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Bloomberg Green: Inside Bill Gates’s Climate Brain

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“Ethical Markets highly recommends Akshat Rathi’s reporting on Bill Gates and his approach to the green transition. While Bill Gates has made some good investments through his Breakthrough Ventures, he is still too focused on R & D, while overlooking low-hanging fruit, such as halophyte foods and saltwater agriculture on unused and degraded land (see our Green Transition Scoreboard reports “Transitioning to Science-Based Investing, 2019-2020). All better than Direct Air Capture, CCS, BCCS, but we agree on some of his CCUse methods, e.g. for cement.

Gates is still grossly misinformed about a need for nuclear power! There is no economic justification for more money wasted in nuclear, which clearly priced itself out of the market years ago! So many additional alternatives to back-up wind and solar: green hydrogen electrolysis from seawater; deep sea collecting of natural mixed metal nodules for use in batteries, e.g. Deepgreen Metals, Inc. of Vancouver, halophytes, kelp farms: algae from seawater for jet fuels, and others.

~Hazel Henderson, Editor“

t was a 90-second video addressed directly to Bill Gates in 2015 that finally convinced the billionaire to take his climate activism one step further by divesting from fossil fuels. But the actual process of disentangling the world’s third-largest fortune from oil and gas is taking years—and hasn’t prevented Gates from investing in other carbon-heavy businesses.

In the new book by Gates, How to Avoid a Climate Disaster, the co-founder of Microsoft Inc. recounts the story of how he went from being a divestment skeptic to eventually coming around to the idea. And his attempts to make good on that promise show how hard it can be to fully exit fossil fuel, especially for the very wealthy.

“In 2019, I divested all my direct holdings in oil and gas companies, as did the trust that manages the Gates Foundation’s endowment,” Gates writes in the book, noting that he hadn’t held coal company shares for “several years.” Public filings of the Gates Foundation’s holdings show that, as of the end of 2019, more than $100 million remained invested in stocks and bonds of oil and gas companies, including Exxon Mobil Corp., Chevron Corp. and BP Plc. The foundation does not specifically disclose its total fossil-fuel investments.

“Bill decided to sell all of his direct holdings in oil and gas companies in 2019,” a Gates family spokesperson said in response to questions about the divestment process. “We do work with third-party investment managers for a very small portion of the stock and bond holdings. They act independently and Bill does not direct those investments.”

Berlin, Germany – April 19: Bill Gates, captured on April 19, 2018 in Berlin , Germany. (Photo by Inga Kjer/Photothek via Getty Images)

The amount of the foundation’s money that remains in direct fossil fuel holdings is a small fraction of the endowment’s total size, which stood at $40 billion in 2019. Of that total, about $1.2 billion was invested in mutual funds that may also indirectly hold some stocks in fossil-fuel companies. Gates’s personal wealth, which is separate from the foundation, is currently about $137 billion, according to the Bloomberg Billionaires Index.

Divestment isn’t a straightforward process. That’s why activists calling on large institutions and rich people to stop supporting fossil fuels tend to allow up to five years for full extrication from carbon-heavy industries. “In 2012, when we started the divestment movement, it was complicated for large asset owners,” said Jamie Henn, director of nonprofit Fossil Free Media. “There was an assumption that you needed to maintain certain investments and unwind yourself slowly.”

Read More: Bill Gates speaks to Bloomberg Green about how the world can avoid a climate disaster

Getting all the way to zero remains extremely difficult, given how much of the global economy still relies on carbon-intensive energy. The Rockefeller Brothers Fund, which was created from the wealth of oil magnate John D. Rockefeller, announced in 2014 that it would divest from fossil fuels. A 2020 case study by the fund showed that 0.05% of the endowment was still exposed, five years after it began divesting, down from about 6.6% before.

Even as Gates moves away from fossil-fuel companies, he has continued to support firms whose existence relies on them. For example, he currently owns approximately 19% of Signature Aviation Plc, the world’s largest operator of private-jet bases. In January, Gates’s Cascade Investment LLC bid to buy Signature for $4.7 billion, alongside Blackstone Group Inc. and Global Infrastructure Partners. According to terms of the offer, Gates will increase his stake by an additional 11%.

