Climate Change was the Hot Topic at the World Economic Forum in Davos

Climate change was the dominant theme at and this year's World Economic Forum (WEF). Panel discussions covered a wide range of related topics and including global warming, ocean sustainability and biodiversity. Al Gore, David Attenborough and Jane Goodall were among the participants.

This year's Global Risk Assessment report released at the WEF in Davos revealed, yet again, that climate change and related phenomenon are among the greatest risks both in terms of impact and likelihood. The report surveys nearly 1,000 decision-makers (public sector, private sector, academia and civil society) who are asked to assess the risks facing the world.  Over a ten-year horizon, extreme weather and climate-change policy failures are seen as the gravest threats.

The End of Fossil Fuel Subsidies

Providing handouts to the wealthiest corporations on earth does not make much sense, particularly when their activities are the leading driver of climate change. Ending fossil fuel subsidies is the most obvious next step in our efforts to tackle the climate crisis. In the wake of the Paris Climate Agreement forged at COP21, continuing fossil fuel subsidies is an oxymoron.

These subsidies take many forms including, tax breaks, cheap loans, price controls, purchase requirements, purchasing equipment, royalty breaks and direct spending. According to some reports there are over 800 ways that taxpayers support the fossil fuel industry.

Fossil Fuel Subsidies and Renewable Energy Post COP21 (Infographic)

One of the most important things we can do to curb climate change is to end fossil fuel subsidies.  This would reduce the amount of fossil fuels burned and it would level the playing field for clean renewable sources of energy. Event thought 60 percent of all new investment is going into renewable energy fossil fuels still get the lions share of subsidies. The International Energy Agency (IEA) say that government subsidies for fossil fuels are 12 times greater than those for renewable energy.

Six Types of Sustainability

Sustainability is an expansive concept that applies widely. The definition of sustainability is commonly narrowly defined particularly by entrepreneurs and some members of the business community.  The Brundtland commission definition from 1987 definition defines sustainability as follows, "development that meets the needs of the present without compromising the ability of future generations to meet its needs".

Many focus exclusively on profitability, at the expense of the other dimensions of sustainability. However, profitability is only one of the three pillars of the so called three legged stool of sustainability (people, planet and profits).  While no one can deny the importance of profitability, some fail to recognize how the other 5 elements of sustainability can also contribute to or detract from the bottom line.

Summary of Recent Reports on the Costs of Climate Action/Inaction

Reports are coming in that make it hard to ignore the economic benefits of action on climate change. This includes recent reports from Citi the world's third largest bank and the London School of Economics, one of the most prestigious and respected schools in the world.

In April 2015 the World Health Organization (WHO) and the US Department of Energy published reports that demonstrate just how high the costs of inaction could be.

An LSE Cost Benefit Analysis Supports Climate Action

Research from the London School of Economics (LSE) makes the economic case for acting on climate change. This study along with many others (see related posts below) make the point that the costs of inaction on global warming are far greater than the costs of acting. This is in addition to the costs directly related to the damage caused by climate change.

Much has been said about the costs of combating global warming but a slew of independent research indicates that the benefits of climate action far outweigh the costs. This was also the conclusion of Citibank study published in August.

Two research institutes at the London School of Economics found that there are significant economic gains from limiting emissions. The LSE study published in July says that improved air quality, energy efficiency and energy security combine with falling renewable energy prices to make climate action the more economically compelling option.

Acting on Climate Change Makes Good Economic Sense According to Citibank

A recent Citibank report showed that if we act to slow climate change we could save as much as $50 trillion. This finding is significant because cost is one of the most common reasons put forth to avoid acting on climate change. The Citi report is but the most recent study to soundly refute the contention that acting on climate change is too expensive. Research shows that climate action offers excellent ROI not to mention saving trillions of dollars of additional costs associated with the damaging affects of a warmer world.

In a report entitled, "Energy Darwinism II: Why a Low Carbon Future Doesn’t Have to Cost the Earth," Citi Global Perspectives & Solutions (GPS), conducted a cost benefit analysis of a low carbon energy economy. The research explored the costs of inaction (business as usual) versus the costs of acting (transitioning to a low-carbon energy economy).

Innovate or Die: The Next Big Trend in Sustainability

Innovative approaches to sustainability are rapidly becoming the next frontier of corporate differentiation. Being more innovative is not only essential to improve the bottom line, it is also a pathway to growth.

The combination of rapid technological change and slow economic growth are driving innovation. At the macroeconomic level innovation is essential to profitability and economic growth, at the level of the individual organization, innovation is increasingly a key success factor.

