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Are Your Companies Copping Out on Climate Change?

Whatever people may think, climate change is affecting Americans -- period. It's hitting us where it hurts, too: economic strength and Americans' livelihoods. The National Climate Assessment (NCA) release is hot off the presses today, clocking in at 1,100 pages of data contributed by hundreds of scientists. 

The economic impact of extreme weather events, like hurricanes and droughts (including California's recent emergency), is plain to see. Massive property damage and withering crops are among the many consequences of the increasingly dramatic weather patterns.

Fortunately, many companies, nongovernmental organizations, and government representatives are gathering to talk about the challenges -- as well as the economic opportunities -- of dealing with this growing problem. It's not all bad, although there are still many companies that need to show improvements.

Companies leading the way
Many investors still shrug off sustainability risks as having little or no connection to financial growth and/or material financial risks. Regardless of the conventional wisdom, increasing numbers of companies are not only acknowledging material risks, but devising strategies to improve their own sustainability and mitigate those risks. They're sharing what they're doing and discussing additional ways that private industry can promote sustainable practices.

It might sound surprising, but oil companies like Chevron and ConocoPhillips were among the stakeholders that participated in the NCA report. 

Nonprofit organization Ceres, which advocates for sustainability leadership, has long tracked and released the many negative economic effects of extreme weather. It released its latest report, "Gaining Ground: Corporate Progress on the Ceres Roadmap for Sustainability," at its annual conference last week. Sustainalytics, which provides environmental, social, and governance (ESG) data, contributed research and analysis to the report, analyzing approximately 600 companies.

Amid frequent complaints that all climate-change headlines scream doom and gloom, the Ceres report's title is a break in the storm clouds. Some companies are making progress. That's huge in an environment in which sustainability has often taken a backseat to quarter-by-quarter profits.

The bad news is that many companies are still lagging -- big time. 

Looking for the leaders
Here are some of the interesting, positive, and surprising moves some companies are making. Ceres defines these companies as "Tier 1."

Of the companies Ceres monitored, 24% link executive compensation to sustainability goals, compared to 15% in 2012. However, only 3% of companies have connected executive pay to voluntary performance goals such as reducing greenhouse gas emissions. 

  • Alcoa (NYSE: AA  ) : For an industrial stalwart, Alcoa has an unusual executive compensation policy. A 20% share of its executive cash compensation takes into account safety, environmental policies, and diversity. Environmental targets include reductions in greenhouse gas emissions and increased energy efficiency. 

For years, investors who were vocal about ESG issues were generally dismissed as cranks. However, shareholders are increasingly calling for sustainability at annual meetings. Ceres' report revealed that more than half (52%) of companies now engage their shareholders about sustainability plans. 

  • PepsiCo (NYSE: PEP  ) : Not only does Pepsi have sustainability initiatives, including development of healthful products, but it's also not brushing off shareholder discussions. These matters are on the agenda for its annual meeting. Further, its SEC filings outline some of its goals and challenges regarding climate change, water scarcity, and public health issues. The increasing amount of SEC disclosure by public companies highlights the material, financial impact of ESG issues.

Employees are an essential part of corporations' future growth and innovation. In 2012, 30% of companies included employees in their sustainability plans. According to the latest report, 42% of companies are doing so today. 

  • Intel: This giant chipmaker trains employees in sustainability and links some compensation to hitting sustainability targets.

The sustainable economy and sustainable companies
I like concentrating on the positives as often as possible, but Ceres' report does reveal discouraging data about how too many companies are behind the times. Investors should be concerned -- not only about the macroeconomic issues that the NCA report outlined, but also about their own companies' future growth potential. After all, all companies are tied to our entire economy's vibrancy -- or lack thereof.

Investors should note that many of Ceres' "Tier 1" companies are blue chips that are found in many portfolios. These are companies with lots of resources to tackle some of these issues.

When it comes to identifying the best long-term investments -- whether one is looking for massive growth or stability -- the above information should be considered as part of your overall qualitative analysis. Are the managements of the stocks you own tackling the biggest problems known today? Are they even finding ways to save or make money by dealing with needless waste, which is only one byproduct of unsustainable practices?

If they are, it says a lot about their leadership abilities. It's an indicator of whether they're willing to look past short-term profits to the risks of an ever-changing world. Companies that don't evolve are among the most dangerous for investors (and, often, everyone else).

Today, news headlines told us that climate change is touching our lives in many ways, whether we think about it or not. As investors, we can not only track how our companies are mitigating risk, we can also set up our portfolio for leaders, not laggards.

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Check back at for more of Alyce Lomax's columns on environmental, social, and governance issues.

Read/Post Comments (44) | Recommend This Article (19)

Comments from our Foolish Readers

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  • Report this Comment On May 07, 2014, at 3:01 AM, BillFromNY wrote:

    "The economic impact of extreme weather events, like hurricanes and droughts (including California's recent emergency), is plain to see. Massive property damage and withering crops are among the many consequences of the increasingly dramatic weather patterns."

    This is hilarious. Are you implying that the US is now experiencing its worst environmental catastrophes in history due to man's recent contributions to global warming? Oh, I guess I mean what is now called climate change for some reason.

    Have you heard of the Dust Bowl that devastated the Great Plains for the entire decade of the 30s. Dust storms that reached New York City?

    How about the 1900 Galveston hurricane that killed 8 to 12 thousand, or the 1935 Category 5 storm that hit the Florida Keys?

    If you want to worry about something, try nuclear proliferation. It's been almost seventy years since the US developed and detonated the first atomic weapons and even primitive countries like Iran and North Korea can make the bombs now.

