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Exchange-Traded Funds Mutual Funds Socially Responsible Investing

Investing in Response to Climate Change

Screening for socially conscious mutual funds and exchange-traded funds that have a sustainability focus.

by David Snowball | June 2019

Human actions are causing our planet’s climate to become increasingly unstable. We are beyond the point where that fact is open to debate. Most Americans now accept the reality of climate change that’s based on fascinating data visualizations provided by the Yale Program on Climate Change Communication.

The Climate Consensus

By “consensus,” we mean “a general agreement” and, in particular, “a general agreement among those whose qualifications have earned them the right to a professional judgment.”

The short version is that every serious inquiry reaches the same conclusion: The climate is becoming unstable, human activity is driving the change, the instability is immediate and the effects are potentially catastrophic. At base, there have been seven studies of the beliefs of scientists who actively research the world’s climate; depending on the particular study, you find between 91% and 100% of climate scientists in agreement. For folks who would like to learn more about the subject from a source that’s expert, unbiased and accessible, NASA’s Global Climate Change is quite informative and easy to follow.

The basic physics of greenhouse gases has been understood since the 1890s. Certain gases in the atmosphere—not just CO2, but also methane, nitrous oxide and others—trap a portion of the energy from the sun and hold it near the surface of the earth. Without those gases, our temperatures would look a lot like those on Mars. The problem is that more gases trap more heat, and we now have the highest levels of CO2 in three million years. The rising levels of heat-trapping gases have both physical and biological effects. There is very good evidence on the physical risks—temperature rise, sea level rise, greater intensity of storms, greater frequency of extreme weather events—and quickly rising concern on the biological risks. In May 2019, IPBES released a report based on a three-year review of 15,000 scientific and government sources by a team of 150 scientists. They found that up to one million plant and animal species—something like one-tenth of all the world’s species—are now at risk of extinction. They conclude that we can make a difference, but need to act boldly and quickly.

Authoritative voices abound: The Lawrence Livermore National Laboratory (2019) calculates that there’s less than one chance in a million that the changes we’re seeing are natural, U.S. National Climate Assessment (2017, 2018) agrees that there is no convincing alternative explanation to the view that humans are changing the climate, the U.S. Department of Defense (2019) reports that almost all military installations are threatened by increasingly extreme weather, the U.S. Director of National Intelligence (2019) warns that the hazards are intensifying and the Intergovernmental Panel on Climate Change (2018) calls on us to do “as much as possible, as fast as possible.”

According to Jeremy Grantham of Grantham, Mayo, van Otterloo (GMO), in his “The Race of Our Lives,” keynote address at the Morningstar Investment Conference (2018): “Fossil fuels will either run out, destroy the planet, or both. The only possible way to avoid this outcome is rapid and complete decarbonization of our economy. Needless to say, this is an extremely difficult thing to pull off. It needs the best of our talents and innovation, which almost miraculously, it may be getting. It also needs much better-than-normal long-term planning and leadership, which it most decidedly is not getting yet. Homo sapiens can easily handle this problem, in practice; it will be a closely run race, the race of our lives.”

Individual investors need to care and need to act in order to safeguard both the planet and their portfolios.

Climate-Conscious Investing Options

Our individual actions, whether it’s buying LED bulbs or not buying fossil fuel stocks, will neither save nor doom the planet. Too much of our energy consumption is determined by factors beyond our control: If it’s a two-hour commute to work (welcome to Chicago!) and there’s no plausible alternative to driving, then we drive and our choice of a smaller Toyota Corolla versus a larger Toyota Sequoia makes a marginal difference to the planet. At base, collective action, that is, public policy, determines whether the $30 trillion in needed infrastructure gets built or not.

Worldwide, though, recognition of climate destabilization is not a partisan issue. With relatively minor differences, conservatives and liberals elsewhere both look at the evidence, gulp and nod. Figure 1 shows results from a survey of citizens in the U.S. and eight other developed nations where typically 60% to 75% of conservatives and 80% to 90% of liberals agree that their countries are threatened by climate change.

Source: https://www.pewglobal.org/2019/02/10/climate-change-still-seen-as-the-top-global-threat-but-cyberattacks-a-rising-concern/

 

Folks often disagree on how to address the problem, but they tend to agree that there is a real problem. As a result, there’s broad support (outside the U.S.) for vigorous regulatory action.

One popular proposal is setting a price on, and charge for, carbon emissions. Homeowners pay now to have their waste—whether it’s trash or sewage—disposed of. The charges reflect the cost of neutralizing a pollutant in which raw sewage full of pathogens leaves homes and businesses, resulting in water that can be safely discharged and—here in Iowa, anyway—in bio-solids that can be turned into finished compost that’s sold at a profit. At base, it’s possible to treat waste released into the air in about the same way we treat solid waste or sewage.

The popularity of those ideas is important, because they introduce regulatory risk into the mix of factors for investors to consider. If oil and gas company British Petroleum plc (BP) is suddenly paying, say, $50 billion (to pick a random number) a year for the carbon pollution their product creates, the value of their stock might require dramatic adjustment. Likewise, as the European Central Bank continues to allocate money toward “green” bonds and trillion-dollar sovereign wealth funds shift in the same direction, folks holding bonds in more problematic industries might find that their portfolios get repriced substantially downward.

