Economy

Germany's new climate plan, Miami's heat czar, and Callaway Climate honored

24/7 Wall St. Staff

Published: May 13, 2021 6:46 am

By David Callaway, Callaway Climate Insights

Callaway Climate Insights was thrilled to be recognized last night by the judges at the annual SABEW awards for business journalists. The Society for Advancing Business Editing and Writing wrote about us:

“Smart, topical, global, informative and geared to practical results with its focus on ESG and making both Wall Street and retail investors take a stand on the climate crisis. It is slickly produced with multimedia, quickly absorbed through its brief snapshots leading to longer pieces, and imbued with wit as well as wisdom.”

Nothing forces a ruling government’s hand like an election year. We see it here in California, where Gov. Gavin Newsom, facing a recall, bowed to pressure last month to ban fracking in the state after years of delays. And we’re seeing it this week in Germany, where a surge in the polls of the opposition Green Party lit a wildfire under Angela Merkel’s government this week.

Merkel’s cabinet, stung by a court ruling last month that said its strategy to reduce greenhouse gas emissions places too much of a burden on the next generation and was in fact, unconstitutional, quickly emitted a major new strategy ahead of the election. It pushed its carbon neutral date up five years, to 2045; established targets for 2040 as well as 2030, and raised its goals for 2030 to 65% cuts vs. 55%.

Nowhere in the strategy is an outline for how it intends to do this, which would certainly involved closing coal plants more quickly and putting thousands of jobs in jeopardy, as well as reconsidering nuclear energy. But the court’s ruling was significant in that it added weight to the Paris Agreement of 2015 on climate progress, and more important, gave a legal voice for the first time to a future generation.

Whether this will help Merkel’s Christian Democratic Union Party in September when the country votes on who will replace her after 16 years remains to be seen. The Green Party has certainly put a stake in the climate ground, as we wrote last month.

But as precedent for the next stages of the global warming battle — the legal and political stages — the court ruling and subsequent strategy change should certainly get the attention of any government leader unwilling to listen to the increasingly full-throated climate demands of the younger generation.

More insights below. . . .

Wednesday’s subscriber insights: The Gitterman ESG Playbook iSummit, and other analysis from an inflation-racked Wall Street

. . . . Jeff Gitterman’s ESG Playbook iSummit for registered investment advisers took place this morning, and I was honored to be featured in a keynote interview, discussing President Biden’s infrastructure plan and what it means for the markets and investors. Gitterman Asset Management is one of the leaders in the emerging environmental, social and governance space. Check out the interview here. . . .

. . . . British asset manager Legal & General became the latest large shareholder of ExxonMobil (XOM) this week to side with activist Engine No. 1 in its bid to gain four board seats and restructure the oil giant’s transition plan. Legal & General joins CalPERS, as well as the California Teachers fund and New York’s pension fund, throwing significant institutional weight against Exxon. Climate shareholder activists are still waiting on whether BlackRock (BLK) and Vanguard, which together hold 13% of Exxon shares, will join Engine No. 1’s campaign for the vote, which is two weeks from today. . . .

. . . . Amid the inflation-battered detritus of the renewable equities market this week, it’s somewhat comforting to see the long-term benefits of focusing on transition plays and renewable energy. Washington DC-based Terra Alpha Investments, founded by Tim Dunn, announced this morning its flagship fund, Terra Alpha Fund L.P., has returned 13.2% compounded annualized returns since it was founded six years ago this month — topping the MSCI World Index’s 10.9%. Terra Alpha’s investment strategy and top picks were highlighted by Callaway Climate Insights in February. . . .

. . . . Deadly pollution isn’t limited to urban centers and wildfires. American farms are killing people too, as many as 18,000 by methane and dust stirred up by animals and gas-powered equipment, according to one recent study. With reductions in hogs and cattle still only a distant hope, investors are placing bets on AI and renewable energy equipment to cut particulate matter and improve soil. Read more here. . . .

. . . . The Netherlands and Britain joined the carousel of nations looking at carbon reduction strategies this week by announcing studies of how to pipe large amounts of it into depleted gas wells. The strategy would address the importance of pulling carbon from the atmosphere as well as the threat of stranded assets on fossil investor books. But the cost seems prohibitive at current rates. Read more here. . . .

. . . . The one-upmanship on Wall Street when it comes to climate pledges took a new turn this week when asset management giant TIAA announced its net zero plans by 2050, which included a first target date for progress of 2025. Other firms have promised nothing until 2030, according to Dealbook, which broke the story. TIAA said it will focus on renewable energy investments and sustainable real estate, as well as offsets for netting out carbon from its general account. . . .

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