    Fear the nearly unlimited group of suicide bombers willing to detonate the bombs at the cost of their own lives. Check out the effectiveness of the kamikaze pilots against the US Navy in the latter stages of the war. And fear a North Korea that will soon have an ICBM capable of reaching the west coast of this country.

  • Report this Comment On May 07, 2014, at 11:20 AM, damilkman wrote:

    I actually take a contrary view. I ask myself which companies have to spend money as a cost center to pacify people and which ones are actually spending there money in a misguided way. If I believe it will affect the bottom line I will not invest.

    What is unfortunate is that science is often treated as a religion or something you can change in an election. Science is based on facts and proved by modeling the past and predicting the future. There have been multiple case studies in history where one individual proved the rest of his/her peers wrong.

    Since the author is emotionally tied to climate change I will use the Guns Germs & Steel method and introduce a case study that has no emotional attachment. String Theory proponents like ancient Christianity was originally an outcast in the theoretical Physics community. Over time it became the dominant religion and followers ostracized all other alternative models. Never mind that not a single conclusion of string theory has ever been confirmed in experiments despite over 30 years of existence. Yet to attempt to explore alternate models is a death knell for aspiring physicists. Just like climate change the flaws in the model are shouted down. As predicted by George Orwell if you shout it enough times fantasy becomes fact.

    For me the discussion is not narrowed down to responsible practices but how much cost is introduced into society because of mandates based on fairy tails or the public being snookered. I leave it as open to debate that animal fats are not unhealthy, that free radicals are not bad, standardized education is stunting, and that statins actually are unhealthy for most of the population. How many trillions of dollars are moved around because of the failure of individuals to do the last part of science which is to ALWAYS QUESTION!

    Because of our failure to question we pursue activities that are harmful to us as citizens, harmful to the productive economic activity of companies, and ultimately harmful to society as resources are frittered for no meaningful game. Which companies and entities profit and which ones suffer because of additional burdens.

    To the author the next time you spread margarine instead of butter, take a multivitamin, or worry about your cholesterol much less are we changing the climate, what is the justification and the facts that compel you to take the actions you do.

  • Report this Comment On May 08, 2014, at 4:51 PM, hbofbyu wrote:

    If I am to trust the science that has been published on climate change the damage has been done and we have two options: Adapt to the changes coming our way, or start proactively attempting to cool the planet through geo-engineering and deal with the unintended consequences and conflicts of interest between governments as we turn forests into deserts or deserts into swamps. I think it is inevitable that we will choose to control the climate once we have the technology.

    Attempting to reduce our carbon output seems so futile at this stage of the game - China and Africa are still worrying about feeding people. Ending world hunger may be a more worthy priority.

  • Report this Comment On May 09, 2014, at 10:26 AM, damilkman wrote:

    To hbofbyu it is worse then that. The environmental movement gutted the fission industry. In our age of recycling we mandated that spent nuclear fuel not be recycled. From a pure statistics viewpoint if trillions of dollars and billions of lives are at risk from climate change the increased risk due to a nuclear accident seems quite reasonable. Ditto for supporting a geothermal solution until technology makes alternative energy cost effective.

    This is where the environmental movement has failed. People will support mandates that have visual positive impact to their quality of life. For example getting rid of the smog, cleaning up the water, and viewing a pristine view despite the higher costs gives me benefit. What they will not do is make a sacrifice when the benefit is nebulous and cannot be clarified. Poor people especially are less willing because they bear the brunt of the cost. If energy prices go up 50% Alyce and us might grumble. A poor family goes cold. Like George Washington Carver who endorsed that poor farmers grow peanuts, the environmentalist need to supply peanut butter for the public to buy in.

  • Report this Comment On May 09, 2014, at 5:32 PM, TheDumbMoney wrote:


    Notwithstanding what you may think of Walmart's labor policies, it should be mentioned here.

    While I'm just quite simply totally delLIGHTed that Intel "trains employees in sustainability [!] and links some compensation to hitting sustainability targets," and that Pepsi has "sustainability initiatives, including development of healthful products," Walmart has committed to being 100% supplied by renewable energy eventually.

    Walmart already has 335 renewable energy projects in operation or under development providing 2.2 billion kWh of renewable energy annually, which together with renewable energy bought from the grid supplies over 24% of its total energy needs globally, as of today. Its goal is to get to 7 billion kWh by 2020. It has primarily used solar power on the tops of its stores, but in 2012/2013 just installed its first 1MW winder turbine, which provides 15-20% of the total energy for its Red Bluff Distribution Center in California. It also just built its first store that uses nothing but LED lighting throughout.

    President Obama announced his new environmental initiates today at a Walmart store, and Walmart today announced it will double the number of on-site solar energy projects at its U.S. stores by 2020. Walmart is the No. 1 commercial solar energy user, and the largest on-site renewable energy user in America.

    Also, Walmart's Portland Supercenter features the city's largest eco-roof (green roof).

    I don't know the exact numbers, but in about the last decade, Walmart's greenhouse gas emissions have only grown at 1/4 of the rate of its total growth, about, and in the past few years the growth of its greenhouse gas emissions has essentially flat-lined.

    Whatever its motives (saving money), I'd say it qualifies when one is "looking for the leaders."

    $WMT shareholder for more than five years.



  • Report this Comment On May 09, 2014, at 5:33 PM, TheDumbMoney wrote:

    Sorry, I spelled your first name wrong.

  • Report this Comment On May 10, 2014, at 1:59 PM, skypilot2005 wrote:

    Climate Change is another “Big Lie” pushed by the Democrats and their liberal followers.

    It is going to turn out just like Obama Care. “If you like your doctor you can keep them. If you like your health plan you can keep it.”