Finally, the popularity of investments screened on environmental, social and governance (ESG) factors is soaring. Morningstar recently reported that the number of ESG mutual funds and exchange-traded funds (ETFs) rose 50% (from 235 to 351) in just one year, while flows are 30 times greater than they were just a few years ago. Jon Hale, Morningstar’s director of sustainable investing, reports that “… the average inflow per year for [ESG] funds was about $135 million [each year from 2009–2012]—very, very small, tiny. Now, for the past six years the average flow has been about $4.5 billion and $5.5 billion just in the last year.”

This reflects the fact that investors, institutional and retail alike, are expressing steadily rising levels of concern about investing in unsustainable or seemingly irresponsible businesses. As millennials enter their peak earning (and investing) years, the movement of capital away from “irresponsible” businesses and toward “responsible” ones will increasingly burden corporations. That’s sometimes referred to as reputational risk.

To recap, the four sorts of risk are physical, biological, regulatory and reputational. While the big picture narratives about the state of the planet in 2050 or 2100 seem reassuringly distant and abstract, these risks can impact your portfolio in the short term. That’s evidenced by the recent bankruptcy of utility PG&E Corp. (PCG) triggered by two years of raging wildfires in California; PG&E stock made up 3% of the portfolios of bunches of mutual funds. For example, Vanguard announced that it holds a substantial amount of PG&E debt in its funds; 52 ETFs have been identified that hold PG&E stock, many of them broad-based ETFs; and mutual funds that hold PG&E stock include T. Rowe Price Mid-Cap Value fund (TRMCX), Fidelity Low-Priced Stock fund (FLPSX), FPA Crescent fund (FPACX), Vanguard Total Stock Market Index fund (VTSMX), Vanguard Mid-Cap Index fund (VIMSX) and Vanguard Value Index fund (VIVAX).

Your options as an investor are: 1) Divest yourself of the stocks most exposed to carbon and related risks; 2) invest in stocks—and, though this is harder, bonds—of firms that might benefit from new regulatory regimes and public demands; 3) invest in stocks of resilient firms—those that are adept at adapting and reallocating capital; and 4) speak up.

Divesting Firms With Large Carbon Footprints

The good news is that indexes that exclude carbon polluters slightly outperform indexes that include them. For example, the S&P 500 index has about the same return whether energy companies are included or excluded, so a low-carbon strategy costs little. The bad news is that some of the firms central to fossil fuel extraction and refinement are also central to renewable energy development and battery tech.

The website Fossil Free Funds tracks the carbon footprints of hundreds of mutual funds by analyzing the exposures in their portfolios. They list a number of funds, often growth-oriented, with zero exposure to the extraction, processing or combustion of fossil fuels. Options include Brown Advisory Sustainable Growth fund (BIAWX) and Green Century Balanced fund (GCBLX). Brown Advisory is what we at the Mutual Fund Observer (MFO) call an MFO Great Owl fund, meaning that it has posted risk-adjusted returns in the top 20% of its peer group for every tracked period greater than one year. My colleague Dennis Baran recently profiled this fund (you can read his article at www.mutualfundobserver.com), and I recently added it to my own portfolio.

Green Century got a new management team 11 years ago, and that team has modestly but consistently outperformed its peers, as shown in Table 1. Green cells highlight places where the fund has outperformed its peer group over the 11-plus years of the current market cycle.

Exchange-traded investors have choices like SPDR MSCI ACWI Low Carbon Target ETF (LOWC) and SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX).

Investing in Environmentally Conscious Firms

There is compelling evidence that a broad ESG-screened fund can form the core of a long-term portfolio, with no loss of returns or escalation of risk.

MFO, which draws its data from Refinitiv (formerly Thomson Reuters, formerly Lipper), currently identifies 339 “socially conscious” funds and ETFs, combined. In either case, ESG-conscious investors have a wealth—and possibly a welter—of choices to contend with.

To help create a more manageable short list of ESG funds that might be worth consideration, we combined three datasets and two sets of measurements to identify 10 first-tier options for you.

  • Screen one: We looked for “socially conscious” funds in both the Morningstar and MFO datasets.
  • Screen two: We selected funds with strong risk-adjusted returns. Those were defined as funds that have an MFO rating of 5 for risk-adjusted performance (and noted the Great Owl funds, GO on the table, which have been incredibly persistent outperformers) or a Morningstar rating of four or five stars (and noted the presence of a positive analyst rating).
  • Screen three: We selected funds with the most promising records of environmentally sustainable investments by looking at their Morningstar sustainability ratings and the Fossil Free Funds badges.

Then we added three bits of important information: age (since excellence over long periods is especially notable), expenses and fund size. To make it easy to scan, we color-coded each cell with blue for the highest score, green for second and so on. Finally, we sorted the table by score. Brown Advisory ranks first with 20 of a possible 20 points, Calvert is second with 19 of 20 and so on. Table 2 shows the results. Remember: These are all really solid performers, whether at the top of the table or at the bottom of it. Our basic starting point for inclusion was outstanding risk-adjusted returns.

