Filed under: Economic
There’s been much turmoil over the past year and I keep reading of extraordinary events that have happened “for the first time ever”.
A quick google news search reveals some interesting results from this – perhaps little signals amid the all the uncertainty of the future direction we’re heading in?
“For the first time ever China bought more new cars in the first half of 2009 than the U.S”
http://blogs.zdnet.com/green/?p=6041
“On July 13th, for the first time ever, a private rocket company has successfully placed a satellite in orbit”
“The US federal deficit topped one trillion US dollars for the first time ever”
http://www.google.com/hostednews/ukpress/article/ALeqM5hrIHTN_1_szqyV1lZDfVCl6cNKpA
“For the first time ever, Microsoft, the world’s largest PC software company, experienced a drop in sales of its Windows software and carried out large-scale layoffs”
http://www.nytimes.com/2009/07/15/technology/companies/15chip.html
President Obama stepped up on renewables and passed regulations to “enable, for the first time ever, the nation to tap into our ocean’s vast sustainable resources to generate clean energy”
http://www.whitehouse.gov/issues/energy_and_environment/
“For the first time ever there are now more pensioners than children in the UK”
Peter Andre has announced that “I honestly believe for the first time ever that I’m going to have an international album”
http://www.itv.com/lifestyle/thismorning/entertainment/peterandre001/default.html
OK, so the last one may be a red herring.
And just because something’s happened for the very first time doesn’t make it significant in the long term.
Is this just erratic ‘noise’ amid the chaos?
I think not. Some of these big shifts of our time that may have appeared insignificant before the crunch are now accelerating with a vengeance.
RICHARD
Recently the S&P 500 launched a ‘Carbon Efficient Index’ to assist investors and fund managers in finding companies that are responding best to climate change.
http://www.greenbiz.com/news/2009/03/10/pg-wal-mart-chevron-join-sp-carbon-efficient-index
The S&P Index aims to profile companies doing the most on climate change and uses a metric of total emissions to total company revenues in order to determine the most ‘effiicient’ companies in each sector. This is a simple and interesting approach; unfortunately, their work focused more on excluding the 100 worst than finding the best. If 400 of the 500 companies in the S&P 500 are actually carbon inefficient, this index will still only screen out at most 100 of them, leaving the other 300 inefficient companies with a ‘carbon efficient’ label. Additionally, the desire to maintain a 50% market cap weighting in each sector means that potentially even big inefficient polluters will have to be included.
At the end of the day, if you’re an investor who is concerned about climate change, it is still better to invest in companies on the S&P Carbon Efficient Index than the traditional S&P 500.
Valuing of externalities continues to grow and putting a cost on climate change (or carbon in particular) is just the first step towards true cost pricing for resources currently outside the economic system like water and ecosystem services. More climate change indices are expected in the future, and it is safe to assume that other environmental topics will be next.
In the Berkshires, a small mountainous community in Southern Massachusetts, thier local currency, Berkshares, are helping the local stave off the gloomy economy. While local currencies are nothing new, they are proving a fomidable method of helping locals maintain local integrity while remaining stable in this globalised economy.
“In the last four years, there has been a renewed interest in local economy, local production,” said Witt, executive director of the E. F. Schumacher Society, a Massachusetts-based think tank focused on local production. “It just skyrocketed with the collapse of the global economy.”
This is a great method for communities moving towards sustainability as it addresses a variety of sustainability issues, not the least of which are building stronger communities and cutting back on carbon emissions. While this methodology has both pros and cons, it is great to explore creativity in the market so as to learn more about the alternatives to the one system currently awash with struggle.
A series of articles have been posted recently about the failure of the recyling market due to the severe drop in demand in China. Due to substantial drops in the need for recycled material, people can’t seem to find a good price anywhere for plastic, paper, or other materials. This bodes poorly particularly for the US and UK markets who export a large percentage of their recycled goods to the east.
Young, president of Allan Company, a Los Angeles processor and exporter of recyclable materials, nods towards the window. “Across the street we would process 600 customers on a weekday, 1,000 at the weekend,” he says. “The whole spectrum – the homeowner who has stockpiled aluminium cans, the bar down the street that has a load of beer bottles, the liquor store with used cardboard. Now it’s probably half that number.”
http://www.guardian.co.uk/environment/2009/jan/08/recycling-china-us
The lack of demand is hitting hard not only in the exporting countries, but manufacturers in the east as well…
Beijing dealers have taken a particularly hard hit. They stockpiled large quantities of recyclables because prices were soaring, but as the market began to soften, the Olympic security clampdown prevented trucks from entering the capital. The merchants could only watch as the value of their holdings plummeted.
http://www.guardian.co.uk/environment/2009/jan/09/recycling-global-recession-china
Ideally, this will lead to a re-evaluation of the recycling industry in the US and UK and the proper steps will be taken to develop a stronger infrastructure for dealing with the material at home.
In a bold move for the financial world, Bank of America takes the lead in eco-investment by pledging not to support companies which partake in mountaintop removal mining.
“Today, BofA released its revised coal policy, which will have the immediate effect of curtailing commercial lending to companies that mine coal by blowing off the top of mountains. The policy states, in part:
Bank of America is particularly concerned about surface mining conducted through mountain top removal in locations such as central Appalachia. We therefore will phase out financing of companies whose predominant method of extracting coal is through mountain top removal. While we acknowledge that surface mining is economically efficient and creates jobs, it can be conducted in a way that minimizes environmental impacts in certain geographies.
Why is this significant? Consider that Bank of America stands as a pillar of our country’s shaky financial system. In fact, the trying economic crisis has only served to strengthen this behemoth bank while other once proud and stable institutions fall by the wayside. All the more reason to engage BofA in using its investment power and influence to affect positive environmental change.”
http://switchboard.nrdc.org/blogs/rperks/bank_of_america_puts_a_deposit.html
Hopefully this will start to choking of the money currently going to coal and get diverted toward renewables.
