What did you do for Earth Day on Monday?
First celebrated on April 22, 1970, Earth Day is a global movement to raise awareness of our negative impact on the environment. More than 193 countries now host events, all coordinated by the Earth Day Network.
I can still remember celebrating Earth Day as a child (and even throughout university), going on day trips with my classmates to clean up parks and rivers. Sadly as an adult, I’ve fallen out of the annual tradition but I aim to make every day Earth Day by doing little things that I hope add up in some way.
In recognition of Earth Day this week, RBC Wealth Management reissued a great article, Climate change is Reshaping the Investment Landscape, from the April Global Insight that looks at how to adapt portfolios to the climate change challenge … and the opportunity that comes along with that for everyone.
Climate change—by which we mean the increasing occurrence of extreme weather events such as crazy storms, all-engulfing floods, or debilitating droughts—has been affecting the lives of a growing number of people. Take Houston, Texas, for example, which endured three massively damaging floods over the span of 2015, 2016, and 2017, each of which was rated a 1-in-500-year event!
In 2018, 415 asset managers, together overseeing assets totaling $32 trillion, signed an open letter to governments urging more action on climate change, which they say threatens their holdings.
The World Economic Forum (WEF), in its Global Risks Report 2019, noted that climate change, already a major concern in 2018, had moved up a notch in its ranking of the most pressing risks. A survey of the WEF’s stakeholder-respondents, made up of insurance and reinsurance companies, banks, and industry-based focus groups, revealed the top three global risks are related to climate change.
We shouldn’t overlook how climate change is changing the investment climate. Economic activity can be stressed by extreme weather events and increased regulatory costs to mitigate and adapt to climate change. From an investment perspective, it preoccupies businesses, central bankers, and rating agencies suggesting equity investors should also pay attention as investment returns could be impacted. It’s not all bad news as climate change may also offer new opportunities, such as renewable energies, special building materials, construction of sea walls, indoor agriculture and aquaculture, and more.
Now you are in-the-know with Word on the Street.
Enjoy the weekend.
Investment & Wealth Advisor
Chaaban Wealth Management Group