While they did not qualify for our short-list of finalists, fans of smart beta ESG investing might look to the work of the Northern Trust Asset Management which, as we noted when we profiled Northern U.S. Quality ESG fund (NUESX) on our website, “has made a major commitment to responsible investing.” That includes active funds, indexes and smart beta ETFs.

Finally, with most future growth in greenhouse gas emissions coming from Asia, it can make sense to consider investing in innovators in that half of the world. The cleanest option is Matthews Asia ESG fund (MASGX), which has substantially outperformed its Pacific stock peers since inception and which benefits from Matthews’ depth in the Asia arena. More broadly, a handful of exceedingly solid emerging markets equity funds—Morningstar medalists—also receive Morningstar’s highest sustainability rating: Harding Loevner Emerging Markets fund (HLEMX), Seafarer Overseas Growth & Income fund (SFGIX) and Virtus Vontobel Emerging Markets Opportunities fund (HEMZX). The last fund is still highly regarded despite the loss of star manager Rajiv Jain two years ago.

Targeting Innovators

Some managers look for companies that are, in a way, resilient. Such corporations have a structural and cultural commitment to innovation, which might give them a built-in advantage in dealing with unprecedented change and instability. Two funds with such a focus are Guinness Atkinson Global Innovators fund (IWIRX) and Seven Canyons World Innovators fund (WAGTX, formerly Wasatch World Innovators). Table 3 gives their performance stats. Green cells indicate places where the funds have outperformed their respective peer groups over the 11-plus years of the current market cycle.

The two funds have earned four- and five-star ratings, respectively, from Morningstar. Both are flexible, global funds run by small, stable management teams. Both have outperformed their peers over the 11-plus years of the current market cycle. Guinness Atkinson has a purely large-cap portfolio, while Seven Canyons invests the vast majority of its portfolio in micro- to mid-cap stocks.

Speaking Up as a Shareholder

In my day job, I’m a communication studies professor. My doctorate is in rhetorical theory and practice. For a quarter century I was a debater, then a debate coach. You had to see this coming, right?

 

If you invest directly in equities, contact the management of corporations in which you invest and express your views to them. You can find out how the executives of those companies think about, and respond to, the environmental risks around their activities by reading their annual Form 10-K, which is available in the U.S. Securities and Exchange Commission’s (SEC) EDGAR database. The 10-K will list all of the risks that the corporation faces and how it’s responding to them. By way of illustration, General Motors (2018) writes:

“To mitigate the effects of our worldwide operations on the environment, we are converting as many of our worldwide operations as possible to landfill-free operations, which reduces greenhouse gas emissions associated with waste disposal … approximately 50% of our manufacturing operations were landfill-free.

We continue to search for ways to increase our use of renewable energy and improve our energy efficiency … We have committed to meeting the electricity needs of our operations worldwide with renewable energy by 2050 ... We continue to seek opportunities for a diversified renewable energy portfolio including wind, solar, and landfill gas.”

And so on, in some detail. Like what you read? Congratulate them. Don’t like it? Chastise them.

If you invest indirectly through funds or ETFs, contact the adviser of the fund. I do this all the time. They’re people. They answer the phone. Morningstar publishes a sustainability grade for every domestic equity fund and FossilFreeFunds.org does a similar five-star sort of rating (Figure 2).

Check your holdings’ rating. Like what you see? Congratulate the advisers. Don’t like it? Chastise them.

You can also contact the people you elected to represent you. The League of Conservation Voters publishes an environmental voting record for every member of the U.S. Congress. Check out your representative. If you like what you see … well, you know the rest.

Doing Good for the Planet and Your Portfolio

Individual responsibility alone can’t save the planet. And yet, it’s still the right thing to do. My home is over-insulated and all of the lights are LEDs. My car gets 40 miles per gallon on the highway, and still I walk rather than drive whenever I can. I eat no red meat and only sustainably harvested seafood. None of this will save the planet, and yet all of it saves me.

Collectively, such actions are good for my health—physical, mental and spiritual. Increasingly, that same ethos is good for my financial gains. And, for all of us, that should be quite enough reason to do them.

Discussion

John Lambert from NJ posted over 7 years ago:

Given the abysmal record of Scientific forecasts; the coming ice age in the 1970's, ozone depletion, peak oil, world overpopulation and the coming starvation, and acid rain just to mention a few, I find this author's over confidence disturbing. Could this be just another in a long line of Chicken Littles saying the world is ending? Never in doubt; often wrong.


Van Farris from AL posted over 7 years ago:

The EPA reports that climate change as measured by heating/cooling degree days over the past three years in North America is generally moderating. They use the arbitrary temperature of 65 degrees and use utility company data measuring hours above and below this temp to give the customer real world medium term usable data. Areas which have had summer temp peaks reaching 100 degrees over the past 5 decades are now seeing less and in many cases none over the past 10 years. It seems that when reliable data is used to generate appropriate actions, such as in utility use, the "undeniable" verbiage points to a lack of candor on the part of most self interested parties, such as Mr. Snowball.


