How can I put my money where my mouth is?

There is a growing interest emerging in “green” or “climate” bonds for funding sustainable development and clean energy technology.  They provide payback security desired (or required) by investors AND are specifically targeting environmentally positive activities, which is making them increasingly attractive in the investing world.  International Finance Corp offered a $1 billion green bond for climate smart projects in developing countries; the bond offering “which was heavily oversubscribed, was sized to address the growing demand from an increasing number of investors interested in climate-related opportunities.”  IFC now plans to issue at least $1 billion in green bonds per year, according to Globe-Net. 

The European Investment Bank’s Climate Awareness Bond (to support lending for renewable energy and energy efficiency), the Export-Import Bank of Korea, and the World Bank (who originally developed the concept in 2007/2008) are joining the IFC in this effort.  “The appeal of this product lies in its simplicity - the credit quality of the bonds is the same as that of other World Bank triple-A rated bonds, it is a 'plain vanilla' structure, a liquid instrument that can be traded as easily as other 'plain vanilla' bonds issued by the World Bank, with a market competitive return. With these characteristics, it fits the requirements of core portfolios of large fixed income investors seeking to support activities that have a positive impact on climate change.”  

The global market for these types of bonds has almost doubled over the past 18 months, growing from $5 billion to approximately $9.5 billion, but estimates are that the total green bond market is much higher. 

In the U.S., Massachusetts is gearing up to sell $1.1 billion worth of bonds not only for climate change projects, but clean water, energy conservation and efficiency, open space and land acquisition, environmental remediation and habitat restoration.

There is a proposed State Clean Energy Finance Initiative in Congress by the Clean Energy and Bond Finance Initiative to bring together public infrastructure financing, clean energy fund managers and institutional investors to raise capital at a higher scale.  The idea is for the initiative to be housed at the Treasury but program development and project approvals would be at the state level.   "The State Clean Energy Finance Initiative is designed to assist the clean energy industry in accessing affordable capital through an innovative and efficient program structure," said Lew Milford, President of Clean Energy Group.

This whole world of socially responsible investing, bonds, stocks and returns is relatively new to me.  I look forward to delving into this further over the next year as I embark on a new sphere of information/learning in finance and investing.  

Flex your BICEPs

Earlier this year, I blogged about the impact of climate change on ski resorts; looking back after the season has passed, every single one of our local resorts reported late openings, reduced snow pack, and increased reliability on snow-making equipment.  Ski resorts are clearly threatened by warming temperatures and decreased snow pack; their very existence is dependent on plentiful “freshies” or “pow”. The NRDC/University of New Hampshire study I referenced took an in-depth look at climate impacts to the winter tourism economy.  Here’s the good: winter sports activities in the U.S. support 211,900 jobs totaling $7 billion in salaries, $1.4 billion in state and local taxes, and $1,7 billion in federal taxes.  38 states had value added to their economies from downhill ski resorts and snowmobiling.  The industry generates revenues of more than $12 billion. $12 billion!  More than 23 million people participated in winter sporting activities in the study period. 

And now for the bad news: according to the UNH study, the length of the snow season in the Northeast could decrease by as much as 75 percent if greenhouse gas emissions continue to rise, and the mean snow depth at Rocky Mountain resorts could drop to zero.  My quick math calculations tell me this is…not good. 

Enter the latest project from CERES, BICEP (Business for Innovative Climate and Energy Policy): an advocacy coalition calling for climate legislation to enable rapid transition to a low-carbon economy.  In April, CERES and BICEP launched the Climate Declaration, which calls upon federal policymakers to seize the American economic opportunity of addressing climate change.  The nation's health and prosperity "are threatened by a changing climate that most scientists agree is being caused by air pollution," the Declaration states. "We cannot risk our kids' futures on the false hope that the vast majority of scientists are wrong."  Well said. 

In May, 108 U.S. ski resorts joined 40 other businesses as signatories on the declaration.  " It is obvious that the success of ski business operations depends greatly on climate, which is why we are so invested in programs that keep our slopes sustainable. But our actions alone won’t be enough without strong policies,” said Brent Giles, Chief Sustainability Officer for Powder Corp of Utah, parent company to Park City Mountain Resort in Utah, Copper Mountain in Colorado and Killington Resort in Vermont. “We welcome legislative and regulatory initiatives that will reduce carbon emissions, incentivize renewable energy development and help improve our resiliency in the future.”

“We welcome the ski industry as allies in our work on climate and energy issues and as signatories of the Climate Declaration. This is an industry that cannot be off-shored, and they are calling for climate action here at home,” said Anne Kelly, director of BICEP. “Policymakers must realize that the old political paradigm of ‘It’s the environment or the economy; pick one’ is a false choice. American businesses are ready to combat climate change, and policymakers should join them in leading the way.”  Here’s to business leading the way. 

