Bill McKibben’s Do the Math tour, while not (yet) getting much mainstream media notice, has become a catalyst for raising significant awareness about the “unburnable carbon” question, and has brought some interesting energy to university campuses, where students can now start to take charge of their future.
Kudos to 350.org for raising much-needed awareness to the problem we have identified within the Carbon Tracker Initiative, and to Bill for his landmark Rolling Stone piece on the subject, but I also have some concerns about aspects of the 350.org approach; more on that in a minute.
This Carbon Tracker Initiative, where I’ve been one of the founding directors, has determined that we can burn only about 20 percent more of the coal, oil and natural gas still in the ground and remain within a safe degree of global temperature increase. Solutions to this will not be easy, but it is essential to get more people aware that the implications of business as usual will likely be catastrophic. Even if we are off by 50 percent, there are major consequences for investors if and when we try and deal with this question as well.
Hurricane Sandy is a clear, sharp sign of the sort of future we may have in store, with increasingly violent weather causing ruin and chaos, both personal and financial. The financial crisis of 2008 is also worth mentioning, for this is an example of free market capitalism run wild, without adequate protections. Without intervention, the crisis likely would have brought the world’s financial system to its knees.
If, like me, you favor capitalism as an economic system, then we must find a way to factor in sustainability for that system to operate most efficiently. This would bring maximum benefit to all stakeholders, including those who hold equity portfolios.
What we need now are pathways forward. Cara Pike of Climate Access recently wrote a wonderful piece on the ways forward we need to consider, and it is well worth a read. This is exactly the line of thinking that has led me to want to see taught in all business schools, especially the ones sending future leaders to Wall Street as well as the largest corporations, a course simply called “The Implications of Business as Usual."
We can no longer tolerate students emerging from leading business schools without this perspective. We need to start doing real future scenario work -- hence my new course at Columbia University’s Earth Institute, to be entitled “Scenarios for A Sustainable World,” starting in early 2013. (More information here.)
The premise is to explore with students the three choice sets we have:
- Ignore the signs, and continue on with business as usual, and explore the Implications;
- Attempt incremental change, and see if that is enough. Part of this requires identifying what is “incremental” versus “meaningful” change, and if the former is not enough, then:
- Examine radical transformation and its implications for investment portfolios. Can portfolios, rather than ultimately being ruined by future sustainability trends, become part of the solution? If so, what do such portfolios look like? None of us have concrete answers, but we need to start having this conversation in earnest and at scale. Jeremy Grantham’s latest quarterly letter (a must read - download this at www.gmo.com) suggests he’ll have thoughts for investors next time possibly.
Next page: The questions divestment brings up