Bill Anderson from NC posted over 7 years ago:

Mr. Snowball, a communications professor, must not know what “unstable” means in his first sentence “Human actions are causing our planet’s climate to become increasingly unstable.” Even the most extreme climate alarmists say only that the earth will reach a higher equilibrium temperature. His second sentence is false: there’s plenty of debate among actual climate scientists. It seems that investing in climate change, as different from all other investing, can only mean investing in government subsidized boondoggles run by political stooges, like Solyndra. Investors beware!


mike from KS posted over 7 years ago:

Read the first paragraph and stopped. If aaii continues to spread this garbage I will cancel my membership. I can get the leftist flawed viewpoint for free anytime anywhere.


mike from KS posted over 7 years ago:

And you just had a poll of members of which 70% said they are not interested in ESG investing.


Steven Turiano from NY posted over 7 years ago:

Thank you for posting an informative article that focuses on actual science and meaningful investment options rather than going down the rabbit hole of getting "data" from politically driven sources. The links to NASA and other scientific sites are nice inclusions.


van farris from AL posted over 7 years ago:

NASA is very, very much a politically driven source.


Vic from NV posted over 7 years ago:

The article has a snowball's chance in hell of being true. I am tempted to cancel my subscription after reading it. In recent years the media, politicians and activists have popularized the notion that climate change has made disasters worse. But what does the science actually say? We aren't sure as there is no fair debate. Mr. Snowball would like us to believe the debate is over. It's politics versus science in attributing extreme weather events to man made global warming. Here's a look at what the debate is like these days....dissenters crushed, grant money goes to a select few, children used as pawns, and corrupted climate science. For this article to be published in an AAII magazine makes me very unhappy. I have a feeling students in Mr. Snowball's classes aren't reading debate material by Judith Curry, Allan Macrae, Steven McIntyre, Roger Pielke, and the late John Coleman.


Allen Crawford from PA posted over 7 years ago:

If I want left liberal nonsense ( which I don't) I will watch CNN. I certainly don't expect this from aaii. Snowball lost me in the first few paragraphs. Allen Crawford


Karl from MD posted over 7 years ago:

Worthless one-sided article promoting a far left agenda. I don't appreciate my membership dollars being used for a blatantly political purpose. This was an insult to AAII members and AAII should issue an apology and refrain from endorsing political platforms in the future. AAII is obviously hurting for content to have to stoop to printing this left wing garbage. An article on investing in alternative / sustainable energy would have been timely but this was not that. This organization has been going down hill for some time and is now sinking to pandering.


Nolan Cummins from OK posted over 7 years ago:

6-17-19 Investing in Response to Climate Change Ref. AAII Journal June 2019 article by David Snowball My first objection is author's repeated use of "consensus" as though scientists get together every few years and pass by majority vote rules nature must follow. Second issue is statement "..basic physics of greenhouse gases has been understood since 1890s." If that were true, we would not have had the situation in the 1960s where we were informed in terms similar to today that unless the government and citizens took drastic immediate action, the air pollutants would reflect the sun's rays back into space and we would all freeze to death. Third is statement ...we have the highest co2 levels in three million years." The world obviously survived that "crisis" as we are alive today. In addition, If the scientists who claim to know are correct, all the carbon it those fossil fuel deposits was in the atmosphere at one time (not necessarily at the same time). Fourth is "..popular proposal..price on..carbon emissions." This implies the free market won't work to reduce greenhouse gases, but after government intervention with a carbon tax, the free market rules of supply and demand will reduce emissions by pricing low income people out of the market for fuel. How then will those people get to work, cook their food, and warm their houses?


Tim from MD posted over 7 years ago:

Excellent fact-based article. However, it might be helpful to broaden the discussion to include the climate aspects related to real estate, a major investment for many individuals and for our economy. For example, many banks will likely be looking at the actual expected useful lifetime of properties in low lying areas (both coastal, e.g., much of FL and inland). A small town near us (Ellicott City) has had two 1,000 year floods in three years so you can't just blindly depend upon stream/river flood zone maps or coastal flooding maps anymore, particularly since many of them are out of date and the insurance coverage (inc. federal programs) is likely to get more stringent and expensive due to the huge financial costs projected for these programs. At least some of the flooding now occurring in the mid-west was likely related to climate and the rate of sea level rise seems to be increasing. Of course, wild fires are also a big issue out West, on the grasslands and in some areas of the East. We have bi-coastal friends that are selling a home and land near the Sierra Nevada at least partially to reduce their fire risk by moving to another area in CA. Other factors to consider include expected droughts, storms (including high winds), long-term water supply (glaciers are melting and will likely be gone before long - Glacier national park may lose their active glaciers in the next 20 years), etc. Some studies are already providing rough estimates of the large expected financial impacts to the broader economy expected from climate. Btw, I was surprised to see so many responses reflecting denial about climate change - I thought we were past that - we pretty well understood the basics of this issue back in the late 1980's. Best wishes to all!


