- Climate discourse has become increasingly personal, focusing on the responsibilities of the individual and not the collective responsibility of governments and corporates.
- We expect this attitude to shift, and utilise survey data to show that to the global populace, climate change remains a key issue despite the shifting political narrative.
- We invest across climate themes amongst others, including solar power production and clean water. As the debate shifts towards collective responsibility, we would expect investment from governments and corporates in these themes to increase further.
Environmental Investing: Understanding public opinion and implications for investing
There are few topics in investment that illicit more emotive responses amongst investors than environmental investing. Debate with someone about factor investment styles, valuation metrics or the path of the US Rates curve and the debate that follows will likely be polite and objective (or some may well glaze over). Start a debate about climate change in finance – or really in any walk of life, and often the responses are impassioned. Arguments are full of ad-hominems, individual examples and ‘gotcha’ moments. Complex debates about carbon output, grid technology and intermittency are reduced to discussions about the merits or demerits of avocados on the environment. This comes from both sides of the aisle, and over the course of 2022 we would argue has gotten worse – the ongoing politicisation of climate issues only serves to further divide and worsen discussion.
The cause of this, to a degree is the focus on individualism when it comes to thinking about carbon emissions and climate change, which has been a masterstroke of big industry lobbying, and a true blessing to polluting heavy industry. In the 1970s for example, facing pressure from politicians to ban or tax plastics, a lobbying effort deflected, instead suggesting plastics should and could be recycled. The reality was far from the truth, at the time no technology existed to recycle plastics, and even today only 9% of plastic is recycled.
Fast forward to the climate crisis, and in 1992 BP coined the term carbon footprint (borrowing from earlier work on the ecological footprint). The footprint, implying that it is up to the individual to determine whether they lead a ‘good’ or ‘bad’ carbon life. It doesn’t matter then, that the biggest carbon choices they can make (how their electricity is produced, how the goods and food they purchase is produced, how far from work they can afford to live) is out of their hands. The concept of the carbon footprint further misses network effects (ie when we do something our friends or colleagues may do it). We think however what is interesting, in this increasingly fraught debate, is to assess not what the headlines are saying, and rather understand a bit more about the general populations viewpoint when it comes to the issue of climate change.
And for many, across the world, climate change causes them a significant degree of worry. What is interesting is that in both cases, geographically the split is not what you might expect. South America, for example, has consistently a belief and worry about climate change. Indeed India, which is a heavy utiliser of coal within its energy mix, has a population that where the vast majority are concerned about climate change. This again shows the disparity between individual views and the actions of corporations and governments. What matters most for carbon emissions now is energy policy, regulation, and government action – populations across the world are bought in.
Source: Yale Program on Climate Change Communication / Data for Good at Meta