While doing research on the future of coal and climate change, I came across a number of articles that look at them from a bottom-line perspective. It's hard to read these articles from financial publications and not come away with the feeling that climate change is real regardless of what local politicians, coal operators, and the "newspapers" that support them say or do. And after reading a few more similar articles, its not hard to come to the conclusion that West Virginia needs to start planning for a future in which coal will play an ever-diminishing role.
An important study on the implications of climate change for investors was released earlier this week. Here's yesterday's online edition of Forbes magazine suggesting its conclusion:
Your investment portfolio could suffer in coming years, thanks to climate change — and it’s not going to take 50 years to happen. That’s the take-home message of a recent report from Mercer, based on a collaboration with 16 large international investment groups and extensive financial forecasts. To put it even more bluntly: ignoring the reality of climate change could hit many investors hard within the next 10 years.
The report singles out coal:
The biggest investment impacts will be in the coal sub-sector, with as much as a 74 percent drop in average annual returns over the next 35 years. That drop will be biggest in the next decade.
The report suggested what countries and companies could do:
The Mercer report emphasizes that responses from companies and governments can affect these outcomes. By working to mitigate climate change impacts, the level of damage can be kept lower, while ignoring the problem or working haphazardly will result in the worst case scenario coming to pass. And that worst-case will have the hardest impact on investments. In other words, denying climate change is a horrible investment strategy. (emphasis mine)
And last month, Reuters reported that seven of the largest world investment funds urged the G7 meeting to cut greenhouse gas emissions:
"We believe climate change is one of the biggest systemic risks we face," the fund managers, who oversee more than $12 trillion in assets, said in an open letter to G7 finance ministers. The letter was signed by 120 CEOs of investment funds, including Henderson Global Investors, Schroders and pension plans for French civil servants and Ontario teachers.
"The benefits of addressing climate change outweigh the costs," they said.
Finally, the Guardian examined pension funds worldwide that were heavily invested in coal:
The pension funds of millions of people across the world, including teachers, public sector workers, health staff and academics in the UK and US, are heavily exposed to the plummeting coal sector, a Guardian analysis has revealed.
And because I have a hunch that a few of my readers are invested in TIAA-CREF I would note what the article said about it:
TIAA-CREF, the US pensions firm which serves 5 million teachers, doctors and academics, has $838m in 30 of the top 50 coal companies.