Climate change, diversity, environment, ESG, retirement, Socially Responsible Investing, SRI

What is Socially Responsible Investing?

I have recently had several people ask me about SRI. What is it? Why does it matter?

The first thing to understand is SRI means different things to different people. Several years ago I attended a gathering of advisors focused on sustainability at the Bloomberg headquarters in NYC. I talked to many of the 300 attendees and what I found was every single person had a different interpretation of what SRI meant.

Some focused on promoting clean energy, some focused on workers issues and inequality, some focused on climate change, some look to exclude alcohol and tobacco, others focused on micro lending. Each focus is unique and approaches the challenge of investing with different assumptions.

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Climate change, economy, environment, ESG, interest rates, retirement, risk management, Socially Responsible Investing, SRI

Mixed Economic Signals, Debt Issues and Fossil Fuel Companies

Several years ago, Bloomberg Businessweek did a bio pic on Hank Paulson, Bush’s Treasury secretary who served during the Financial Crisis of 2008. After reviewing the events that led to the Crisis, connecting the dots, and seeing the impact of what happened, Paulson had this to say at the end of the film…

“The whole reason I’m doing this, is not because I want to look back, but because I have increasingly come to the view that it’s important that there be a historical record for those that come after me, so we don’t replay this movie all over again.” (1)

Fast-forward to November 2019, and we see many positive and negative conditions developing that raise questions about the longevity of the 10-year bull market in stocks and the health of the US economy.

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Climate change, environment, ESG, retirement, risk management, Socially Responsible Investing, SRI

Socially Responsible Investing Grows

“Integrity is the essence of everything successful” -Buckminster Fuller

One of the benefits of the information age is the ability to make rational judgements about companies that you invest in. To the degree that a company fails to meet an investors expectations of what is acceptable, a company or industry becomes un-investable.

“Sustainable, responsible and impact investing (SRI) is an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact.” (1)

A recent study by the US Sustainable Investment Finance Foundation revealed the tremendous growth in sustainable investing.

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Climate change, economy, environment, income, retirement, risk management, Socially Responsible Investing, SRI

Rising Seas and the Risk to Retirees

Florida has always been considered a favorite retirement destination. The warmer climate attracting older American’s who have health issues ranging from Asthma to Arthritis, from Heart Disease to Parkinson’s. 20% of Florida’s population is over age 65 (compared to only 15% in New Jersey).

An additional challenge facing retirees in both Florida and New Jersey is climate change risk due to rising seas, storm surge and the potential loss of property in coastal communities.

In 2013, hurricane Sandy delivered a wake-up call to many about the danger to real estate as a result of hurricane force winds and storm surge. This past summer it looked to be Florida’s turn. Hurricanes Irma and Maria threatened to make landfall in Florida with devastating force.

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Climate change, economy, environment, ESG, retirement, risk management, Socially Responsible Investing, SRI

Divestment From Fossil Fuels Gathers Steam

As an investor in todays economy, you have a say in what companies you invest in and support. By investing in a company, you are effectively voting with your dollars.

By the same token, as an investor you also have the right to the purposefully refuse to invest in a specific company or industry. Perhaps you disagree with their business model or you oppose the negative impacts they are having on society. This act of withholding investment is at the core of “Divestment”.

Without access to capital markets, fossil fuel companies cannot finance their operations. As fewer buyers come in to buy shares of fossil fuel companies, the potential value of these companies decline.

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Climate change, economy, environment, health, new economy, Socially Responsible Investing, SRI

Pending Meat Tax Could Change Economic Behavior

In recent weeks plant-based meat products have made real inroads into many popular restaurant chains. Many plant-based brands have developed models that make them cost competitive and flavor competitive with animal-based meat products.

Animal-based meats have been criticized on several levels. The role that CAFOs (concentrated animal farming operations) play in deforestation, methane release, pollution and accelerating climate change. In addition, several recent studies have shown that meat products have many negative health consequences, including cancer. (1)

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Climate change, economy, environment, interest rates, retirement, risk management

Rising global temperatures will hurt global GDP

A study released by the science journal Nature makes the connection between the rise of global temperatures and the negative impact this has on GDP around the world. In the study, titled “Global non-linear effect of temperature on economic production”, researchers found that “fundamental productive elements of modern economies, such as workers and crops, exhibit highly non-linear responses to local temperature even in wealthy countries.” Meaning as temperatures rise, the effect is much greater and accelerates in ways that are potentially disastrous. (1)

One of the lead authors, Marshall Burke of Stanford’s Department of Earth System Science, calls their study “the first evidence that economic activity in all regions is coupled to the global climate.”

The study continues, “If future adaptation mimics past adaptation, unmitigated warming is expected to reshape the global economy by reducing average global incomes roughly 23% by 2100 and widening global income inequality.”

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Climate change, economy, environment, ESG, new economy, risk management, Socially Responsible Investing, SRI

David Hume, “State of Nature” and Climate Change

When you examine the behavior of corporations today you begin to wonder… Is there a moral philosophical underpinning to their behavior? What determines right and wrong? And in an age of anthropogenic climate change what is the responsibility of business to the larger society?

I decided to revisit the philosophy of David Hume and see if I could scrape together some clues to better understand what we are experiencing. Hume was an English philosopher in the 18th century. Along with John Locke, Hume wrote several treatises that became the foundation of philosophical thought in England, but also importantly, for the United States. Hume’s insights can be found in the Declaration of Independence, the Articles of Confederation and the Constitution. As a result, his thinking played a crucial role in the development of business and industry, and the policies that supported their development.

To understand how government developed and the role it played in regulating behavior, Hume and others described an original condition (prior to government) he called the “State of Nature”.

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Climate change, environment, ESG, Socially Responsible Investing, SRI

How to Reduce Your Carbon Footprint

People are becoming increasingly aware of the consequences of climate change. In October of 2018 the UN Panel on Climate Change stated we have 12 years to halt the growth of CO2 if we hope to avoid the worst possible consequences of global warming. (1)

This awareness has led to many projects that are working to effect change. Greta has raised the awareness of students and led to student walkouts on Friday’s to protest the inaction of adults on Climate. John Lui and others have organized eco-restoration camps to foster regenerative agriculture and to plant many more trees in degraded environments. Many foundations and pensions are pursuing divestment strategies from fossil fuel companies to reduce the capital available to produce carbon intensive projects. More people are turning to socially responsible investing as a way to have their own investments impact what the future will look like.

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Climate change, economy, environment, retirement

Climate Change Affecting Crops in 2019

Thanks to endless rain and historic flooding that has stretched on for months, many farmers have not been able to plant crops at all, and a lot of the crops that have actually been planted are deeply struggling. What this means is that U.S. agricultural production has the possibility of being way, way down this year.

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