Private jets typically pump out far more carbon emissions per passenger on each trip than flying commercial. The investment highlights the next challenge for climate-conscious investors. Even if they divest from both direct and indirect holdings of oil, gas and coal companies, they have to consider whether their financial support is helping to prolong the use of these fuels.

A new Netjets Inc. Embraer Phenom 300 jet sits in the Signature Fight Services hangar at Eppley Airfield in Omaha, Nebraska, U.S., on Friday, May 3, 2013. NetJets, the aviation business of Berkshire Hathaway, is a fractional-jet company whose clients take a stake in planes in exchange for flight hours. Photographer: Daniel Acker/Bloomberg

A jet sits in the Signature Fight Services hangar at Eppley Airfield in Omaha, Nebraska.

Photographer: Daniel Acker

A bigger question is why Gates, an outspoken voice on the need to counteract global warming, only decided to divest from oil and gas in 2019. “To be frank, Gates should have divested long ago,” said Bill McKibben, a longtime climate activist and founder of 350.org, which helped kickstart the Fossil Free movement in 2012. “But if he is working on it in good faith and has a plan to get it done sooner rather than later, it’s not outrageous in terms of what others have done.”

Gates may be the most high-profile wealthy individual to attempt to fully divest from industries that extract carbon from the ground. In his book, he evokes the economic criticism of divestment to explain why he didn’t do so sooner. The theory is that dumping a company’s stock, for whatever reason, isn’t likely to have any real impact on the share’s price because someone else is likely to snap up the cheap shares and take home the gains anyway.

“I didn’t see how divesting alone would stop climate change or help people in poor countries,” Gates writes. “It is one thing to divest from companies to fight apartheid, a political institution that would (and did) respond to economic pressure. It’s another thing to transform the world’s energy system—an industry worth roughly $5 trillion a year and the basis for the modern economy—just by selling the stocks of fossil-fuel companies.”

Activists argue that divestment is needed to send a strong signal. “It’s mainly to take away the social license of fossil-fuel companies,” said Henn. “It is to show that the business models of these companies is in direct contradiction to our efforts to meet the goals of the Paris Agreement.” The accord strives to keep the increase in global temperatures below 1.5 degrees Celsius from pre-industrial levels.

On a large enough scale, divestment can have a real financial impact. Royal Dutch Shell Plc acknowledged in its 2017 annual report that it “could have a material adverse effect on the price of our securities and our ability to access equity capital markets.” Coal companies are already struggling to raise financing for projects around the world.

Gates says that he ultimately made the decision for moral reasons. “I don’t want to profit if their stocks prices go up because we don’t develop zero-carbon alternatives,” he writes. “I’d feel bad if I benefited from a delay in getting to zero [emissions].”

To that end, Gates has focused on putting money behind firms that are attempting to scale up cleaner alternatives. In the past decade, he has personally invested in climate-tech companies developing everything from advanced nuclear reactors to machines that capture carbon dioxide from the air. He launched Breakthrough Energy Ventures in 2017, a $2 billion fund that invests in early-stage climate startups. Other investors include Jeff Bezos, Jack Ma and Michael R. Bloomberg, founder of Bloomberg LP.

In his book, meanwhile, Gates discusses working to increase demand for cleaner products, which could drive down their costs. He calls this the “green premium”—the difference in price between a product available today and its low-carbon alternative. That could apply to his investment in Signature Aviation.

Currently, only about 1% of the aviation fuels used globally are sustainable, according to the clean energy research group BloombergNEF. While private jets make up just 5% of the overall market for flights, it may be easier to persuade their wealthy owners to switch to cleaner fuels because they already pay more, according to Roland Berger analyst Robert Thomson. In turn, that could boost demand for sustainable fuels and lower prices for airlines.

“Getting to zero [emissions] doesn’t mean we are going to stop doing the things we are doing—flying, driving, making cement and steel, or raising livestock,” Gates said in response to questions about his investment in Signature, while declining to comment on the specific transaction. “There is a lot of opportunity to bring innovations to all of the sectors. And in aviation, in particular, there are exciting developments in alternative jet fuels.”

Akshat Rathi writes the Net Zero newsletter on the intersection of climate science and emission-free tech. You can email him with feedback.