    New McKinsey Survey: 74% Of Obamacare Sign-Ups Were Previously Insured


    These people really need something productive to do instead of messing with the rest of us.

  • Report this Comment On May 10, 2014, at 2:05 PM, skypilot2005 wrote:

    "Alcoa (NYSE: AA ) : For an industrial stalwart, Alcoa has an unusual executive compensation policy. A 20% share of its executive cash compensation takes into account safety, environmental policies, and diversity. Environmental targets include reductions in greenhouse gas emissions and increased energy efficiency. "

    Isn't "diversity" unconstitutional now?

  • Report this Comment On May 10, 2014, at 9:59 PM, michaelkm88 wrote:

    Little minds come up with little more than rhetoric. You ma'am are an ant trying to feel important in a big world. If you think that we can have this massive of an effect on something so large as a planet you need to stop posting here because your ridiculous assumptions are pathetic. This is supposed to be a serious website for investing, not pathetic wining about nothing.

  • Report this Comment On May 10, 2014, at 10:56 PM, mdog wrote:

    Ms. Lomax,

    Before you post another Global Warming / Climate Change / Climate Disruption related article, go read ClimateGate by Brian Sussman.

    Just like me, you will get educated as well!

  • Report this Comment On May 11, 2014, at 9:56 AM, wvowell wrote:


    Let's not forget one of your heroes (ALGORE) on JANUARY 27, 2006 predicted that we had 10 years before the earth was going to be scorched, in other words turned into a "frying pan". So I guess we have less than 2 years before the earth will be so hot no one can live on it.

    Oh let me add one other thing in 1988 another one of you idiots (Ted Danson) predicted we had 10 years to save the Oceans or we would pay the consequences.

    You believers in this nonsense about the earth freezing, cooking, oceans destroyed, or what other scary thing you want to come up with is costing us millions of dollars, lives are being destroyed, jobs are being killed all in the name of "CLIMATE CHANGE".

    What is it going to take to wake people up!!!

  • Report this Comment On May 11, 2014, at 10:36 AM, DonkeyJunk wrote:

    Well, at least we have a nice diversity of dissenters who eschewed the amusing "the climate is always changing" or "the sun is hotter" arguments, though I suppose blaming the rich scientists and their global cabal for the overwhelming consensus on climate change is my favorite. You can always identify a climate scientist by their booming Escalade as they roll by in Beverly Hills.

  • Report this Comment On May 11, 2014, at 1:42 PM, Montereyjackson wrote:

    Productive conversations about climate change theory often begin with the physics, which is simple and powerful in my opinion.

    Focusing on how much monetary loss or harm to humanity occurred in what decade is unlikely to persuade anyone either way.

    The theory makes a simple prediction based partly on a basic characteristic of thermal energy: the coldest places and times will warm most.

    As for investment, Berkshire Hathaway does not take climate change directly into account when making investment decisions, according to recent statements by its leadership. But Berkshire is opportunistic and good at capitalizing on incentives, so its utilities are greener than most.

    It is also good at locating businesses with good economics and high returns on assets. Such businesses may withstand the effects of climate change for the same reason they'd withstand the effects of inflation.

  • Report this Comment On May 11, 2014, at 5:59 PM, TMFLomax wrote:


    Actually my Prosocial Portfolio is up about 56% since 2010. Not shabby.


    I in no way argue with you about Wal-Mart's sustainability initiatives. They are great. And a company like Wal-Mart can definitely move the needle. Even little things like offering its customers inexpensive, energy saving light bulbs (which in turn save them money) -- those are pretty huge things.

    You're already aware that Wal-Mart isn't exactly my favorite on the labor side, and I would like to see something like some cost savings going more strongly to support employee benefits/pay (even cost savings it can derive from sustainability goals).

    Anyway, I do try to give credit where it's due, and Wal-Mart does deserve that credit. (And no worries, my name gets misspelled quite frequently!)



  • Report this Comment On May 11, 2014, at 9:54 PM, pedorrero wrote:

    Climate change may or may not be true. It does not matter at all. Let me show you why. The fundamental problem is a branch of economics (or mass psychology -- related, after all, isn't economics supposed to be the study of large groups of people and how they allocate resources?) "Damilkman", you got closest to the heart of the matter: The Social Trap (also called the "Tragedy of the Commons"). You can google that if you like. In very simple terms, it means that a huge collective problem, let's say "Pollution" as a generalization of (possibly) human-caused global warming. It is a problem that affects everyone, or at least a large group. Problem: at the individual level, changing one's behavior makes almost no difference to the outcome, and in fact may be "negative" for the individual. Social traps are intractible -- meaning "very difficult to solve", not necessarily impossible. But good luck solving climate change. Consider the general problem of "solutions." Even if I were the wisest man in the world, and had all the best answers, how much success do you think I'll have convincing several billion other humans to change their erring ways? Exactly. We are basically screwed. "Optimist" answers usually rely on some combination of miracle of technology, religious conversions, or denial of basic human nature that there is no evidence to believe will ever change. We are doomed. The best likely outcome will be a massive reduction in the population and even if that happens...the cycle starts all over again.

  • Report this Comment On May 11, 2014, at 11:12 PM, fishers2tall wrote:

    Actually Alyce 56% isn't something to brag about since a Dow Industrial Index fund would have returned the same amount from the beginning of 2010 till now and a S&P Index fund would have done even better at a 64% return in the same time frame. These figures are not even taking into account the fact you would have reaped at least some dividend income along the way so these returns are actually understated.

  • Report this Comment On May 12, 2014, at 1:14 AM, CraigWPowell wrote:

    Tesla with its electrical cars is also in this game.

