British billionaire Hohn launches campaign to starve coal plants of finance
in.reuters.com
in.reuters.com
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
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.
The median household income in the United States is around $63,000 with an average household size of 2.6 people.
Unfortunately many of us simply lack the luxury to invest in such ways, we do our best just to invest. At best I could throw 1-2% of my income into an IRA and buy some ETF that invests in renewables which would equate to a drop in a swimming pool and interestingly at 2% it would be about 1% of my gross income less than the amount I spend on gasoline annually at current prices (I pretty much only drive to work and church, I bought my 2013 Impala in 2013 and I'm at like 68k miles).
I did no such thing.
In fact, I am unable to even contribute enough to meet my full employer match (like most of the people in my office).
I said I don't have the luxury of investing meaningful amounts of money into potentially risky stocks/funds that only invest in renewable energies instead of broad market/whole market index funds that also include fossil fuel driven companies. As far as tax-sheltered, it looks like 59-65% of Americans have access to a 401k [1], something like 3 million teachers will have access to a 403b, and those that don't have access to either are almost certainly eligible for an IRA.
[1] - https://www.cnbc.com/2018/03/12/how-many-americans-dont-have...
I'm not sure how this works in the US, but in the UK you can transfer whatever you have accrued in the default (defined contribution) workplace pension into a private pension plan, at any point.
They are called SIPPs, and you have many suppliers for them, and many of them offer a large universe of funds (or even shares directly). They are accessible to all taxpayers in the UK.
Getting broad market exposure, minus fossil fuels - there are a growing number of ETFs and funds that don't have exposure to fossil fuels - I think there should be more, and lower cost ones.
What's the source for this? There was a post from a few months ago that said the opposite.
You have taken a loss. No one who holds the stock is taking a loss. That's why gains and losses can be "realized" and "unrealized."
> Because I do not want them anymore it mean that that market has one less buyer so demand decreases by at least one.
The demand curve shifts to the left, and since stock buyers and sellers are the same people, the supply curve shifts to the right, and, yes, the equilibrium price drops. (edit: Come to thnk of it, the supply curve doesn't change, since it only reflects shareholders and you're dropping out by design. Still, the price goes down.)
But... the company still has all the same employees, still has the same hard assets (real estate, machinery, etc) and is still earning money. The company's fundamentals remain unchanged by a boycott of its stock.
The dividends they pay out per share remain the same, since those are dictated by profits and those haven't changed.
Their investors' assets are worth slightly less, but those investors are the ones who bought your shares, so they actually get more dividends paid out to them.
You've thus managed to reward the people who held on to their stock by making it cheaper for them to acquire more shares.
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.
Plus many companies do raise money by issuing new stock after IPO, or buy other companies with their own shares, and so a higher stock price benefits them, even if you don't buy those particular shares.
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 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.
I'm pretty sure that it's very very clear that the fires are getting maybe not bigger, but definitely more frequent. Sure 1973 might have had a fire as bad as the one this year, the problem is that Australia is now expected to have such a fire every year or even multiple times a year, instead of once a decade or so.
Forest management used to focus on eliminating fires entirely. This has the impact of building up brush to the point where any fire became massive. They thought they were reducing fires, but they actually just increased amplitude and decreased frequency.
It’s kinda like dams for flood control, but with different time scales. A few dams for flood control reduces flood frequency massively, and we build up population centers in what was previously deserted floodplain. Then a flood (dam failure eg Oroville came pretty close) has a huuuuge systemic and possibly chain reaction, trading semiannual road blockages from minor flooding into one Whoa Noah every hundred years.
You can’t manager a tinder dry forest with fire anymore because the droughts and dry seasons are becoming hotter and dryer than in recorded history.
What land management would fix this issue because deforestation?
The only thing that probably needs to be reincorporated in Australia is indigenous cold fire burns when the time is right.
How fire management could help if forest fires are main tool to move from forest to veld - forest will burn and replaced by bushes and grass
We start
It's clear the fires are getting much bigger than in the past. The fires were called by Australian people "unprecedented".
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.
In general, I'd say re-education is a job for the workers in question and government.
I understood:
- If governments stop funding coal, coal goes down.
- Governments are likely to stop funding coal.
- Coal is likely to go down.
- This risk isn't adequately represented.
