Profits / Investments

With ever-more floods and fires, how are insurance analysts planning for the future?

The “National Flood Insurance Program has paid to rebuild houses that have flooded 6 times over.”

We “face brutal choices about which communities to save — often at exorbitant costs — and which to sacrifice.”

Insurance companies, investors, and businesses face ethical quandaries regarding pollution. The story of Monsanto provides an example of how profits are valued compared to poison:

“Monsanto knew…their PCBs were harmful and pervasive … and kept selling them…They [hid] the dangers…in order to [make a] profit.”

“‘Monsanto went for the profits instead of for public health’.”

“It all comes down to money…[they are] taking care of stockholders. They search for ways to blunt…science [if the science]…detracts from profits.”

Monsanto went to great lengths to intimidate farmers:

They hired private enforcers to spread fear; they would “sometimes show a farmer a photo of himself coming out of a store, to let him know he is being followed.”

The hired bully may tell the farmer, “‘Monsanto is big. You can’t win. We will get you. You will pay’.”

Are investors or corporate leaders willing to grab money - in any unethical manner - as long as they don’t go to jail?
Oftentimes yes. Bringing in big bucks is what they are hired to do.

Recently though, ESG investing (Environmentally-aware, Socially-responsible, Good-governing) has grown.

“Major pension funds…have upped the pressure on portfolio managers to include more climate-sensitive offerings and [to] divest from oil.”
“Many large businesses and their investors, recognizing the urgency of the threat, are already attempting to protect their assets and investments from climate risks.”
“Private bank investors are tilting…to renewables.”

A lot of this money-moving is to gain profit (or avoid losing $), not to help clear the atmosphere.

“a majority of directors at major banks worldwide are connected to polluting companies.”
“Big banks have been making billions of dollars from bankrolling fossil fuels.”
“Liberty Mutual is insuring new tar sands pipelines, coal mines, oil rigs, and…fossil fuel extraction.”
Real estate values have yet to drop in fire/flood prone areas. Insurance companies are trying to stay ahead of the curve, “It’s going to be harder to get insurance.”

The “stranded assets” problem complicates the trillion dollar betting. When, exactly, is the transition to renewables going to take place? Investors don’t want to jump off the pollution-fueled gravy train until the last moment.

Fossil-fuels “are likely to become stranded assets, and investors don’t want to be left holding the bag.”
“Most of those fuels will need to stay in the ground, meaning the money still flowing to…oil and coal…is inflating a multi-trillion-dollar bubble.”
“In a worst-case scenario, people will keep investing in fossil fuels until suddenly the demand they expected does not materialize and they realize that what they own is worthless.”

How to maximize Return On Investment, but still jump off that pollution-profit train before it goes over the cliff? Extractor corporations have to plan many years ahead with projected outlays, implementation arrangements, supply-chain logistics, etc.

“Clean energy initiatives, ESG investment, and the Sustainable Development Goals are all having a direct negative impact on [oil firms] and their ability to maintain reserves and production.”

Will there be miscalculations if countires/companies try to make the transition too soon - perhaps leaving the consumers who still depend on dirty fuels in the lurch?

Some fossil-fuel companies suggest similar planning as automakers: “Black pays for Green”. This means using current pollution-related profits to gradually invest in and prepare for a transition to a low emissions economy. Carmakers can produce electric cars, and oil/gas companies can become wind/solar companies - but only after they make as much money as possible from the more-polluting/more-profitable older style of business.

" ‘The latest words from a [ Big Oil ]…chairman, Black pays for Green, refer to the 80% of the…cash flow…from oil and gas’."

Can these for-profit companies, or their banks, be trusted to give up old habits?

“In 2014…companies, financial institutions and governments pledged to end deforestation for…palm oil, soy and beef… Instead, the rate of…deforestation…accelerated … ‘It’s in our investments, our pensions. We’re all part of a deforestation economy’.”
“The financing of…plastics is complex, involving…lending and investment.”
In 2020 the CEO of Volkswagen was removed. He’d tried to rapidly switch to electric cars: “after weeks of squabbling…over…cost cutting plans…for a radical shift toward electric cars.”
“Since the end of the Paris climate talks, [JPMorgan] Chase has reportedly committed $196,000,000,000 in financing for the fossil-fuel industry.”
“Banks…have continued to profit from illicit dealings with disreputable people and criminal networks.”

Will businesses that depend on pollution simply close their doors? What will happen to American sports teams, the tourism industry, or real estate?

“American…sports leagues…are…far behind.”
“Covid-19 dramatically curtailed Western imports and tourism for a time. The consequences in poor countries were devastating. Hunger rose, and child mortality followed.”
“Climate change…[will] wreak havoc in the real estate market.”

Here’s the story of one gas station owner:

“Mehdi Mahmoodi owns 12…stations…
He has not…installed an EV charger…‘because there’s not really much profit’.” “His EV charger will cost $125,000 to $150,000… That’s ‘no comparison’ to a double sided gas pump, which can be constructed for $20,000.”

Look at pollution-related commerce percentages for the US economy:

Autos - 3.5%
Tourism - 3%
Aviation - 5.5%
Energy - 6.5%
Beef - 1.5%
Dairy - 1%
Shipping - 2.5%?

If other pollution-related enterprises (steel / timber / cement / aluminium / etc.), equal 1.5% of the US economy, the overall total is 25%. More than ¼ of the GDP of the United States comes, somehow, from pollution!?!

Even if my calculations are slightly off, you can see why there’s been no significant pollution reductions since scientists started warning us to stop. Are you willing to quit your job - if applicable?

Consider how we spend our money:

"USA Refinery yield 1993 - 2010:

46% - Finished Motor Gasoline
29.5% - Distillate Fuel Oil (for trucks, locomotives and tractors, also for home heating and electric power generation)
9.1% - Kerosene-Type Jet Fuel"

Investors will sell the shares they hold in fossil-fuel companies (and invest in other stocks, such as renewables) if you and I stop buying fossil-fuel products. Take note of the following news items:

“The investment impacts of less [consumer spending on] stuff: huge.”
“Oil companies don’t…put themselves out of business … If this is…sunset…for oil and gas, someone forgot to tell consumers.”
“Oil companies posted bumper earnings for the 2nd quarter of 2021…driven by the return of air and road travel.”
“The U.S. is responsible for burning 1 out of every 5 barrels of oil in the world.”
“The transportation sector is still 92 percent powered by petroleum products.”