John Lambert from NJ posted over 7 years ago:

Tim - The NOAA sea level trends data base shows no acceleration in sea level rise. NY Battery sea levels have risen an average of 2.85 millimeters per year for the last 162 years. In 30 years that is 3.4 inches. Hardly a real estate disaster. Glacier National Park has recently changed the signs that said the glaciers would be gone by 2020. There is no evidence that weather is becoming more extreme; just the opposite. I think it would be more accurate to call this a faith-based article. Snowball is pushing a list of high cost (expense ratios average 1%) actively managed equity funds. A low cost Vanguard or Fidelity broad based equity index fund will easily out perform this group of mutual funds over a 30 year period. If it makes you feel good; invest with Snowball. For me, I don't intend to follow investment advice from a PhD in Communication with a political agenda!


Edmund Roache from NY posted over 7 years ago:

I strongly object to this article. The computer models used for climate change are highly inaccurate. None of the predictions have come true. Climate change is a political issue, not a real one. Yale is subject to the same political influences as the UN and other political so-called bodies of science. Please do not have this man in your magazine again and please educate yourselves to the facts regarding "climate change." Stick to investing and steer clear of political issues.


Bob Rea from AZ posted over 7 years ago:

“We are beyond the point where that fact is open to debate” Why? Has the “consensus” never been wrong before? “Our individual actions, whether it’s buying LED bulbs or not buying fossil fuel stocks, will neither save nor doom the planet.” This statement makes no sense to me. If you do believe humans need to change behavior to stop climate change, then indeed the change will have to be made by individuals. They’ll either make changes because they want to and think it’s the right thing to do, or by force. Anyway, I could go on, but since we’re beyond the point of debate according to the author, I’ll stop. This isn’t the place for the debate anyway, and I agree with those that feel this article was poorly chosen for publication in the AAII journal.


John Graves from NC posted over 7 years ago:

This article does not belong in our publication. The author is senseless and his story is nonsense. Science is not a consensus event. Politics and religion more closely reflect the impression of 'AGW', anthropomorphic global warming'. Or 'climate change' as it is now so invidiously referenced. If we want commentary such as this, we can go to a wide variety of political and religious sources for manna to feed the masses. We are an association of individual investors who build and monitor our own portfolios with an eye to net returns relative to our individual objectives. Promoting mutual funds with 1%+ annual fees with nominal track records in this journal is contrary to our closely held views. As a lifetime member, as a speaker at local and national conferences over the years, I find this commentary beyond the pale of our world. One can be socially responsible in a meaningful way without the diatribes herein stated. Charles, you can do so much better than this. Please do. Thank you, John Graves


Tim from Rate of Ice Melting Increasing posted over 7 years ago:

For you many climate skeptics responding to this article, I suspect that nothing I or any other scientist can say will influence your opinion. Best of luck to you all. BTW, I continue to urge those readers open to argument on this topic, or at least open to hedging your real estate bets: please consider projected climate impacts in your purchase decisions for real estate and other investments. :-) Couple of other quick notes in closing: The National Academies Presidents Affirm the Scientific Evidence of Climate Change. See http://www8.nationalacademies.org/onpinews/newsitem.aspx Several articles discuss increased rates of melting for glaciers and Greenland: See, for example: https://www.vox.com/energy-and-environment/2018/12/8/18129132/greenland-ice-melt-sea-level-climate-change https://www.sciencenews.org/article/cold-war-spy-satellite-images-himalayan-glaciers-rapid-melting


Ken Washer from NE posted over 7 years ago:

I really enjoyed the article! Thanks for publishing it. I always like to be exposed to new ideas as it makes me a more well rounded individual.


Randall Jones from TN posted over 7 years ago:

Professor Snowball is at the center of one of the greatest debates of our day.That "We are beyond the point where that fact is open to debate" from his opening statement sounds like Al Gore as he gets on his monster jet going to another climate change conference with the other international "promoters"on their big private jets as well. Not open to debate? Really?? The hypocrisy is rampant in this "scientific" Barnum and Bailey show. Yet the money to be made here is just too big. There are innovations being made in the free market, but due to supply and demand, not fear and hyperbole. And as an owner of two hybrid vehicles, I rather like the electric cars. We'll soon be driving more and more of them, NOT because CO2 is bad, but because they will soon become more cost-efficient to drive and require less upkeep. The left also leaves out of the equation the influence of God in the scenario. He that created the earth did so for sustainability, knowing that we will make mistakes; the earth is adaptable. He will allow it to fail only when HE is ready. I think it would be best to keep sales pitches like this off the publication, as we are in search of FACTS not bull...and I won't give up my T-Bone steak either!!!


David Hill from OK posted over 7 years ago:

I too like Mike from Kansas stopped reading after the first paragraph. I offer up a good article by Walter E. Williams from April 26, 2017 from The Daily Signal titled 'Here's How Wrong Past Environmental Predictions Have Been'. Walter presents a list of predictions from the experts over the years and I keep it handy for such situations. One of the best predictions was from 1970 where ecologist Kenneth Watt told a college audience that the earth had been 'chilling sharply' for 20 years, would be 4 degrees colder in 1990 and 11 degrees by 2000-about twice what it would take to put us into an ice age. Don't forget that some of these socialists want to jail people that don't believe in climate change. It's all about government control and they want to control it all.


