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Forget about the science of climate change. Follow the money.


Some people would still debate all the world’s scientists on the reality of human-driven climate change. In the face of the 100s of millions spent by fossil fuel companies to disseminate disinformation, they struggle to believe it’s happening or that we are causing it. To them I say, forget about the science then. Follow the money instead. Fossil fuel companies can dispense disinformation about climate change but cannot outrun the cost of the catastrophes it perpetrates.

In 2020 the money changers of the world are stepping up on climate change. Why? It threatens their profits. The cracks in the dam are opening up. A major reallocation of capital has begun. If you don’t believe me check out what these guys are saying:

Munich Re and Swiss Re:

These two are the largest reinsurers in the world. That’s right, a reinsurer. You see, insurance companies can’t really afford to carry the costs of large natural disasters like the California 2019 fires (244 billion in loses) or hurricane Harvey (125 billion in loses). So, what do they do? They do the same thing we do, buy insurance coverage. They get it from reinsurers like Munich Re and Swiss Re. Reinsurers can cover the cost of an occasional natural disaster because they only happen every 100 years or so. But these events now occur so frequently that money is drying up.

In a recent report Munich Re authored a warning. The social framework supported by insurance is in danger of collapse due to climate change. In the near future insurance may be so costly it cannot be afforded or simply won’t be offered in high risk areas. Here is what Munich Re has to say:

"Climate change, predominantly the result of human activity, is real and has a major influence on weather-related natural disasters. It can dramatically alter a region’s risk situation in terms of severe storms, thunderstorms, floods or droughts. A thorough understanding of climate change is essential for an insurer's risk management.”

If the risk from wildfires, flooding, storms or hail is increasing then the only sustainable option we have is to adjust our risk prices accordingly. In the long run it might become a social issue,” said after Munich Re published it’s report concerning climate change’s impact on wildfires. “Affordability is so critical [because] some people on low and average incomes in some regions will no longer be able to buy insurance.”

Nicolas Jeanmart a spokesperson for 34 national insurance associations in Europe talks about the effects climate change could have on fundamental social order as a result of skyrocketing insurance premiums.

The sector is concerned that continuing global increases in temperature could make it increasingly difficult to offer the affordable financial protection that people deserve, and that modern society requires to function properly,” he said.

In fact, everyone’s rates will likely increase in order to spread the liability of climate disasters. We’ll all help pay for next year’s hurricane in the Carolinas and well we should since our carbon footprints contribute equally to the problem.

BlackRock, the largest financial asset manager in the world, caused a major stir in the when Larry Fink wrote in his annual letter to CEOs in 2019.

“Climate change has become a defining factor in companies’ long-term prospects. Last September, when millions of took to the streets to demand action on climate change, many of them emphasized the significant and lasting impact that it will have on economic growth and prosperity – a risk that markets to date have been slower to reflect. But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”

“The evidence on climate risk is compelling investors to reassess core assumptions about modern finance. Research from a wide range of organizations – including the UN’s Intergovernmental Panel on Climate Change, the BlackRock Investment Institute, and many others, including new studies from McKinsey on the socioeconomic implications of physical climate risk – is deepening our understanding of how climate risk will impact both our physical world and the global system that finances economic growth.”

Munich Re, Swiss Re, BlackRock, and many other financial houses like Goldman Sachs are beginning to divest themselves of carbon stocks like coal, oil and natural gas. Mammoth corporations like these may have done more to accelerate the green movement in the past few months than all the scientists and organizations and green politicians have done in the past few decades.

I wish I could tell you that these guys are driven by a sense of social justice and a better environment, but they aren’t. They are driven by greed just like us. After all, the almighty dollar is the ring in our nose and wherever it goes we will follow. When a problem takes money out of your pocket it’s time to act. Unfortunately, these companies have yet to earn our trust and have abysmal track records on climate change mitigation and responsiveness to investor demands. Talk is cheap. Still, the narrative is rapidly changing and that’s a good thing.

Now they must be held to task. It’s up to us to push. How? Here are a few things you can do.

Demand a complete accounting of all carbon-based stock in your portfolio. You should know to what extent you are investing in fossil fuels.

Send letters to your money managers demanding divestiture of these stocks or you will look elsewhere.

Explore and invest in money managers like Climate Action 100+.

Write a letter to BlackRock and Munich Re to encourage them to follow through on their proposed divestitures.

Write a letter to a fossil fuel company telling them it’s time to invest their vast riches in renewables. They can profit from those as well.

Pressure your employer to examine their 401K and make it environmentally friendly

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Coupled with the fact that green energy is now the cheapest energy and investing in green products is becoming more profitable, it is not surprising that investment in renewables hit 55 billion dollars in 2019. 2020 could be the year that shakes the political foundations as well, since power and money are linked at the hip. It’s no surprise that the Republican Party just put a new climate change program on the table (anemic as it is).

Science can tell us what is happening and how to fix it. Ironically, it may be greed, in the end, that saves us all.

The time is ripe. Act now!


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