Earth Day is Every Day for Investors

Earth Day 2019 was April 22^nd.  Started forty-nine years ago to increase awareness of the environmental, the first Earth Day featured sit-ins, demonstrations, marches, and speeches.  As the years have gone by the day has been commemorated with clean-up projects and, of course, more marches and demonstrations.  Today, the day after Earth Day, the environmental imperative is ever more palpable.  Indeed, each day as we go about our routine the effects of global warming and climate change hit us full on the face  -  unpredictable and uncharacteristic weather patterns, unexpected and disastrous wind and rain events, unusual animal migrations.

The ramifications of melting pole ice, rising seas and shifting agricultural lands are so catastrophic for humans, it is clear one single day of activism will not be enough.  Every day of the year must be dedicated to the environment just to mitigate some of the most negative results for humans  -  no access to potable water supply, reduced food production, life threatening weather events, loss of sea shores and beaches  -   to name just a few.

Argentine Glacier Collapse

Of course, there are the ‘deniers’ who will not acknowledge changes in the climate let alone human responsibility.  The U.S. White House is occupied by an individual who has used the social media platform Twitter over one hundred times to question the validity of climate change ideas.  “Hey it is cold outside, global warming must be fake,” he tweets.  Donald Trump gives bombast and power to those who oppose the plans to change human consumption.

There are, of course, compelling reasons to reject change.  Those who are currently in control of economic resources are often the most egregious violators of intelligent conservation.  They are also the most frequent targets of climate change plans.  Take for example, oil and gas companies that are some of the largest business organizations in the world.  The combustion of fossil fuels and the conversion of petroleum to plastic polymers are most frequently cited as culprits in global warming and environmental degradation.  

Initially, the oil and gas industry denied climate change data and stonewalled efforts to adopt more benign alternative fuels.  Eventually, oil and gas companies began cloaking themselves in ‘green’ mantles by providing token investments in alternative energy.  More recently, and especially the Russian oil and gas industry, has attempted to rebrand oil and gas as a ‘renewable’ resource not from fossil fuels but from biochemical reactions deep in the earth.  Whatever the origins of petroleum  -  compressed ancient plants or primordial goo  -  combusting oil and gas has led to a population explosion and a warming in the planet that, if continued a pace, cannot sustain life as we now know it.

There is much corporate and personal fortune at stake in the oil and gas industry.  Few who accumulate exceptional wealth are willing to give it up or even share.  Greed is a powerful force.

Humans will not likely wipe out that insatiable drive for material gain or power.  However, it is possible to make very painful the consequences of habitual abuse of resources.  Earth Day in the future must feature more than just marches, speeches and the odd trash collection.  Earth Day must take place every day in the halls of government institutions to bring about changes in laws that push, tug and pull human behavior into alignment with the natural world. 

Earth Day must take place every day as traders and investors sit clicking and tapping at their computer screens.  Capital allocation can be just as decisive in bringing about change as government policy.  Risk management requires the acknowledgement that food, water and air are under threat.  There are ramifications for investments in agriculture, water utilities, hospitals, health care providers, and more.  Portfolio managers must take into consideration that investment in an oil and gas company or another polluter could undermine the profits of the health insurance company.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.