    See Bullish Algorithmic forecast on $TSLA $SPY

  • Report this Comment On May 12, 2014, at 8:18 AM, TMFLomax wrote:


    It's difficult to beat the market right now since it's been in a massive bull market for years now. About 5.

    You're right, I shouldn't brag, because bragging is poor form. However, I think as an active investor, 56% isn't bad. At any rate, I was asked "how the Prosocial Portfolio is working out" so my point is that it isn't doing badly, which I think the commenter was basically implying it must be.

    Another thing, during bull market phases like the one we've been in, a lot of weak stocks get floated up with the strong. So, I would say in no case should any of us get too high-and-mighty about returns right now. I personally think that in focusing on investing in strong companies is the way to go, and that's what I've been trying to do with that portfolio. I don't think 56% shows a flaw in the way that I invest.

    CraigWPowell, yes, Tesla is also in this area.



  • Report this Comment On May 12, 2014, at 9:03 AM, wvowell wrote:


    As another poster said the whole market in general is BEATING you.

    Why didn't you comment on ALGORE's absurd prediction of a scorched earth by 2016 or TedDanson's crazy claim that the oceans would be destroyed by 1998!

    What about the 1960's when all you climate idiots were claiming a new ICE AGE.

    Notice how every prediction of the earth's demise caused by PEOPLE has been WRONG!!

    This Climate Change Crap is destroying jobs, people, and turning the world into poverty for us all except the ones in control.

    And you Alyce are not one in control. So you are helping yourself to your on demise!!!

  • Report this Comment On May 12, 2014, at 9:09 AM, wvowell wrote:


    One other thing about your ProSocial Portfolio. How much of your 56% is because of our government mandates, regulations, and tax breaks?

    In other words how much is due to STEALING from us to give to Windmills!! (PS--Do you know how many birds are being killed by windmills?)

    Tesla what a great example of the government stealing from us and giving to companies like this. They sell a car for $100,000 (wow we all need one) and the government gives the buyer a $20,000 tax credit (who benefits from that?)

    This ProSocial Climate Change trash is destroying us. And useful idiots like you help it along.

  • Report this Comment On May 12, 2014, at 9:56 AM, TMFLomax wrote:

    Actually, a lot of companies' returns are from a lot of regulations (regulatory capture), tax breaks, subsidies, lobbying... I most certainly think that that happens a lot in our entire marketplace and that is not something I'd actually call "prosocial."

    I don't actually think my Prosocial Portfolio is particularly reliant on those, and I wouldn't want it to be. I never actually said anything about taking advantage of any of those aspects at all.

    Tesla is not in the Prosocial Portfolio, maybe that's why you went in that direction, I'm not sure.


  • Report this Comment On May 12, 2014, at 10:04 AM, damilkman wrote:

    I also have a problem with TESLA because of the pollution created by the extraction of lithium. I suppose as long as its not going on in our country out of site out of mind?

    I have read a number of articles claiming that the TESLA model S is not efficient because of loss of power just in steady state. I cannot state as a fact how significant this is since there are people on both sides.

    I do agree with wvowell that what really irks me is I feel that Musk is just another Perot, an individual who is getting rich on my dime.

    Now I am not against sustainable human footprints for human activity. What bothers me is the championing of technologies that have no hope. What is the cost to society when warped incentives to encourage people to do wasteful activities. Me personally I think we should pore resources into the glucose battery. Extracting energy from sugar has been shown to be by far the most efficient method. It means treading water for perhaps another decade as there are many hurdles and obstacles. But if the technology were mastered it would so something that could stand on its own without the need of government incentives.

  • Report this Comment On May 12, 2014, at 2:02 PM, HoosierRube wrote:

    The sky is falling, the sky is falling.. Run away, run away. Be afraid, be very afraid. The chicken little syndrome is alive and well.

    I would like the author to show a little proof and not just parrot the tyranny of the 'social conscience'.

    One should ask themselves, why haven't we seen an open debate on this issue? There are real scientists that have put money on the table for this debate. And not a single taker. That should be of concern to everyone.

    Lets look at the recent facts.. The antarctic polar cap has grown 54% in just the last year. Is this proof that we are into a global cooling period? If so, The sky is falling again. *sigh*

    Not a single computer model has proven out the 'theory' of global warming. NOT ONE!.. There is no proof of any kind. It is a theory and the honorable thing the chicken little's of the world should do, would be to make it clear, this is only a theory. But alas, they do not.

    However, there are computer models that will predict what is going on. A change in ocean currents. Yes, ocean currents. The most influential climate force on this planet.

    You want to make good investments? Look for the companies that are focused on their customers and not the whining shrill of the uneducated and easily fooled.

    Why would anyone invest in a company whose goal is to please the bullhorn blaring, self-congratulatory government pimps?

    Companies exist for their customers and not for the pleasure of those that think they can create heaven on earth or the employees or the government hacks.

    Just what prompts people to know what is right for someone else? I don't see any great accomplishments from this author.

  • Report this Comment On May 13, 2014, at 10:46 AM, damilkman wrote:

    Even if I am against the premise I believe dialog is good. If Webster, Clay, and Calhoun had the same attitude as our modern day internet flame trollers, American History would not be as colorful. Alyce serves a very important role which is a position on a debatable subject. Immersion in contrary opinion and rhetoric is good. If the conservatives listened only to Fox and the liberals to MSNBC neither would be in an adequate position to properly debate their beliefs. If you are going to treat as a zero sum gain at the very lease understand you must know your enemy. This is the fallacy of most movements. They are so consumed by their self righteousness they fail to observe how the other side ticks. If one is truly committed to winning an argument being angry and wallowing in the angst of the other sides "stupidity" will never win you a convert. At the very least the debate sharpens your position as you are held accoutable to back your beliefs with fact.