Like getting the Green Daily newsletter? Subscribe to Bloomberg.com for unlimited access to breaking news on climate and energy, data-driven reporting and graphics, Bloomberg Green magazine and more.

Source: https://www.ethicalmarkets.com/bloomberg-green-inside-bill-gatess-climate-brain/

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Help the Science Cheerleaders Bring Science to More Cheerleaders!

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“Ethical Markets congratulates Darlene Cavalier for her vision and commitment to bringing citizens voices into science policy and education! We are so happy that Darlene helps promote the publications of the Office of technology Assessment (OTA) especially the report I fostered:

“AN ASSESSMENT OF TECHNOLOGY FOR LOCAL DEVELOPMENT“ (originally published in 1981, now available at the University of Florida Press and downloadable on www.ethicalmarkets.com ) .

Keep up your great work, Darlene!

Hazel Henderson, Editor “

The Science Cheerleaders are current and former NFL, NBA and collegiate cheerleaders pursuing careers in science, technology, engineering and math (STEM). Our mission is to inspire, engage, and empower girls to pursue their dreams in STEM.

We playfully challenge stereotypes with the goal of inspiring girls to see the possibilities that are available to them in STEM careers. Our Science Cheerleaders leverage girls’ interests in fun and familiar activities, primarily cheerleading (and dance), by leading science-themed cheers and hands-on STEM learning opportunities to diffuse the intimidation and increase the approachability of STEM in events across the nation.

Your support will help us expand our programs and appearances, like those highlighted below! Please consider making a tax-deductible donation to the Science Cheerleaders to support our STEM outreach efforts.

The Science Cheerleaders are current and former NFL, NBA and collegiate cheerleaders pursuing careers in science, technology, engineering and math (STEM). Our mission is to inspire, engage, and empower girls to pursue their dreams in STEM.

Source: https://www.ethicalmarkets.com/help-the-science-cheerleaders-bring-science-to-more-cheerleaders/

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What the COP26 deal means for investors

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“Ethical Markets highly recommends this summary of COP26 from Akshat Rathi and the Bloomberg Green team.

See also my complementary, Deeper Dive Beyond COP26 “Global Infotech: Humanity’s External Nervous System Now Driving Us Crazy?“

Hazel Henderson, Editor.”

The Glasgow Climate Pact is a message to investors and executives that the march to net zero is accelerating.

The agreement, negotiated by almost 200 nations over two weeks, isn’t the pact that some were hoping for. But it sets out a vision for a world that radically cuts back coal usage, eliminates fossil-fuel subsidies and commits governments to the most ambitious targets of the Paris Agreement.

Skeptics argue that the whole accord rests on a massive bet that the world’s biggest polluters will eliminate all their net emissions in the next few decades and say the recent surge in coal mining in China, India and Australia proves just how hard this is going to be.

But the outcome of COP26 “made it crystal clear to businesses that they need to move away from fossil fuels,” said Nick Molho, executive director of Aldersgate Group, which represents companies worth 550 billion pounds ($740 billion) pushing for sustainability. Businesses are traveling in that direction whether or not governments back up their pledges with policies, he said.

How quickly global business and finance move away from fossil fuels is still an open question. U.K. Prime Minister Boris Johnson said Sunday that the Glasgow pact sounded the “death knell” for coal, but the final language was watered down at the last minute to “phase down” unabated coal power after objections from India that were backed by the U.S. and China. The qualifications leave the door open for investment in some coal plants, especially if they’re equipped with technology to capture emissions.

Even so, companies are already preparing for a greener world. Hundreds of global businesses have set targets to cut carbon dioxide emissions, including oil giants like Royal Dutch Shell Plc and BP Plc. Companies were eager to show their support in Glasgow, with countless industry booths and appearances by corporate elites like Microsoft Corp. co-founder Bill Gates and BlackRock Inc. Chief Executive Officer Larry Fink.

In the six years since the Paris Agreement was signed, the business world has moved faster than public policy, according to John Kerry, U.S. special presidential envoy for climate. “Not only are companies ahead of government, but companies understand that their future is tied to having a stable marketplace,” he said.

Boardrooms still have a long way to go. Only 5% of the companies listed on major European stock indexes which have set targets to reach net-zero emissions by 2050 are on track to meet their goals, according to a study by Accenture. And they’re the ones ahead of the curve. Green entrepreneurs in poorer countries face much higher funding costs than their counterparts in richer nations. Many companies in China and India — two of the world’s biggest polluters — have yet to lay out detailed carbon-neutrality plans.