Carlis Faler from TN posted over 7 years ago:

“consensus,” - At one time there was a consensus that the world was flat. Well that did not work out and this will not as well.


Ray Niemiec from TX posted over 7 years ago:

It's bad enough that academics, government bureaucrats, and popular media push this agenda but AAII should hold to a higher standard. Perhaps it isn't reasonable to expect the editors to understand the 'science' but surely they can identify political bias, sermonizing, and silly opinion surveys. This article could have been abbreviated to a short lecture on how to invest in the companies that write the best "Corporate Citizenship Reports" and know how to navigate the hazards of regulation.


Wayne Maybach from VA posted over 7 years ago:

Like so many others, I find Mr. Snowball's article contains a plethora of garbage and opinion masquerading as fact. One can find organizations and articles (and weather models) supporting any "reasonable" agenda - just put in the data in the model of your choice and "presto". This article sounds like it was written by Michael Mann of hockey stick fame. I especially find amusing Mr. Snowball's statement that "There is compelling evidence that a broad ESG-screened fund can form the core of a long-term portfolio, with no loss of returns or escalation of risk." Gee, did Mr. Snowball find the "magic formula" of investing where one NEVER experiences a loss? Is the statement "Past performance is not a prediction of future results "not true for him or his selections? Whether the return he specifies is on one's initial investment or total return, or whatever (which he doesn't state) I find it absurd to say such a thing. This causes me to question Mr. Snowball's intelligence and investing credibility. This article does NOT belong in the AAII Journal. I can get bias BS by watchng CNN, MSNBC, ABC, NBC etc.


Tom Spalding from CA posted over 7 years ago:

Climate deniers can continue to stick their heads in the sand, to the extreme detriment of their children, grandchildren, great-grandchildren, etc. I would challenge each of the posters who themselves claim to be so certain that climate change isn't real or won't be damaging to billions of people to: 1) Edit your comment to clarify the number of college level science courses you took. 2) Name three so-called climate scientists who have published peer-reviewed papers that legitimately challenge the prevailing theory that climate change is human-induced. And if your main source of news is FOX, consider broadening your horizons. We all need to get out of our bubbles and listen to thoughtful, reasonable voices on multiple sides of the issues, not just the shouters pimping for ratings (on both sides of the political divide).


Hal from PA posted over 7 years ago:

Tim and Tom did not state how many science courses they took (nor did Tom say how a person can "deny climate"). I took enough classes to earn a Ph.D. in mathematics and a M.S. in applied statistics. The satellite data from 1998-2018 show a trend with r^2 = 8.61%, t = 1.34, p = .20: not significant. We are warmer than the 1970s, which was cooler than the 1930s, which was warmer than the Little Ice Age in the 17th to early 19th centuries, which was cooler than the Medieval Climate Optimum, which was warmer than today! Should we stick with the scientific consensuses on the flat earth, geocentric universe, phlogiston, essentialism, ether, and the steady state universe? CO2 is a trace gas, .04% of the atmosphere, less important as a greenhouse gas than water vapor, whose increase does not precede warming temperatures, but follows it instead. It has been far higher in earth history, at times biodiverse life flourished. Coming out of the most recent Ice Age, CO2 was so low it was close to extinction level for plants, which would have killed all animals and humans as well. Our gradually increasing CO2 levels are greening the Sahara Desert, providing more food for Africans. Do the climate stability deniers like the communications professor wish to deny more food to Africans? By the way, I subscribed to AAII to get retirement savings advice, not to read a leftist political screed misrepresenting science and the nature of science. I will not be renewing my subscription.


Tim from MD posted over 7 years ago:

My earlier comments noted the existence of man-induced climate change. Just to clarify for those concerned about my training and experience: Ph.D. in Biological Sciences from Florida State University (Major Professor Dr. Hans Gaffron, Research Professor at the Institute of Molecular Biophysics). I published over ten peer reviewed scientific papers related to electron flow in photosynthesis, a new mass spectrometer inlet system for sampling gases from liquids, etc. Served as Chief Biologist, Chief of the Bureau of Surveillance (including air and water monitoring and reporting) and as Chief of the Bureau of Water Quality for the State of Florida Department of Environmental Regulation. Chief of the Water Monitoring Branch at EPA Headquarters (responsible for national monitoring and reporting on water quality and guidance on modeling water quality as needed to develop water-quality based permit limits), Chief Scientist for the Bureau of Environmental Statistics Development Staff. Agency representative to the White House Office of Environmental Policy, Chair of the White House Inter-agency Committee on Environmental Trends, Co-founder of the Inter-agency Working Group on Sustainable Development Indicators (development of economic, social and environmental indicators), assisted in the White House management of the President's Commission on Sustainable Development (PCSD), and served on several PCSD task forces including the Climate Change Task Force. Also received eight U.S. patents for shelving and clamps.For details see www.stuartanalytics.com Best wishes to all.


