You have to see the comments on this FT Alphaville post.
It's like the entire capitalist readership did ecstasy and wanted to share the love.*
From FTAV's editor, Izabella Kaminska:
Holier than DOW
This is a new series from FT Alphaville flagging a growing 2020s phenomenon we’ve decided to call “Holier than DOW” risk. (Though it’s a working title. Better suggestions are welcome.)Seriously, take a look at the comments, a lot of folks are seeing opportunity with Izabella's new series.
The premise here is that the old adage about the road to hell being paved with good intentions exists for a reason.
While we don’t want to undermine or discourage efforts to make the world a better place in all sorts of fields from environment, governance to sustainability, we want to put pressure on the Twitterati to ensure such movements are properly thought-through all the way to the end point negative externalities.
A classic case of Holier than DOW economic risk comes in the shape of the great avocado shortage of the late 2010s which was in part prompted by vegetarian-oriented (and often morally inclined) dietary trends. This had an unexpected impact on the cost of the fruit in poorer countries like Mexico — where it was, until then, considered a staple food group — making it inaccessible to large portions of the population.
A similar thing, of course, happened with quinoa in Peru. In that case, however, the demand surge led to a welcome economic boom for Peruvian farmers, offsetting many of the negatives associated with the growing expense of the crop as a staple foodstuff. But that in itself then exposed the country’s farmers to another externality: price sensitivity associated with declining prices, the inevitable consequence of market competition proving true the old adage that there’s no better cure for high prices than high prices (which then lead to more supply). The moral of the story being that western food trends have the capacity to unleash huge amounts of volatility on the prices of what were previously localised crop markets.
In that vein, here’s the Guardian’s Annette McGivney on how the agricultural processes used to create almond milk in the US — another vegan/vegetarian mega trend — may be exacerbating already significant environmental pressures that are killing off native bee populations.
According to the McGivney, the demand for almond milk in the US has grown 250 per cent over the past five years. But the enormous orchards that cultivate the product depend on bees and beekeepers who rent out their colonies to the farms to help pollinate the trees. The problem is the bees are coming out of those exposures sick and weak....MORE
Earlier today:
BigLaw (Wachtell Lipton) Discusses Purpose, Stakeholders, ESG, and Sustainable Long-Term Investment
Scientific American: "Are You A Moral Grandstander?"
PIMCO Says Catastrophe Bonds Are An ESG Asset, Ok's Them For New Funds
*Meanwhile, I have to get this image out of my head before our visitors arrive:
