Kingsmill's Investment Miscellanea: Friday, January 17, 2020

Jan 17, 2020 | Joshua Kingsmill


Whether you believe in global warming or what causes it or not, there is no question that these natural disasters are being increasingly highlighted. So it begs the questions, can investors drive positive societal change?

I believe that as the next generations take the helm of government and business there will be a major shift in the way money will be allocated towards sustainability. Policy and projects will be significantly more tilted towards the impact they have on the environment.

The proverbial adage of Canada as “Hewers of wood, drawers of water” is reflected in our stock index: Almost a third of the Canadian index is weighted towards Oil and Gas and Mining companies: that’s not an asset allocation that a long-term investor ought to be following.

In the past 10 years, the S&P energy sector had gained just 2 percent, while the broader S&P more than tripled.

In a fascinating annual letter this week written by Larry Fink (Link)   , the colorful and thoughtful founder of the world’s largest asset manager Blackrock, he announced about BlackRock will be exiting investments that “present a high sustainability-related risk. Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance”

Mr. Fink is just ahead of the institutional investor curve, but his capitalist motivations and calculations are aligned with his take on future generations beliefs.

Had Mr. Fink moved a decade ago to pull BlackRock funds out of companies that contribute to climate change, his clients would have been well served. The convergence of “interests” between his firms mandate to provide clients with strong returns, and the awareness around the environment is really something

So in a perfect segue way: after months of record-breaking temperatures and severe droughts which have fueled a series of massive bushfires across Australia, the Australian Open Tennis tournament is underway. On the men’s side, I’m betting on Canada’s own Shapovalov to win his first major. Sadly it won’t be an all-Canadian sweep as US Open winner Bianca Andreescu withdrew. So on the women’s side, I going with Serena Williams.

Have a great weekend !