Competing Visions of Capitalism Viewed through the Lens of Renewable Energy Investment Strategies

In the wake of the Greek financial crisis, and the Pope's Encyclical there is a lot of hyperbole about economic dysfunction. Fueled by popular resistance to austerity, wild allegations about the imminent demise of capitalism abound.  Contrary to the musings of some idealistic pundits, capitalism is alive and well. In fact, led by the sustainability movement, there is an economic renewal underway.  By marrying self interest and altruism a new brand of capitalism is emerging that has seen advances on both the social and environmental fronts.  However, this vision of capitalism is at odds with some basic tenants of conservative economics .  What follows is a review of these two competing interpretations represented by the renewable energy investment strategies of Bill Gates and Warren Buffet.
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Bill Gates and Warren Buffet are philanthropists who are both invested in renewable energy. While their actions may appear similar, their diverging investment philosophies reflect two different visions of capitalism.

Renewable energy is a critically important part of sustainability oriented business practices and responsible investment strategies that are driving environmental and social change. Renewables are a low carbon energy source that can reduce our reliance on climate change causing fossil fuels. While renewables are an important part of solving the climate crisis, they are of interest to many investors largely because they offer impressive rates of return. A 2012 Forbes piece titled "Investors are Making Money with Renewable Energy," states that for "investors looking for financially sound, environmentally responsible, climate-friendly investments, renewable energy finance is worth a very close look."

It would appear that the market agrees with the Forbes assessment. As reviewed in a 2015 report, renewable energy investment increased by more than 17 percent to $270 billion in 2014.

Social obligations

While earning returns from investments is important, Gates and Buffet are two high profile examples of men who use their wealth for social betterment. Forbes, reports that Gates, who is worth $79 billion, is the richest man in the world and Buffet, who is worth a paltry $72 billion, is the third richest man in the world.

Both Gates and Buffet refute the stereotype of the wealthy one percent. They both see that their wealth comes with certain social obligations. Even the capitalist icon David Rockefeller understood this more than half a century ago when he said, "The old concept that the owner of a business had a right to use his property as a he pleased to maximize profits has evolved into the belief that ownership carries certain binding social obligations."

Gates has committed his life to his perceived social obligations. He first embraced philanthropy while at the helm of Microsoft, and now, through his full time involvement in the Bill and Melinda Gates Foundation, he has made social betterment the "primary purpose" of his life. His foundation is focused on improving people's health and education. "My full-time work for the rest of my life will be at the foundation," Gates was quoted as saying in a 2013 Telegraph article. So far, Gates has given away $28 billion to philanthropic causes.

Creative capitalism

Contrary to the writings of people like Naomi Klein and Paul Mason who believe that capitalism is profoundly flawed and destined to die, Gates argues that capitalism offers our best hope for social and environmental renewal. Gates is an advocate of system innovation, an approach that he calls creative capitalism.

Gates offers a form of ecological economics. His practical approach is grounded in the fundamentals of human psychology, while the ambiguous utopias insinuated by Klein and Mason are an offshoot of socialism, which has proven to be at odds with human nature.

According to Gates, capitalism can be made to serve those in need and the environment upon which we all depend. In his view, capitalism can harness innovation on the massive scale required to confront the challenges we face. Gates' approach seeks to leverage the fact that human nature is composed of two fundamental elements, self interest and the desire to help others.

In a January 24, 2008 speech at the World Economic Forum, Gates said, "The genius of capitalism lies in its ability to make self-interest serve the wider interest. The potential of a big financial return for innovation unleashes a broad set of talented people in pursuit of many different discoveries." Gates says. "This system driven by self-interest is responsible for the great innovations that have improved the lives of billions."

Gates believes we need to measure and publicize social responsibility to give consumers the tools they need to make good buying decisions. He also suggests that to make markets work, we need to see more collaboration between governments, businesses, and nonprofits.

"Creative capitalism takes this interest in the fortunes of others and ties it to our interest in our own fortunes—in ways that help advance both." Gates says. "There is a growing understanding around the world that when change is driven by market-based incentives, you have a sustainable plan for change—because profits and recognition are renewable resources."

Renewable energy

As reviewed in an Entrepreneur article, Gates has invested over $1 billion in renewable energy and now he is looking to double that amount. In an interview with the Financial Times, Gates said that investing in technology companies is the best way to find cost effective solutions to climate change.

"The only way you can get to the very positive scenario is by great innovation," he said. "Innovation really does bend the curve." He sites the case of current battery technology saying that if we are to fulfill the promise of renewables we will need more reliable energy storage than is currently available. However, Gates' approach to capitalism is anything but laissez faire. He explains that advancing technology requires the kind of massive investments that only governments can provide. Gates says that efforts to improve renewable technologies require Manhattan or the Apollo style government projects.

