Tag: esg

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

A Unique Investment Approach

James Cox

For the past 15 years I have developed my investment practice around a core thesis…

“Do your investments match your values?”

While this question can pull people in many varied directions, the underlying truth is that investors are interested in reducing their risks, and thereby improving their performance. Many people recognize that investment markets tend to underappreciate the impacts companies have on society and the environment.

While the planet is undergoing profound challenges due to climate change, investment professionals tend to not appreciate the connections to fossil fuel companies and their role in the crisis. Meanwhile, many investors of all age brackets do see the connection and are demanding better options for their investments. (1)

My work focuses on helping clients divest from fossil fuel companies, and the companies that support climate destruction. In doing so my goal is 3-fold; 1) to avoid the risks associated with sunken assets in the fossil fuel industry, 2) invest in companies that benefit from the economy becoming “decarbonized”, and 3) managing macroeconomic risk that is generated by the transition. This approach has typically outperformed comparable indexes over the past 10 years.

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

Energy, Economic Trends, and Effecting Change: A Review of the Economic Superorganism

James Cox

In his book “The Economic Superorganism”, Carey King outlines a novel system to organize economic decision making and to evaluate outcomes in a Climate Changed world. People are becoming increasingly aware of the consequences of climate change. In October of 2018 the IPCC (International 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) The fossil fuel industry is the primary driver of CO2 growth.

In the February 2022 update of the IPCC report stated, “This report is a dire warning about the consequences of inaction,” said Hoesung Lee, Chair of the IPCC. “It shows that climate change is a grave and mounting threat to our wellbeing and a healthy planet. Our actions today will shape how people adapt and nature responds to increasing climate risks.” (4)

“The world faces unavoidable multiple climate hazards over the next two decades with global warming of 1.5°C (2.7°F). Even temporarily exceeding this warming level will result in additional severe impacts, some of which will be irreversible. People and ecosystems least able to cope are being hardest hit, said scientists.”

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

What is Socially Responsible Investing?

James Cox

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, environment, ESG, health, new economy, Socially Responsible Investing, SRI, Taxes

Pending Meat Tax Could Change Economic Behavior

James Cox

In the past year 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)

In a recent paper Fitch Solutions Macro Research found that meat could be the target of new consumption taxes, similar to sugar taxes to fight obesity that have proliferated over the past few years.

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

What Role Do Moral Values Play in Investment Selection?

James Cox

As a financial advisor, I am constantly approached by mutual fund and ETF wholesalers who are selling their investment vehicles. Yesterday I was approached by a representative who offered a vehicle that invested and looked at company fundamentals in a way that I believe is important. Before we talked, I asked if these were funds that invest based on sustainable or ESG (environmental, social, and governance) criteria.

He said, “These funds rank very highly based on ESG ratings.” And when I looked at the Morningstar ratings, they did. However, when I dug deeper several red flags jumped out at me. First, nowhere on the fund prospectus do they mention using screening for sustainability or ESG concerns. The second red flag was when I looked at existing holdings… their top holding is one of the largest US oil companies.

This to me is non-negotiable.

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

Divestment From Fossil Fuels Gathers Steam

James Cox

As an investor in today’s 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 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, environment, ESG, Socially Responsible Investing, SRI

Greta Thunberg, David Hume, “State of Nature” and Climate Change

James Cox

The climate crisis is worsening…

In a speech to the Austrian World Summit in June 2021, Greta Thunberg called out global leaders for their inaction. (1)

“During this time, more and more people around the world have woken up to the climate and ecological crisis, putting more and more pressure on you, the people in power. Eventually, the public pressure was too much and you had the world’s eyes on you. So you started to act…

Not acting as in taking climate action, but acting as in role playing, playing politics, playing with words and playing with our future, pretending to take responsibility, acting as saviors as you try to convince us that things are being taken care of.

Meanwhile the gap between your rhetoric and reality keeps growing wider and wider, and since the level of awareness is so low, you almost get away with it.”

Greta Thunberg raises a crucial issue that needs to be addressed for humanity to overcome the climate crisis…

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