Environmental Hero

“Much is still unknown about the sources and sinks for atmospheric CO2, as well as about the climatic effect of increasing CO2 levels in the air, so that prognostications remain highly speculative. The models that appear most credible (to us) do predict measurable changes in temperature, rainfall patterns, and sea-level by the year 2030 for the postulated fossil fuel combustion rates, but changes of a magnitude well short of catastrophic and probably below the magnitude that need trigger otherwise non-economic responses to the problem of energy supply.”

Werner Glass, Exxon scientist, 1981

 

The previous post “Environmental Threat” on February 4, 2022, pointed to rising sea levels as an undeniable environmental threat to world.  Despite highly vocal and persistent denial by corporate leadership, global warming is a clear and present risk to investor returns.  It is no longer possible to pretend the climate crisis is manufactured by scientists with dubious motivations to produce alarmist computer models.  

No one is looking at computer models anymore.  They are looking out the window.

The view is alarming so people are demanding action.  Investors expect businesses to take action.     The Paris Agreement, an international climate treaty signed in 2015, provides business with the perfect means to shift with ease from climate denier to environmental hero.

The treaty requires the countries that sign on to achieve a climate-neutral world by 2050.  We reach the goal when greenhouse gas emissions from human activities are countered by carbon removal.  Reduction in the combustion of fossil fuels for heating and vehicles as well as the restoration of forests or capture and storage of carbon emissions would be examples of actions to reach net zero.

The scientists are telling the world that achievement of the ‘net zero by 2050’ goal is necessary to avoid the worst climate impacts from greenhouse gas emissions.    Left unchanged the world is looking at life threatened by heat waves, intense storms, loss of land mass, and dramatic reduction in food production, among other dire consequences.  Humans will not fare well in these conditions (nor will any animals, for that matter).

The World Resources Institute (WRI), an environmental policy think-tank, has a list of ten projects for nations to achieve the net zero goal, starting with phasing out coal plants, adopting electric vehicles, and halting deforestation among other projects.  For corporations it is a matter of setting targets validated by the Science Based Targets initiative (SBTi), a global organization helping businesses take credible action on climate change.  This list includes electric fleet adoption, sustainable travel policies and change to renewable fuels.

  

SBTi claims to have developed standards for validating corporate net-zero targets, thereby given employees, customers and shareholders the means to decide whether the company is an ‘environmental hero’ or a ‘climate ne’er to well’.  The next post will look more carefully at net zero targets and how SBTi applies its criteria in the real world.

 

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.