Another powerful man who has invested massively in renewable energy is Warren Buffet. Through his investment firm, Berkshire Hathaway, Buffet has invested $30 billion in renewable energy. Buffet has also given away more than $17 billion to philanthropic causes.

Buffet's stellar record of wealth creation has earned him a reputation as the world's foremost investment genius. In 2009, Buffet's investments in lithium show that he was already ahead of the sustainability investment curve. In addition to his other renewable energy investments, Buffet has invested more than a billion dollars in solar energy alone, this includes the massive Agua Caliente solar array in Arizona.

Climate ambivalence

Despite his philanthropy and investments in renewable energy, Buffet has garnered some well warranted criticism. Although Berkshire has invested in renewables, they also own Burlington North Railroad which ferries huge amounts of coal.

One of those who dare to criticize the Oracle of Omaha is Rob Berridge, the director of shareholder engagement at Ceres, one of the most important sustainability focused organizations in the world.

Buffet's supporters may point to the fact that in the fourth quarter of 2014, Berkshire sold its $4 billion stake in Exxon Mobil. However, withdrawing these funds was due to market conditions, not environmental or social concerns. His move was prompted by the falling price of oil and the realization that oil's glory days are gone.

Buffet has also been criticized for his suggestion that extreme weather is not on the increase due to climate change.

Despite what Buffet has said publicly, Berkshire is vulnerable due to its investments in the reinsurance business. Extreme weather is expected to substantially increase insurance pay outs.

Buffet is sending mixed messages said Berridge. "He'll undoubtedly go down as one of the world's greatest investors and most ethical businesspeople." Berridge said, however, "with climate change having such an important impact on the largest parts of his business, we'd love to see him be clearer."

Buffet's statements indicate that he acknowledges the science of climate change. However, his position suggest something far worse than denial. His investment decisions indicate that he is indifferent to climate change.

Buffet may be a titan in the field of renewable energy, but his motivations are suspect and his ambivalent stance on climate change is unlikely to be judged kindly by future generations.

Investment philosophies

Buffet and Gates have two different investment philosophies that are premised on two dissimilar visions of capitalism. Buffet seeks out investments that are exclusively about the returns that they generate. His investment philosophy is focused on value hunting, his gaze myopically seeks out companies that will generate returns. Conversely, Gates' investment philosophy considers issues beyond corporate profits.

On the surface, Gates and Buffet may appear to be very similar, but when it comes to their investment philosophies, the two men are profoundly different. While Buffet is interested in earnings, Gates wants to solve complex global problems. Gates invests in renewables to work towards global betterment, while Buffet invests to generate attractive rates of return.

Buffet makes vast sums of money with his investments and he is generous with his billions, but when it comes to climate change, he seems to be devoid of a higher purpose.

Source: Global Warming is Real

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Sustainability Reporting Attracts Investors and Improves ROI (Video)

Here is a panel discussion designed to improve returns and attract investors. This discussion offers practical insights and helps commercial property owners with reputation management, employee engagement and efficiency. It also increases access to capital. This discussion is ideal for all who own or intend to buy or sell real estate. It is also for property managers, developers, and sustainability professionals.

Moderator: Heather Gadonniex, Director of Sustainable Building and Construction, PE International

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Helen Gurfel, Executive Director, ULI Greenprint
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Kristen Sullivan, Partner, Deloitte
Dan Winters, Director for North America, Global Real Estate Sustainability Benchmark



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Event - Sustainable Investing Conference: Risk Value Impact

The 5th annual Sustainable Investing: Risk, Value, Impact conference will take place May 4th–6th at the Westin Michigan Avenue in Chicago. Participants will learn about new approaches, trends and policy developments while networking with industry leaders.

This event offers a unique opportunity to network with leaders of the sustainable, responsible and impact investing community, and to learn about new approaches, trends and policy developments in the field. The conference will attract representatives of investment management and advisory firms, research firms, financial planners and advisors, broker-dealers, community development institutions and asset owners such as pension funds and foundations, along with policymakers and corporate leaders.

This Year's WEF Gives us Reason to Hope

Climate and energy conversations that took place at this year's World Economic Forum (WEF) in Davos gave us reason to hope. Many of those who constitute the core of the world's economic power acknowledged the urgency of climate action and the opportunities associated with forging a new green economy.

We are beginning to see the kind of leadership from CEO's and investors that is an essential if we are to succeed in tackling climate change. Companies and investors are coming together to advance meaningful solutions. Business leaders are now looking at climate change as both a risk and an opportunity. Investors are showing unprecedented interest in investments that support low carbon technologies.