It is an especially bad argument in this context, because not only is coal endangering the whole society, but when we close down coal plants, we continue to need electricity. So the coal plants are replaced, usually these days with renewable sources. And those tend to be more labor-intensive than coal. So "jobs" is actually a good reason to close down coal plants.
The only reason most existing plants might close is if cheaper alternatives provide a better service.
Remember, these projects are inherently very profitable because coal is cheap and easy (and dirty, but dirty isn't a cost). If a big name won't invest for a 5% return, I'm sure 1001 small names will...
Supply and demand. If the number of investors goes down, the remaining ones can charge higher rates. The 1001 small names would be stupid to invest for 5% if they can get 6%. The coal company would build even more plants if it were lucrative, but at 6% such and such big investment does not make financial sense anymore.
The world is awash with capital right now, money sitting around idle, looking for a place to be invested. Just look at how much money is being thrown at startups, how low interest rates are for countries who were bankrupt or on the verge of bankruptcy <10 years ago. This scheme is guaranteed to fail right now. Maybe in another credit crunch it has a chance?
Your argument does not show that it won't go up, but only that it won't go from 5% to 15% but rather find some balance at, say, 8%. Mission accomplished, coal is now at a disadvantage compared to what it was before.
> The world is awash with capital right now, money sitting around idle, looking for a place to be invested.
And considering that coal is not doing well (and thus has to offer higher rates), much of that money will be invested elsewhere. Sure, some will still be invested in coal but less than it would be if you didn't do that.
This type of argument pops up often: "but there is a small counteracting effect, so it will balance out to not do anything". No, it does not work like that.
Or it will settle at 5.01% due to the fact that a middle eastern sovereign wealth fund or two will be bigger than all investors who sign up to this scheme put together.
>And considering that coal is not doing well (and thus has to offer higher rates), much of that money will be invested elsewhere. Sure, some will still be invested in coal but less than it would be if you didn't do that.
But that has nothing to do with global warming or ethics of coal. It's mostly due to natural gas becoming so much more economical, which is mostly due to the shale gas revolution. It's a huge benefit to the planet, but mostly an incidental one. Of course politicians and energy companies will still use it to pat themselves on the back very very publicly.
>This type of argument pops up often: "but there is a small counteracting effect, so it will balance out to not do anything". No, it does not work like that.
Depends on the scale of the pro-acting effect. My guess is that the effect of 'ethical investment' due to ethics/global warming alone, and not due to fundamentals of energy markets that have to do with prices of natural gas, will be close to zero. If I'm wrong, it'll only be because a majority of investors who would have otherwise invested in coal (important distinction) jump on board this campaign, or close to a majority.
Which did not sign up at 5%, but at 5.01% it is now totally worth it... . No, it is entirely unreasonable to expect that if the current large investors drop out they will be more than replaced.
It might be the case and even likely that Hohn does not achieve the first step, but if he can convince a few large investors the effect will be much bigger than 5.01%.
> If I'm wrong, it'll only be because a majority of investors who would have otherwise invested in coal (important distinction) jump on board this campaign, or close to a majority.
If "just", say, 10% jump on board, what then?
No, not a few. Most.
>If "just", say, 10% jump on board, what then?
Then it'll make little or no difference.
Do you actually want us to be drowning in the horse manure, literally tonnes a day, from still depending on horses, because horseless carriages will under employ postboys and farriers?
Similar problems is with state workers in bureaucracies. In my country, citizens spend hours in queues, filling forms etc. when it could all be done online and have simpler laws.
If the purpose is for the state worker to have a job, let her stay at home and get paid, rather than causing more harm just to have a job.
(I’m not pro coal or anything, but I just don’t share the view that transitioning to higher tech solutions doesn’t have negative externalities—it does but they are borne by people largely outside the conversation, much like global heating).
Most wind and solar jobs are temporary construction/installation jobs. It takes a year or two for hundreds of workers to build a solar farm. Then the site can operate for 20 years or more with just a handful of permanent employees. Jobs in manufacturing the equipment used for renewable generation are steadier but also less plentiful. Factories for making batteries, turbines, inverters, and solar modules are already thrifty with human labor and becoming more so over time.
I actually think that these characteristics of renewable generation are benefits, overall. Aging populations benefit from technological developments that enable the same material standard of living with fewer prime-age workers. Low labor intensity also means that renewable electricity prices can fall further until hitting a price floor set by the wages of plant workers.
See a previous analysis here: https://news.ycombinator.com/item?id=13750787