  • Report this Comment On May 13, 2014, at 1:57 PM, Montereyjackson wrote:

    Damilkman, you are right about dialogue. This is an interesting discussion and credit to Alyce for starting it and taking a stand.

    Climate change is highly complex subject, and its complexity has led to a wide range of fairly reasonable positions, including opposing positions.

    The positions related to the politics of the issue are the ones we tend to focus on. But there are others worth our attention also. For instance, Brendon Matthews' article, posted on the Fool's home page today, quotes Charlie Munger, vice chairman of Berkshire Hathaway, answering a question on climate change at Berkshire's annual meeting.

    "Climate change and global warming are indisputable, but it's hard to say how it'll affect economic patterns and so on. I think we're (i.e. Berkshire) very well located, regardless. Transmission lines -- we're going to need to produce electricity regardless. So I think we're in very good shape."

    Munger also said that he doesn't think the 100-year climate projections were likely to prove accurate.

    Munger probably worries about climate change a lot less than I do, but I like the logic of his position. On one hand, physics is physics. On the other, who (or what computer) has ever successfully modeled the behavior of a complex system a hundred years out?

  • Report this Comment On May 13, 2014, at 2:41 PM, dmawhinney wrote:

    Climate change is inevitable, but we don't/can't know in real time whether it's warming or cooling. For your enlightenment Alyce, there has been no evidence of global warming for more than ten years, which is why I guess the politically correct police changed the mantra. The problem is these same policemen deny government and university research grants to those who proclaim the truth. The companies you highlight are merely caving to the politically correct position on this subject as being an easy way to deflect media attention.

    You can be 100% certain that any time an issue develops a politically correct way of thinking, that way of thinking won't stand up to enlightened, factual truths.

  • Report this Comment On May 13, 2014, at 10:34 PM, InvestForGood wrote:

    Hi Alyce,

    Thank you for this article. I know it must be challenging to call attention to this very serious issue amidst such criticism, but it is absolutely necessary. It amazes me how offended the people are who have responded to your post. Almost in a yelling tone. What is so threatening about your post? Scientists from the highest levels of the international community are forming a consensus about the realities of climate change in report after report; and yet, we, in the US, are so offended to the possibility of being part of the problem. People are so caught up in being right or wrong that we miss the larger picture that extreme devastation is taking place on our planet on many fronts that needs real solutions, and unfortunately, the poorest peoples, who are not posting on this blog, who do not have money to invest, are the ones who are suffering the most.

    Please keep this kind of information coming as many of us do wrestle with how to balance sound investing with appropriate social practices. The good news is that, if humans are primarily responsible for global warming/climate change--which I believe we are due to widespread industrialization taking place at a global scale in a relatively short period of history--this means we can also work together to find comprehensive solutions. Investing responsibly could be a good step for many of us.



  • Report this Comment On May 14, 2014, at 10:46 AM, damilkman wrote:

    To InvestForGood you nailed the problem us pessimists have. Science is never based on concensus. It is only based on fact. There are all sorts of examples in history where the 99% got it wrong until the one individual proved them wrong. Science is not a democracy. It is a dictatorship of the truth. If the majority decide that the sum of all integers equals -1/12 it does not make it so.

    Me? I will profess that the world is round and orbits around the sun even if the establishment has reason to state it is not!

  • Report this Comment On May 14, 2014, at 5:46 PM, TMFLomax wrote:

    damilkman - I am a big believer in civil discussion too, thank you for your posts. Trust me, although I have strong opinions on things, I do like to try to listen to opposing views. This gets me in trouble sometimes -- I'm not particularly lock step and a lot of people get offended sometimes on all kinds of things.

    The climate change debate has gotten highly politicized as several of you point out, and that actually bugs me very much. It's one thing to bring up a lot of the reasonable discussions and even disagreements above, but when it's politicized, well, we know what happens. People start taking sides, just for starters, and that usually doesn't get any of us anywhere.

    MontereyJackson, thanks for bringing up Brendan's article, I hadn't seen it yet, and I'll have to check it out.

    I find that really interesting about Charlie Munger's comments. He says it's "indisputable," and on the pure business level, disclosure that they don't believe it will have a negative impact on the business -- more companies are disclosing whether or not it could potentially have impact, and for many it could. I feel like Warren Buffett and Charlie Munger are smart (understatement) and are people who shoot straight and aren't exactly prone to hysterics. So, it is a comment not to take lightly, I think.

    Also, I will grant that modeling and predicting is rough (as he says and some of you are also pointing out). What's also a problem that it seems that from what I've been seeing, many pieces of data are actually showing that the predictions about climate change have actually been too optimistic (the recent news about the Antarctic sheet breaking off didn't sound so good, speaking of this whole conversation).

    I do not believe that companies that are dealing with these issues are simply bowing to the "politically correct." On the one hand, they will have to gear their businesses to what consumers and investors are looking for (and granted, the possibility of regulation). On the other hand, it's not like these massive companies don't recognize the importance of profit.

    Monsanto isn't the most popular company in the world, but late last year it bought a company called The Climate Corp. for $1 billion somewhat recently. It appears there's a reason it bought it. It's to track climate issues -- an important part of its business given the fact that it deals with agriculture, which faces serious problems given changing weather conditions (understatement) as well as hostile weather conditions in some areas that can't grow food (which granted, its products try to tackle).

    I am not a fan of Monsanto, but I do find this a significant event. I also do not believe that Monsanto is the kind of company that would spend $1 billion on a frivolous frill.