Choose Your Own Adventure Flowchart to Solve Climate Change!

Yes! A Choose Your Own Adventure Flowchart to solve climate change, brought to you by the same guy that made the cheat sheet on how to win every climate argument (which I posted a few weeks back): 

An exercise in semantics

There is a heated debate going on in the world…. wait, many heated debates.  And many of them center on semantics.

From Wikipedia:

Semantics (from Ancient Greek: σημαντικός sēmantikós)[1][2] is the study of meaning. It focuses on the relation between signifiers, like words, phrases, signs, and symbols, and what they stand for, their denotation.  Linguistic semantics is the study of meaning that is used for understanding human expression through language.  The word semantics itself denotes a range of ideas, from the popular to the highly technical. It is often used in ordinary language for denoting a problem of understanding that comes down to word selection or connotation.

No wonder we’re stuck.  Is it climate change or global warming?  Anthropogenic or just natural variation?  What the hell does “anthropogenic” mean again?  How exactly do you define ecosystem health?  It’s not getting warmer, we had more snow last year than in the past 2 decades…

Years ago, the day after I received my first master’s degree in Environmental Science, I moved up to the tiny mountain town of Silver Gate, MT, population 12 (13 once my daughter was born): suburb of Cooke City, MT, population 60, and arguably one of the premier snowmobile destinations of the lower 48.  Word got around that I had just finished my degree, and apparently some of the locals were suspicious that I was up there to close off the valley to snowmobiles.  So, naturally, I did what any newly minted hippie with an environmental grad degree would do.  I bought a snowmobile; the lawnmower of snowmobiles, but a snowmobile nonetheless.  In part it was to access the amazing wilderness areas surrounding Cooke City and Silver Gate (trust me, 30 minutes on a snowmobile to the wilderness boundary is much more feasible than a full day’s ski in when you only have 2 days off), and in part to demonstrate to the locals that I wasn’t the bad guy.  I wasn’t there to challenge their way of life or insert mine.  And it was pretty awesome to realize that when it came down to it, we were all interested in the same thing—we wanted to preserve the area we lived so we could continue to recreate and our kid’s kids could recreate there.  So the awe-inspiring natural landscape could continue to attract tourists to support the families in the community whose sole economic engine is tourism.  Now, that sounds a lot like conservation to me.  Or environmentalism.  Or sustainability.  Damn, those words again.  But don’t get me wrong; I would never call my neighbors environmentalists to their faces.  To them, that would be an insult.

I work in sustainability.  When I tell people that, quite often their eyes kind of glaze over and they say, “…Oh.”  Or “…Yeah, but what do you do?”  Or “…(silence and blank stare)…” 

The very word “sustainability” seems to confuse people, and means so many different things to different people.  And understandably so.  The sort-of universally accepted definition for sustainability is from the UN Brundtland Commission’s Our Common Future 1987 Report: “Development which meets the needs of the present without compromising the ability of future generations to meet their own needs.”  A better, simpler one I heard recently is “Enough, for all, forever.” 

Somebody from BGI posted this article (which has been in my “to read” queue for 2 weeks, obviously, and I can’t remember who or on which BGI Facebook page…gotta love Facebook for news) about the challenge of semantics, questioning whether the term “sustainability” is destined for obsolescence, and should be replaced with a more universally appealing term like “resilience”.  It talks about the wine-making town of Sebastapol becoming the second California town to require all new development to have solar panels installed, with the Realtors selling this program as a safeguard against power loss and rising prices.  This makes complete sense to me.  What I’m talking about when I’m talking about sustainability is resilience.  How can we prolong our existence in our communities/country/world while still being able to benefit from the amazing technological advances and non-natural aspects of society?  Climate change mitigation is resilience. 

On the other end of the spectrum, GreenBiz posted a great article about the non-story of the first 24 hour period where average daily emissions have been over 400 parts per million.  “There wasn’t a lot of fanfare in the news; there were articles and a front-page story in The New York Times and a few op-eds. But the general tone was ‘no surprises here, we said we were on this course and so we are.’”  The author’s pertinent question was: “How have we let this be business as usual?”  She provided some interesting insights into how surpassing 400ppm can affect the business world and three key charges to actually address this problem:

• Start saying the words “climate change” out loud: “If we don’t use these words, who will?  Where’s the urgency?”
• Understand the risk of inaction: focus on the value-at-risk to the whole business model from climate change—a fundamental risk to the future of business.
• Think big: banish the term “low hanging fruit”: “If there’s low hanging fruit that’s still to pick, then shame on us. Let’s stand back from the tree and get a good luck at the stuff at the top.

And her final words: “So write the number 400 ppm on your office wall, look at it hard, and then ask if what we’re doing is enough yet.”

Well said, Helen Clarkson.  Well said.