Hal from PA posted over 7 years ago:

The argument from authority is a logical fallacy in which a claimed authority's support is used as evidence for an argument's conclusion. Carl Sagan wrote of arguments from authority: 'One of the great commandments of science is, "Mistrust arguments from authority." Too many such arguments have proved too painfully wrong. Authorities must prove their contentions like everybody else.' The satellite temperature record is publicly available. Anyone with an Excel spreadsheet can reproduce my calculations above. I question too whether human activity caused the Medieval Climate Optimum or the Holocene Climate Optimum, or other warm periods before human beings existed. I question too how many Africans need to starve so that we can have the dubious pleasure of returning the Sahara Desert to a barren, bone-dry wasteland when we win the war on CO2.


Stephen from CA posted over 7 years ago:

Bravo, AAII! Although I was pleasantly surprised to find such an important article connecting the environment with our portfolios, I didn't expect to read the same old denials or attempts to downplay climate change's impact that some of our old, male leaders continue to put out. Truth seems still to be inconvenient for both these leaders and their followers. Many AAII members may be in or approaching retirement, but surely we have some young people whom we love. Can't we listen to them, and care for the future? As an exercise, I did read material cited by one of the "skeptics" above, and found it interesting...always interesting to look for ways to correct bias. However, besides the overwhelming majority of expert opinion warning us about climate change, it is now so obvious that even the non-expert such as myself can see it accelerating.


Hal from PA posted over 7 years ago:

It is sad to read the emotional reasoning of the climate stability deniers. They appeal to authority; they appeal to youth; they appeal to everything but the facts. Now they convince themselves that "global warming" is "accelerating" - even though it is statistically non-existent for the last 21 years, and there is even evidence of cooling in the last 2 years, thanks to entering a sunspot minimum. But for many people, the need to conform and the need for virtue signaling outweighs the power of facts and reason. It seems that the scientific method and the Enlightenment were all for nothing after all.


Stephen from CA posted over 7 years ago:

Indeed, I do not have a problem referring to authority, when it is authority that has shown dedication to truth. To quote from the excellent and actionable article above: The Lawrence Livermore National Laboratory (2019) calculates that there’s less than one chance in a million that the changes we’re seeing are natural, U.S. National Climate Assessment (2017, 2018) agrees that there is no convincing alternative explanation to the view that humans are changing the climate, the U.S. Department of Defense (2019) reports that almost all military installations are threatened by increasingly extreme weather, the U.S. Director of National Intelligence (2019) warns that the hazards are intensifying and the Intergovernmental Panel on Climate Change (2018) calls on us to do “as much as possible, as fast as possible.”


Hal from PA posted over 7 years ago:

In the past, "authority that has shown dedication to truth" warned us of the flat earth, geocentric universe, phlogiston, essentialism, ether, the steady state universe, and... global cooling. I too have "dedication to truth". In science, that means keeping an open mind to new evidence. I employ publicly available evidence, from the satellite weather data set from UAH, and perform a calculation that everyone can do on their home computers. There is a fully 20% chance - one in five - that the temperature fluctuations of the last 21 years are due to pure chance. That is not statistically significant. Again, you refuse to explain the Medieval Climate Optimum or the Holocene Climate Optimum, which could not have been the result of human activity, not to mention the 5x higher CO2 levels of 250 million years ago, during which life flourished before our destructive ice ages. You refuse to say what is so dangerous about slightly higher CO2 levels, to give plants more to breathe, so they can grow, overspread the Sahara Desert, and feed starving Africans. Environmentalists are the most dangerous people on earth, intent on wiping out all multicellular life.


Joe Ogrinc from OH posted over 7 years ago:

Dr. Snowball, in his article “Investing in Response to Climate Change” in the June 2019 issue of the AAII Journal, presents a good example of how a lie can be repeated often and loudly enough until it's believed as fact. Even by a university professor. Science is never “consensus”; it's fact. So to say that 97% of scientists hold a particular belief is meaningless without facts to back it up. History is filled with numerous examples. Ninety-seven percent (or more) of scientists once believed that bacteria had nothing to do with causing infections. Or that a Vitamin C deficiency didn't cause scurvy. Or too-little Vitamin D was unrelated to rickets. Or not enough Vitamin A brings on beri-beri. The facts showed they were all wrong. Many others question the 97% figure because the method to arrive at it is flawed. Ed Hiserodt and Rebecca Terrell explain it quite well in their article at www.https://thenewamerican.com/print-magazine/item/31953-climate-change-it-s-not-that-complicated. Further, tens of thousands of scientists dissent from this “consensus.” Over 31,000 (more than 9,000 of those with Ph.D.'s) have signed a petition saying they have examined the evidence and found no connection with man-caused climate change. View it at www.petitionproject.org. The project is ongoing; the list of scientists continues to grow. If you want to invest in alternative energies or “socially conscious issues,” more power to you. It's your money. But base such decisions on facts. For instance, most garbage can be converted into and recycled as oil. Discover Magazine has run a series of articles on this process. Look up Discover Magazine online and search for “Anything into Oil” for the original article with links to several follow-up pieces. And www.plastic2oil.com could be the solution to the floating islands of plastics in our oceans. Currently being tweaked for maximum profit, these businesses welcome investors. More important, they are founded on proven scientific principles that work now, not on discredited theories, fabricated data, rigged numbers, incomplete information, predetermined conclusions, computer models, or “consensus.”