    Interesting stuff right here, including a quote from Monsanto on the topic:

    I see this as significant beyond the big fights about climate change -- extreme weather IS an issue right now, and we have seen a lot of it lately. Ceres points out these issues a lot -- not just storms but also water scarcity such as the extreme drought conditions in places in the U.S. lately, some of which continue right now and have been going on for quite some time, California is a good example.

    Investforgood, thanks for your encouragement too! It's a sticky topic, but it's an important one, and I agree with you completely: trying to "balance sound investing with appropriate social practices." It's not a bad choice some of us make! I feel strongly about that.

    Thanks for the thoughts folks. It is good to talk about these big issues in investing and otherwise!



  • Report this Comment On May 14, 2014, at 6:17 PM, Montereyjackson wrote:

    How about this? Science is a process of constructing theories or models which explain known events and which predict other events yet to occur, or yet to be observed.

    If certain events occur and/or are observed, the climate change model or theory is proved. If others occur, it is disproved.

    I think it has been proved. If it were to be disproved by future events, I would be embarrassed by my error, but I would also be so happy and relieved, that the embarrassment wouldn't matter.

    However, I am exploring other prospects for future happiness, because that one is a long shot.

    One prospect is in doing things that align with a view of the future that's probable and actionable.

    Acts of good will certainly have their place.

    When it comes to investment, several approaches have been touched upon:

    Investing in companies committed to sustainability, like those presented by Alyce.

    Investing in innovators and disrupters.

    Investing in companies that are less reliant than most on present and future activities requiring carbon emissions. These could be companies focused on renewables, but they could also be companies that make good returns on their tangible assets. (If replacing those assets requires activity that emits carbons, at least the level of that activity will be low, relative to business done and profit achieved.)

    I think Charlie Munger is right when he says that how climate change will affect economic activity is hard to predict. If he is right, putting lots of eggs in a few baskets isn't the best approach unless the investor has some special insight.

  • Report this Comment On May 15, 2014, at 4:23 AM, BillFromNY wrote:

    Dear Alyce,

    As the first person to comment on your article, I certainly did not expect so many nasty and vulgar attacks on you. Perhaps since I have reached the advanced old age of 63 I have become skeptical about climate change and world population and many other issues that I think had merit on the surface, but have mostly had the result of publicizing the proponents.

    Born in 1951, I think that in the future my generation may be viewed as the lucky group that (if you missed Vietnam) lived in a time of peace and prosperity. With a lifelong interest in history, I doubt that America will continue this period for another fifty years. The oceans no longer protect us. It is not hard to see a North Korean leader hunker known in his bomb-proof bunker and strike the United States with a nuclear missile, not caring about his own subjects or any nearby populations which the US might strike as a poor revenge.

    Anyway, it's valuable for you to keep the other side of the climate change argument out there, since none of us really know.


  • Report this Comment On May 15, 2014, at 7:49 AM, devoish wrote:

    Dear Bill,

    I think we know. I think it is genuinely possible for humans to learn and to know stuff.

    For example, back in the 1970's a minority of scientists modeled a set of circumstances which might cause global cooling. Over time as more was learned about climate and some events that the minority considered possible did not come to pass, they were able to consider new information and change their expectations.

    Another example might be a family on vacation expecting to return home by 6:00pm. An accident on a major highway might cause them to be delayed in traffic and change their arrival expectation to 8:00pm based upon their new information.

    Another climate related example of learning over time would be the scientist who compared Northern Hemisphere surface air temperatures to solar cycles back in 1990 using data updated to 1985. At the time he observed what appeared to be a connection between 11 year cycles and temperature. Ten years later, in 1999 and with more data it became clear to Lassen that the connection was broken as temperature continued to rise in defiance of solar cycles, and he learned that something other than solar cycles was having a much greater impact on temperature.

    What was a healthy skepticism toward CO2 induced climate warming way back in 1985, really is not healthy any more. There is just nothing out there that might overwhelm the warming effect of CO2 any more except the likely release of methane which will make warming worse.

    At the end of the day, I think we will sorely regret the 2000 Presidential election and the 15 year head start government intervention might have given us in dealing with reducing CO2 in the atmosphere.

    Best wishes,

    Steven Cecchini

  • Report this Comment On May 15, 2014, at 10:47 AM, Zinj wrote:

    Why the anger and name-calling from doubters of climate change? Some of you couch your "arguments" in reason, but your writing betrays an emotional drive of some sort.

    It is simply not in dispute what the chemical properties of CO2 (or other "greenhouse" gasses like methane) are. These are very simple molecules which have been exhaustively studied for well more than a century.

    You can model, both in theory and in a physical setup, a closed chemical system with inbound radiation (sun) and outbound radiation. When you change the chemical composition of the gasses you use in your "atmosphere", guess what...the SYSTEM changes!

    It's absurd to expect you can change something in a closed system and it have no effect on that system. That's willful ignorance.

    What we can't do with sufficient precision, however, is to predict the magnitude or the timing of the changes on our global climate system. There's ample room for inquiry, analysis, postulation and debate.

    "Nothing happens" is not a reasonable stance.

  • Report this Comment On May 15, 2014, at 1:15 PM, damilkman wrote:

    The problem I have with Global Warming is the same I have with Creationism. A certain facet of people have an agenda. By arguing that Global Warming exists it furthers their agenda. Never mind Science! It is well documented that the data sets that everyone quotes as proving absolutely the truth of Global Warming have been manipulated and revised using homogenization techniques. Revising data sets for known inaccuracies is okay. However, when someone with an agenda has a free hand in revising up and down what should already be valid data points will of course generate the expected result. It is about as useful as putting a tyrant in charge of counting the votes of an election.

