And it is for this very reason that we decided on the first inductee in the Climateer Investing Hall of Fame
Finally for investors in rent-seeking organizations
there is the real risk that the politicians will change the rules.
Heed the words of Sen. Simon Cameron, R&D(!)-Pa.:
Our Hero
"The honest politician is one who when he is bought,
will stay bought."
You must always keep in mind that policy prescriptions are political and that your fortunes can rise or fall on the basis of one election.
And the headline story from FT Alphaville:
There are plenty of explanations for the sudden rush of asset managers into green finance. The most common, from the industry itself, is that their clients — the people investing the money in the first place — want to contribute towards a worthy environmental cause.
Here's an alternative explanation.
The UK government has today announced it will explore a mandatory requirement for listed companies and pension funds to disclose climate-related risks by 2022. The FT news story is here.
...MUCH MOREThis echoes Article 173, a 2016 French law which required investors in the country to disclose how they deal with environmental, social and governance criteria. It was a first-of-its-kind example of a legal system incorporating the growing “ESG” movement.
It is difficult to categorically say what is and isn't green (or socially, or governmentally, good) — there are seemingly thousands of thousand-page documents from various international organisations that seek to address this. Rating agencies, too, are now involved in the business of formally answering that question for bonds.
But today's announcement captures why you might be compelled to invest heavily in green assets, whatever the definition. In Europe, governments are now edging towards a situation where legislation is beginning to codify assets into green and non-green fields. Central banks are also moving in the same direction.
With each passing year a legal requirement that, say, asset managers hold a certain proportion of green assets, seems increasingly plausible. And just as they are required to have a certain proportion of equity against assets, major banks might also need to eventually meet a green asset ratio. The former reflects a political impetus to reduce the risk of financial instability. The latter's claim to reduce environmental instability would have political momentum, given there is an emerging cross-party consensus on the issue of mobilising the financial sector against climate change.
Set aside the impact on the companies themselves, and focus on those investing capital, and the situation becomes clear....
I suddenly have an urge to retell the story of the Corn Laws, Peel and Repeal, the founding of The Economist and the birth of one of the great American fortunes.