mel from MD posted over 7 years ago:

I think he downplays the importance of individual choices. If 100 million Americans gave up their gas hogging SUVs, installed solar panels and switched to a vegan diet this would make an impact on trends in climate change. It would also alter the market and cause corporations to rethink their product lines. If a sufficiently large number of persons experienced first hand the benefits of greatly increased energy efficiency, it could also alter the political market place. The main barrier to taking action to reduce the risks of climate change is not technical or economic, it is the intransigent ignorance such as that demonstrated by many climate change deniers responding to this article. Politicians are happy to pocket payoffs from polluting companies in exchange for limiting regulations. They are even happier if they justify their actions by saying they are only doing what their constituents want.


mel from MD posted over 7 years ago:

Too bad it is not possible to directly reply to posts. Nolan Cummins wrote asking if greenhouse gas effects were discovered in the 1890s that it was not until the 1960s that the issue began to generate widespread concern. The basic physics lab experiments on the heat retaining characteristics of several gases were first published around 1890. Some scientists back then wondered how this might affect the climate. After years of increasing industrial pollution scientists began to see the results. That is when they first began to warn of the dangers in earnest. Carliss, the Columbus myth you have been fed says "everyone" believed the world was flat. Not so. Pythagoras and other Greeks in 500 BC posited the earth was a sphere. You can find references to many other learned writers arguing the earth was a sphere or an ovoid as well as others who thought it was flat. There was little "consensus" on that issue. Also, during most of the debate there was limited empirical evidence, and a lack of theories to convincingly explain how a spherical shape might be possible. Once those became available, the notion the earth was flat became the province of a limited fringe element. We have both the empirical evidence and the theoretical framework in place to support climate change.


Gilbert from TN posted over 6 years ago:

The author states that investors should contact the management of ETF's they invest in to change their investments if they don't like what companies are in the fund. Many if not most equity ETF's are index funds and a lot of the indexes they follow are constructed by an unrelated party Therefore contacting the ETF management would be useless in those cases. If you don't like what your fund is invested in, just sell it and buy another one that better fits your preferences. As for the subject of climate change itself - like everything else it is subject to a cost - benefit analysis. If man is changing the climate to what degree is he affecting it and what are the costs and benefits of trying to do something about it. Those things are certainly NOT settled.


Kay from NY posted over 6 years ago:

Reading these comments has been one of the most disheartening experiences. It seems that nearly everyone is about marshaling whatever facts or scientific content is at their disposal to trash someone else's perspective in response to an article that provided very useful information to those of us who want to invest in ways that we think will help to improve living conditions for everyone. I work in energy efficiency, so I am used to all the conflict and I would like to share with you one of the most salient and valuable perspectives I have ever heard or read on this subject. The speaker was an advisor to industry at the global level. I wish I could remember his name, but it is not relevant. He was not giving a scientific presentation. Rather, he was talking about how people in our business might advise their clients. In doing so, he framed his entire presentation in terms of risk management. He said, let's assume our job is not to tell people what they should believe. First, they will likely distrust our motivation and dismiss our opinions; and second, a simple fact of capitalism is getting people to people don't need to (paraphrasing here) "do the right thing" doesn't mean they need to do it for the "right reason." If you want to be successful in your business dealings, the issue is whether they see inherent value in what you are offering, however closely or remotely your views align. That's true for us as investors, and it's true for the businesses we consider investing in. This message really resonated with me as it was closely related to the social marketing wisdom that had been shared with me about healthy eating when I worked on a health promotion project years ago. The speaker talked about how he discussed with CEOs of global companies the options for investing in making the operations and physical plants of global businesses. He posed energy efficiency and resiliency options in the context of other ways of investing or distributing profits. He listened to their perspectives. And he made sure the issue of risk management was on the table. The way he pitched that issue was simply (and this is all a paraphrase from here on): "OK, I hear you saying these are your priorities and your interest in the [energy or sustainability] options is low. You need to be responsive to shareholders, board members and those who see other growth opportunities, and you don't want to go out on a limb when other leaders in your company are not convinced that climate risks are real. "I also know that I know you feel it is important that all your investments are defensible and are protected against adverse events in the marketplace. That's why your annual expenditures for insurance are $XXX billion even though the risk of catastrophic incidents affecting your company are moderate to low. "So I just want to ask you: In the unlikely event that your best efforts to evaluate climate risk are wrong, what would be the outcome if you did not [harden your facilities against extreme weather, or develop a less polluting technology, or develop a more energy efficient process that will be better able to compete under changed circumstances, or whatever]? "What kinds of actions is your board of directors likely to take? Your shareholders? The regulatory agencies you interact with? How well will you be able to defend your decisions?" What the speaker described was a way of bringing the whole conversation back to the fundamentals of how to best protect and grow the opportunities for the companies. All that David Snowball did in his very resourceful article was to provide those of us who wish to consider climate change risks in our investment decisions with an incredibly useful set of options and a broad based range of perspectives that might inform us in making those investments. I for one am very, very grateful. I don't share the opinions of many AAII authors. But I learn from every single one of them. I humbly assert that we all can. My two cents.


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