Video - Live Earth 2015: Pharrell Williams and Al Gore Launch Live Earth Climate Action Concert

Climate campaigner and former US vice-president Al Gore and hit musician Pharrell Williams announce Live Earth, concerts in seven continents intended to galvanise support for climate action. Announced at the World Economic Forum in Davos, the event is intended to 'have humanity harmonise all at once.' 

Collaboration and Cooperation are Imperitive (WEF Summaries)

Collaboration and cooperation are commonly mentioned as important aspects of sustainability and they emerged as salient themes at the World Economic Forum in Davos, Switzerland. Over the course of the last year we have seen historic collaboration on carbon emissions reduction between the US and China. We have also seen tremendous progress in some private sector areas.

While many are talking about global disunity, others are pointing to significant examples of global collaboration. John Kerry, US Secretary of State, said "I don’t see an unraveling [of international cooperation]. I see just the opposite. I see nations coming together … to reach an ambitious global agreement to address climate change, with the recent agreement by China and the United States that begins to set the targets to make the Paris negotiations this year a success."

Towards a Global Climate Agreement at COP21 (WEF)

Much of the climate momentum that occurred at the World Economic Forum (WEF) in Davos is in anticipation of COP21 where it is hoped that a global agreement can be signed.

François Hollande, the President of France and host to next year's COP21 climate talks in Paris, made a number of prescient comments in Davos.

"I call upon the whole of business to make an economic contribution to the most fragile of states, in the name of solidarity and security. I call on you also to counter another threat which is one that looms over the very future of this world: we need to fight global warming,"  Hollande said.

Curbing Fossil Fuels - Carbon Pricing and an End to Subsidies (WEF Summaries)

Carbon pricing and fossil fuel subsidies were popular topics at the World Economic Forum (WEF) in Davos, Switzerland. The comments made by economists, business leaders and climate experts signal a global readiness to price carbon and remove oil subsidies.

Investors and business leaders need and want regulatory certainty. Regulations on fossil fuels are coming the only question is when. Climate economist Lord Nicholas Stern was among those who argued that we need to see carbon taxes and eliminate oil subsidies.

If we are to get serious about tackling climate change we will need to curb fossil fuel use. One of the best ways to do so is through carbon pricing schemes. Rowan Douglas, CEO Capital, Science & Policy Practice and Chairman, Willis Research Network, said, "Carbon pricing is a very important tool in the armory. I think it is difficult to see the world achieving its targets without some sort of pricing mechanism for this critical pollutant."

The Value of Investing in Climate Mitigation (WEF Summaries)

One of the salient themes that emerged at the 2015 edition of the World Economic Forum (WEF) is that investors are very interested in climate action. There have been a number of important developments during the course of the WEF but few are more important than the emerging trend of integrating climate risks into financial assessments. The risks and the opportunities  posed by climate change are bottom line issues.

Low carbon energy investments are providing considerable returns. According to Bloomberg New Energy Finance, clean energy investment increased by 16 percent in 2014. The We Mean Business Coalition reports that companies are achieving 20+ percent internal rates of return on their own clean energy projects.

Global Economies Feeling the Heat from Climate Change (WEF Summaries)

Economic assessments of climate risks and the potential returns from mitigation and adaptation emerged as salient themes at the World Economic Forum (WEF) in Davos, Switzerland.

A number of speakers made the point that it is important to calculate the massive risks associated with climate change. We are already seeing that climate change is systemically disrupting the global economy and the situation is destined to get far worse if we do not significantly reduce global carbon emissions.

As explained by several economists, we do not have to make the false choice between combating climate change and growth. We can both grow our economy and act on climate change.

Business Leadership on Climate Change (WEF Summaries)

The 2015 edition of the World Economic Forum (WEF) put unprecedented emphasis on the role of business to manage climate change. Both to mitigate costly risks and reap lucrative benefits, the business community is beginning to take climate concerns very seriously.

One of the key stories that emerged out of the WED last week is that an unprecedented number of business leaders are showing bold leadership on climate action. Business leaders are speaking more clearly and more cohesively than ever about the need to address climate change.

As Al Gore explained in a Davos presentation, "We have the solutions at hand. And this is why I’m so excited about all of the work being done, led by the business community," he said. "The private sector is leading the way," he added.

WEF Summaries: Climate Change

Climate change was a central part of this year's World Economic Forum (WEF) which took place in Davos Switzerland from January 21 to 24. Unlike previous meetings there was an unprecedented sense of urgency in this year's discussions about climate change.

A WEF plenary titled "Tackling Climate, Development and Growth" included Paul Polman, A. Michael Spence, Jakaya M. Kikwete, Christine Lagarde, Ban Ki-moon and Jim Yong Kim. This distinguished panel shared the view that to combat climate change we must engage sustainable development. They also said that to succeed in efforts to reduce climate impacts we must see significant investments from both the public and private sector.