental, social and governance issues.” That’s a big shift for the fourth-largest U.S. fund firm with about $2.1 trillion under management because Fidelity doesn’t want to be sidelined from some of the most consequential decisions being made on climate risk.
I worked at a Fidelity subsidiary in London called COLT Telecom. COLT, which initially stood for City of London Telecom, was the brainchild of Fidelity owner Ned Johnson, who ultimately invested £3.5bn rolling out fibre to 32+ cities around Europe. If there’s one thing I learnt in my five years there managing a data product portfolio, was that the Fidelity’s senior management view for the long term. Going all in on climate solutions is in line with that same long term investing view, when you consider they essentially spent ten years creating the fastest private Internet in Europe.
Fidelity to back climate resolutions
Institutional investors have fiduciary duties with climate solutions
In Europe, the proportion of institutional investors who see fiduciary duty as including environmental, social and governance factors now over 92% of investors with slightly less in the US at 79%. There is a keen awareness that seeking immediate high returns without accounting for long-term implications may lead to underperformance for long-term investors.
Accounting for environmental, social and governance factors makes for a shrewd investment decision.
Investing responsibly can unlock trillions of dollars
Investing in Climate Solutions is more convenient
Sasja Beslik is the first Climate Solutions expert that explains the sound investment angle of climate disruption through the sustainable finance goals Nordea sets their organisation. He personally visits organisations that are responsible for the delivery of climate solutions to complete due diligence so they can effectively fund them. Sasja is at the leading edge of thinking of climate+finance and deserves far more coverage.
Watch his 60 second intro below his more in depth look at the Jackobshavn Glacier.
Why sustainable energy will happen no matter what
Four of the top twenty climate solutions are energy related including onshore wind turbines, solar farms, rooftop solar, geothermal and nuclear.
The cost benefit of sustainable energy is already past tipping point. Elon Musk is rolling out 4 more giga factories this year for lithium ion production. Listen to how explains the guiding forces for his business decisions and how they’re related particularly on sustainable energy (well worth watching the full Ted talk).
Watch the 4 minutes on sustainable energy and Elon’s investment strategy.
Elon looks at the future through a branching stream of probabilities where we can accelerate one thing or slow down another thing or introduce something new to the probability stream. This model of thinking is similar to Paul Hawken, who covers the 100 Best Climate Solutions that will be where the smart money heads.
An Investors Guide to The 100 Best Climate Solutions
As an investor, this is really the how to guide of where super normal returns will sit by themes over the next 10 to 20 years. Invest here and expect better returns.
100 Best Climate Solutions — and why they’re going to work
Well Lit LED Lightbulbs
A friend on mine in the United Kingdom started Well Lit. He’s also a business person like me. We were in business together in the mid 2,000’s and we never even mentioned the environment. It was about can we make this thing successful and success meant profitable. Ethical supply chain, fair pricing and the highest quality LED bulbs on the market are now founding principles.
Will Chris saving the world the greatest crisis human civilisation has every faced? No, but he’s doing his bit while building a very successful business.
That’s all Paul Hawken says we all need to do.
Climate change is happening for us.
It is to help us focus our energy on the things that we need to do next. It is feeding innovation and it will feed a meaningful life for us and our next generation.
The physical size of the problem
It’s not as big as you think. The yellow dot is the physical biomass size of if all 7.3bn of us stood shoulder to shoulder in one place. The white dot is the size of every carbon emission emitted globally in the world in one place.
Watch Paul narrate this part here.
Capitalism can finally save the planet
I’m a business person that enjoys making profit, because that demonstrates delivering value. Revenue minus costs = earnings before interest, tax and depreciation. It is a sign of a healthy business model… but until recently not always a healthy planet.
So, my belief system prioritised the support of healthy business models that made money through delivering of value. That was the sole yard stick. It has served me well.
The climate change thing moved me when An Inconvenient Truth came out in 2006. I did what the credits said, bought ten DVD’s and gave them away to people and then got on with doing profitable business.
In 2010, my son was born. That shifted my perspective... but not my business practices. I decided to work for good people doing good business in New Zealand rather than large multi-nationals. Now the planet wasn’t just about my viewpoint. I remember my Dad saying to me after one dinner conversation that his generation had the best life, and I said that’s because you ignored the environmental costs. He replied ‘we didn’t know.’
So here I am. Now I know. Now I know there’s a profitable way forward, what am I doing about it?
The Global Blueprint for the New Economy
To date, the communication on climate disruption has been really poor.
Psychological barriers exist on how we communicate about climate change.
The Climate Change Distance Communication Problem
You hear a report that the high tide in Hawke’s Bay will be 2 feet higher and some of us joke saying, well at least the surf might be better! It doesn’t hit home because the problem feels distance.
The Climate Change Dissonance Problem
I travel a lot and I need to get to this city on a plane so here I am combusting fossil fuels to get there. How can I be for climate solutions when my actions say the exact opposite?
The Climate Change Doom and Gloom Problem
The future feels catastrophic when future 79 out of 80 news reports are saying that ‘we’re screwed’. The one that shows a solution therefore sounds delusional.
The Climate Change Passivity Problem
Produced by the fear of doom and gloom, people simply switch off.
The Climate Change Identity Problem
There are 7.3 bn of us with strongly held beliefs and those worldviews aren’t going to change because facts don’t change the belief. We bring facts to us that support our current belief. Our belief does not change. Giving facts to people about climate change does not win the day.
My 3,000 day goal
Taking on the greatest crisis human civilisation has every faced will take time. I’ve got time. I’ve estimated my son will be able to make his own mind up and spend as much time as he wants with his father in 3,000 days maximum. Until then, he’s with his Mum and doesn’t get a lot of say. What I do in the interim should set the foundation for his future, and make him proud.
I am working age. I know what to do.
The odds are long… but really the odds are irrelevant.
…once you know, you get to make a choice.
The one thing we haven’t looked at, is our mind.
Our thinking caused it and when you change your thinking you see a completely different world. Part of that is to understand that there is possibility in the way that is grounded, science based, practical, do-able right now.
A solvable civilisational crisis.
I’m not an activist. I’m not a scientist. I’m an entrepreneur, a marketer and an interview.
I’m not on the climate amelioration side. I’m the guy who can evangelise the change in a way that fits with people current worldview and hasten the time it takes to make the change while continuing to do so with commercial metrics in mind.
The Global Blueprint for the New Economy
Help create the blueprint for the new economy by showcasing what your company is doing on the biggest issues of our time. It may fit into one of these, or be a new one entirely:
Clean energy > Petro energy.
Clean air > High Particle Air.
Oxygen > Carbon dioxide.
Renewable > One time use.
Innovation > Same.
Good for all > Good for some.
It’s easy to take part. Share your contribution to the biggest global issue your company is seeking to change and I’ll give you a broader umbrella to tell your story.
Together I will tell the stories of 12 communities in 12 cities (I’ve told 100 CEO stories already) that either benefiting from your help or need more companies like yours to join you to protect them from the damage.
This global story will go to an audience of 50 million. Read more…