    So when Alyce titles her article "Are Your Companies Copping out on Climate Change" I reorder how much is it costing your company to appease the rubbish makers. As far as I am concerned these costs are no better than the tariffs Jews had to pay in medieval times because they were Jewish. More troubling is when Al Gore trumpets how the naysayers have to pay. So were going to pay because we believe otherwise. Not much different than a homophobe saying all Gays are going to pay for their supposed evil. Thus the problem when science becomes religion.

  • Report this Comment On May 15, 2014, at 2:13 PM, TMFLomax wrote:

    Hey everybody,

    I just ran across this, climate change to affect sovereign credit ratings, according to S&P:

    Again, like the point I was making in the article, we are starting to deal with and will have to increasingly deal with economic impacts.


  • Report this Comment On May 15, 2014, at 7:56 PM, BillFromNY wrote:

    In the real world what happens is this: institutions like S&P and Lloyds, being exposed to a torrent of media coverage of global warming, open new departments to deal with climate change. Once these departments have been created, they must generate reports to justify their existence. The people hired by S&P to evaluate the existence and effects of global warming are not going to turn in a report which states that global warming is still in question, the effects of global warming even more so, and therefore S&P should not be concerned with it at this time.

    "According to reinsurer Munich Re, overall losses in East Asia, for instance, used to be below $10 billion per year, but over the past decade have regularly topped $20 billion – and peaked at over $50 billion."

    This statement is a perfect example of a argument made supporting the existence of the increasing destructiveness of global warming based on a short and ambiguous statement of facts. Are insurance losses due to the increasing number and violence of storms, or are they the result of more insurance covering more items and circumstances being purchased? Did you notice that the nations most affected by an S&P crackdown are the poorest nations in the world?

    I believe that global warming has already had its greatest public exposure and has been found wanting. Our species has all the problems it can attempt to handle in the here and now and are not willing to devote resources to ward off speculative disasters on the planet long after they have departed.

  • Report this Comment On May 15, 2014, at 8:59 PM, hbofbyu wrote:

    The future has two options as I see it:

    1. The earth will get warm.

    2. The earth will get warm and they will take your money.

  • Report this Comment On May 16, 2014, at 12:05 PM, Montereyjackson wrote:

    hybofbyu, thanks for that one! Briefest statement I have ever read on this subject, and one of the wittiest.

    Zinj, very nice summary of the situation from a system-focused perspective! It's where we need to start to get a good understanding of the issue.

    Additional thoughts about the investment side:

    Alcoa, mentioned by Alyce, is seeing more demand for its products because they are sometimes lighter-weight than steels of comparable strength.

    A smaller company in the same industry is Constellium. Recommended a Meryl Whitmer, a Berkshire board member, in Barrons winter 2014. (Stock up 15-20% since.)

    Tesla's stock is now even more expensive than its cars. But the cars are selling because they are great cars to drive, not just because you can run them on solar power (if you have lots of panels and a sunny back yard).

    Berkshire trains have their coal-hauling issues, but trains will probably always be the most fuel-efficient way to move lots of cargo across a continent.

  • Report this Comment On May 16, 2014, at 5:24 PM, eddietheinvestor wrote:

    To paraphrase Ms. Lomax's myopic and dictatorial first sentence, "Whatever people may think, climate change scientists purposefully ignore any research that doesn't reinforce the theories they are paid big bucks to support--period."

  • Report this Comment On May 16, 2014, at 11:49 PM, skypilot2005 wrote:

    Global warming?

    Ya. Right on.............


    Someone Tell the Record Polar Ice Cap It Should Be Melting

    "The Southern Hemisphere polar ice cap for the month of April 2014 surpassed its greatest April extent in recorded history. The new record extends a long-term expansion of the Antarctic ice sheet that defies alarmist claims that global warming is or should be melting the polar ice caps.

    Ironically, the record Antarctic ice extent occurred as global warming alarmists released a paper claiming recent global warming has now made it inevitable that Antarctica will lose its ice cap nearly 1,000 years from now. The establishment media has given the alarmist paper extensive and uncritical press coverage, even though objective scientists have pointed out glaring flaws in the paper. For example, objective scientists question why recent warming has put the Antarctic ice sheet past a tipping point when the ice sheet has survived many warmer periods in the past.

    Satellite instruments measuring the precise extent of the Southern Hemisphere polar ice cap report the polar ice cap has been steadily growing for decades. Moreover, the combined extent of the Northern Hemisphere and Southern Hemisphere polar ice caps have been above the long-term average almost uniformly since 2012."

  • Report this Comment On May 18, 2014, at 12:36 AM, OnceDaisy wrote:

    Oh, please! Such anger – so many uncredentialed experts!

    Is there some unwritten rule that anti-climate-change people can argue as offensively as they wish, but people who take the other side of this long-resolved issue must stay calm and treat the anti-climate warriors with a level of respect they have not earned and would never reciprocate?

    Allow me to establish a precedent, then.

    I am always stunned by the ferocity with which the ignorant argue for their views. Over time, I have realized that the anti-climate-change arm of this phenomenon, amply represented here, is simply arguing its own quasi-religious belief – i.e., an uncritical, emotionally driven belief in the way it wishes things were.

    Fortunately, in arenas where truth matters and evidence and logic rule, these crazy voices are simply not present – they have no force and no effect.

    In particular, a noted legal scholar has surveyed the landscape of court cases in the US and concluded as follows:

    "Viewers of certain television net¬works, readers of certain newspa¬pers, and anyone visiting Capitol Hill would come away with the impression that there are serious questions about whether climate change is occurring and, if it is, whether it is mostly caused by human activity. One place where there are few such questions is the courts. In fact it appears that (with one lone excep¬tion in a dissent) not a single U.S. judge has expressed any skepticism, in a written opin¬ion or dissent, about the science underlying the concern over climate change. To the contrary, the courts have uniformly upheld this science . . . ."

