Q2's leaderboard suggests EV play overdone

By David Callaway, Callaway Climate Insights

Overall, the Callaway Climate Insights index edged lower for the second quarter, finishing at 92.83, down 0.5%. Strength in the EV sector, up 2.6%, and natural resources, up 8.8%, largely offset declines in solar companies, down 2.1% for the period.

It says something both strange and telling about the fragile nature of this stock market that shares of Nikola Corp., the disgraced electric truck company, would be on the top five list of performers in the Callaway Climate Indexes in the second quarter.

Enjoying a nice bump along with fellow EV plays Workhorse (WKHS) and Arcimoto (FUV), and cannabis mobile payment company Net Element (NETE), Nikola stock (NKLA) trading above $15 this week shows the company is clearly enjoying a rebound in reputation from its collapse last year from its highs above $60.

Only Brazilian mining and minerals company Vale SA (VALE), which has been riding the commodities inflation story for more than a year, appears in a somewhat reasonable, non-meme pattern. Still, a rising tide tends to lift all boats, and that’s what we saw in both the stock market and environmental, social and governance (ESG) stocks in Q2.

Both ESG funds and the broader S&P 500 were up more than 8% in the quarter, and as much as 15% so far this year. And despite Tuesday’s hot consumer price numbers, the rally continues to roll along as we start the third quarter.

To give Nikola its due, it has made substantial progress in revamping its strategy since its founder was ousted last year after a short-seller exposed fraudulent activities tied to its potential electric trucks. It is now making some trucks, and its factory in Arizona is due to go online this quarter.

Lack of product and revenue might be a reason for some to ignore; or for some to try to catch a rebound early. We all read the charts our own way. But as this New York Times story today about the people behind the collapse of Lordstown Motors (RIDE) shares earlier this year shows, some of us are reading them with a bit more enthusiasm than history supports.

More insights below. . . .

Tuesday’s subscriber insights: Climate First bank launch, and the deadly interplay of air conditioners and heat waves

. . . . Florida banker and climate entrepreneur Ken LaRoe officially launches his Climate First Bank in St. Petersburg this week, hoping to capitalize on the growing need for funding of environmental projects. LaRoe, who has already built and sold two banking businesses, told Callaway Climate Insights he raised about $44 million in an oversubscribed offering, including a small investment from Kat Taylor and Tom Steyer’s Radicle Impact Fund.

LaRoe said the bank already has about $90 million in its loans pipeline, and that he plans to start locally in Florida and go national at some point if it succeeds. “I’m a radical environmentalist, but I’m also a radical capitalist,” he joked.

The grand opening includes parties and events all week, including a microbrew beer tasting and a “guess the amount” game with a Tesla filled with dollar bills. Let’s see Wells Fargo (WFC) top that. . . .

. . . . Hard to believe air conditioning technology is only 120 years old. By 2050, the International Energy Agency (IEA) estimates more than 3.3 billion boxes will be cooling homes, particularly in overheated Asia. As the world narrows priorities for combating global warming, cooling systems will be on the list. Read more here. . . .

. . . . The International Renewable Energy Agency (IRENA) estimates 60 million workers will be needed in the solar industry in the next 30 years for it to reach the capacity to create a global, climate-neutral energy supply. Up from four million today. So who is going to train these people? Read more here. . . .

. . . . Great new podcast series from New Hampshire Public Radio out recently called “Windfall”, about the two decades of political fighting and red tape that held back the offshore wind industry in New England. Now that the Vineyard Wind project off Martha’s Vineyard is moving forward and other offshore wind investments are sprouting, it’s timely to remember how long the campaign to prevent this form of renewable energy existed. . . .

Editor’s picks: Record summer heat; Moody’s ESG score predictor, Canada commits to cutting GHG

New ESG score predictor for small- and medium-sized businesses

Moody’s on Tuesday launched a tool to generate real-time predicted environmental, social, and governance (ESG) scores for public and private small- and medium-sized enterprises. The company says in a news release that the tool, the ESG Score Predictor, is based on a model derived from Moody’s proprietary ESG scoring methodology for large-cap corporates, and provides financial institutions with essential quantitative data for portfolio and risk management, and helps companies monitor ESG risk across their global supply chains. The ESG Score Predictor leverages analytics to provide 56 ESG scores and subscores for any given company using location, sector, and size. Customers can access approximately 140 million company ESG scores on Moody’s Orbis database, Procurement Catalyst and Credit Catalyst platforms, via an application programming interface, or leverage the ESG Score Predictor model with their in-house data to score their portfolios.

Canada commits to GHG cuts of up to 45%

Canada’s government has submitted its Nationally Determined Contribution to the UN, committing to cut greenhouse gas emissions by 40% to 45% by 2030, on a 2005 base. ESG Today reports Canada announced initiatives to achieve the climate goals, including grants for energy efficiency and climate resiliency-focused home retrofits, funding for green building initiatives, infrastructure planning, public transportation investments, zero emissions vehicle legislation, and renewable energy development. Officials also confirmed that the minimum price on carbon pollution will increase by $15 per tonne each year starting in 2023 through to 2030.

Recent heat waves in northwest killed a billion sea creatures

A new study out of the University of British Columbia estimates 1 billion sea creatures on the coast of Vancouver alone died as a result of the recent record-breaking heat waves that scorched Western Canada and Washington, Oregon and California. NPR quotes Prof. Christopher Harley from the University of British Columbia as saying the number could be much higher. “I’ve been working in the Pacific Northwest for most of the past 25 years, and I have not seen anything like this here,” he said. Meanwhile, officials from the University of Washington Friday Harbor Laboratories said the extreme heat wave June 26-28 coincided with some of the year’s lowest tides on Puget Sound. NPR’s KUOW reports the combination was lethal for millions of mussels, clams, oysters, sand dollars, barnacles, sea stars, moon snails, and other tideland creatures exposed to three afternoons of intense heat.

Today in wildfires

. . . . As of July 13, the Fire Information for Resource Management System reported 10 new large incidents in the U.S. and Canada, three large fires contained, and 51 large fires uncontained. Active areas continued to be in the Western states. In the Northwest, there were seven large uncontained fires. In Northern California, 25 new fires were reported including one large fire, while five large fires remain uncontained. In the Great Basin region, 14 new fires were reported. Almost all these large fires were described by officials as exhibiting extreme fire behavior with crowning, wind-driven runs and running. Structures are threatened and area and road closures are in effect. Across the nation, the National Interagency Coordination Center reports that as of Tuesday morning, more than 999,512 acres had burned. So far this year, nearly 34,000 fires have been reported, compared with 27,770 for the same period last year. Some 2,061,054 acres have burned in the U.S., a 23% increase year-over-year. . . .

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