    I refuse to be polite when confronting irrationality – everyone has a right to an opinion, but some opinions are so unfounded as to be absurd, and are presented with such anger and calumny as to deserve a strong response. These opinions, again well represented in this thread, simply deserve no respect. I find it extremely gratifying that the courts have given them exactly that – no respect.

    One final thought: if you are arguing a point that has been so soundly rejected by so many different judges on so many different occasions – well, at some point you may want to consider . . . oh, never mind, why waste time on a hopeless endeavor?


    A Drumlin Daisy

  • Report this Comment On May 19, 2014, at 1:21 PM, damilkman wrote:

    A Drumlin Daisy is a perfect example of how if you yell something enough times per George Orwell fiction becomes truth. Removing climate change from debate recall that it was scientifically and spiritually proven that black people were less intelligent then white people. Just because a judge or any sample space of people spout something as fact does not make it a fact. Something is only proven as true when it is proven.

    Yet we live in a world where it is taken for granted that high cholesterol is bad, fat is bad, free radicals are bad, dust creates precipitation, string theory is true and 150 years ago all black people were stupid. And yes there were judges and priests who professed that namely most of them.

    Yet if you look at what those movements gained by imposing their beliefs on others you gain insight for every spurious movement be it Global Warming, Gun Control, Slavery, Prohibition, and yes even why your doctor pushes 3 billion pills that you must have on you.

    Look at who benefits or gains power for any given movement. The entire point of this article sheds light on the issue. People and companies are having to change their practices because of the influence of those who push Climate Change no different to why tens of billions of dollars are spent on Cholesterol medication that actually hurts most of us.

  • Report this Comment On May 19, 2014, at 7:08 PM, BillFromNY wrote:

    Daisy, that's a good one.

    I thought you were going to hall out some legal cases and cite some respected jurors.

    Instead you take the very liberal New York Law Journal and post an article by the director of the Center for Climate Change Law at Columbia Law School (another very liberal institution). And this man just writes a survey article, choosing cases where the law seems to smile on Climate Change and ignoring any that take a contrary position.

    This is exactly what I referred to above with respect to Standard & Poor's and Lloyds: an institution, having heard enough from the media about global warming and ascertaining that it is a primarily liberal issue, sets up a department to address the matter.

    And you're trying to tell us that this man approached the subject in perfect objectivity and, if supported by the facts, would have written an article saying that just about every judge in every court system had determined that global warming was not a real phenomenon and therefore he was resigning?

  • Report this Comment On May 25, 2014, at 6:56 PM, Montereyjackson wrote:

    To criticize Drumlin Daisy's argument by denying the credibility of its source is ok as far as it goes. But that's not real far. How about coming up with a respected conservative legal expert who has made an opposite point?


    I try to keep my ears open to a wide range of arguments on this issue, including those made against the climate change model by columnists and editorial writers at WSJ.

    A conclusion I've reached from doing that: some of the wide differences of opinion on this issue have a cultural as well as political basis. There are a number of fault lines in our culture and at times this argument runs along one of them.

    Cultural assumptions do change, but usually its not because of good conversations or good books. Events drive the change, and the books and conversations play a secondary role.

    A recent example: Simpson-Bowles had a lot less impact on avoidance of a government default than did televised images of violence in the streets of Greece.

    Events. Not close enough to home to solve the problem, but graphic enough to cause crisis avoidance.

    (Interestingly, government indebtedness was and is an issue whose urgency and complexity make it comparable to climate change.)

    That doesn't mean that those of us who are convinced, both heart and mind, that climate change is real should become fatalistic. There's no lack of things to do, nor of opportunities for clarity and good will. Ahead of events and after.


    On the investment side, Alyce focused a while back on a quote I introduced from Charlie Munger, Berkshire Hathaway's vice-chair, that climate change was indisputable. I want to add to the thread what I know of Munger's position, as revealed in Q and A transcriptions and Q and As I have witnessed, as well as public filings.

    Berkshire's 2013 annual report disclosed a risk to revenues at Burlington Northern, based on possibility that government regulation causes less coal to be burned, and therefore hauled by Burlington.

    Munger has said he doesn't expect global warming to be a major catastrophe for humanity. He has said it will unfold over long enough time frames for cultures to adjust to it. But he has said the dislocations caused by it will be painful.

    He does not believe that 100 year projections will prove accurate. At one point, he said one would have to be a "pot-smoking journalism student" to believe in some of the detail projected for the year 2100.

    (Charlie Munger!-- love this guy!)

    He has recommended, in a general way, a tax on fuel. And has said the European approach of issuing carbon credits isn't a good idea.

    Five or 10 years ago, Munger predicted that over the very long run, sunlight would eventually become the global economy's main source of energy. He thought nuclear power could be a bridge to that. He said at the time that solar power wasn't yet investible and shouldn't be subsidized. He thought innovation and market dynamics would take the price lower.

    Berkshire has not widely thought of a green company but personally, I wouldn't count it out. Fortune recently listed one of its top executives, Greg Abel, has one of its top 25 eco-innovators.


    Disclosure: I am long several companies mentioned by me or others in this thread: Berkshire, Tesla, Constellium, Alcoa (bonds).

    Best wishes to all. See ya down the road.

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Alyce Lomax

Alyce Lomax is a columnist for specializing in environmental, social, and governance (ESG) issues and an analyst for Motley Fool One. From October 2010 through June 2015, she managed the real-money Prosocial Portfolio, which integrated socially responsible investing factors into stock analysis.

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