Many of these tensions can be seen in former Bank of England governor Mark Carney’s drive to get the finance industry to cut their portfolio emissions to zero by mid-century. One of the biggest announcements at COP26 came in the first week when the Glasgow Financial Alliance for Net Zero said that signatories overseeing about $130 trillion would set clear targets and timelines for greening their investments. (Michael R. Bloomberg, founder of Bloomberg LP, is co-chair of GFANZ.)

Mark Carney at COP26.
Photographer: Emily Macinnes/Bloomberg

The initiative was greeted with skepticism by some experts. Members didn’t say how much money will actually be shifted into green activities and they haven’t agreed on a fixed definition of net zero. JPMorgan Chase & Co., the world’s biggest funder of fossil fuels, was a late entry and hasn’t specified how it will meet GFANZ’s target. The group also excludes three of the world’s biggest banks, all of which are Chinese and major providers of coal finance.

But the strength of international agreements like the Glasgow Climate Pact comes from the fact that governments are united over a single consensus, no matter how broad, that sets the foundation for investment and policy to follow.

Since countries agreed in Paris to try and limit global warming to 1.5 degrees Celsius from pre-industrial levels, almost every single industry in the world has been transformed. More than $2 trillion poured into green energy and technologies, according to BloombergNEF, giving birth to a new generation of billionaires. Tesla Inc., now worth $1 trillion after sparking an entirely new ecosystem in the car industry, may be a model for future game-changers in everything from green steel to fake meat.

“For the first 20 years of the climate problem, it was governments subsidizing green technologies and making markets with regulation,” said Nick Mabey, chief executive of environmental think tank E3G. “Then technology got in front of those regulations and now governments follow the technology and the markets.”

The challenge for governments and activists is holding companies accountable. In Glasgow, governments approved rules to boost scrutiny of national climate pledges. There’s a parallel effort by the Science Based Targets initiative to do the same for companies, which might prove to be even more important.

There is a “need to be realistic about what is truly possible, and for investor claims of ‘green’ approaches to be verifiable,” Jessica Alsford, an analyst with Morgan Stanley, wrote in a note to clients.

One significant development for companies that want to reach their climate targets was an agreement on the rules to create a global market for carbon credits. The past few years has seen an explosion in interest from businesses looking to reduce emissions from their carbon balance sheets by purchasing offsets.

Even as experts debate the merits of the new framework, which some warn is not watertight against greenwashing, the agreement will have “profound implications on both the supply and demand landscape of the voluntary carbon markets,” said Simone Tagliapietra, a senior fellow at Brussels-based think tank Bruegel. “Uncertainty on this front indeed disincentivized governments to develop robust domestic markets.”

While COP26’s main action happened in the Blue Zone where country negotiators worked on the pact, the Green Zone across the river Clyde saw unprecedented representation from business, finance and nonprofits.

“Glasgow will be remembered as the turning point when companies from all sectors, en masse, are now turning their attention to developing and driving their decarbonization strategies,” said Keith Tuffley, global co-head of sustainability and corporate transitions at Citigroup Inc. “It is another big step forward on the pathway towards a net-zero emissions world.”

Written with Alastair Marsh. Akshat Rathi writes the Net Zero newsletter, which examines the world’s race to cut emissions through the lens of business, science, and technology. You can email him with feedback.

Source: https://www.ethicalmarkets.com/what-the-cop26-deal-means-for-investors/

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Sustainable Debt Summary Q3 2021

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Total volumes for the sustainable debt market – including labelled Green, Social and Sustainability (GSS) bonds, Sustainability-linked bonds (SLB) and Transition bonds – are well on their way to an annual trillion, reaching USD649.1bn in the first three quarters of 2021.

Key Highlights

  • Combined labelled issuance of Green, Social, and Sustainability, Transition, and Sustainability-linked reached USD767.5bn in the first three quarters of 2021,
  • September – largest issuing month ever, USD130.6bn of total labelled issuance
  • Cumulative total labelled issuance stood at USD2.3tn at end Q3 2021; cumulative green at USD 1.2tn
  • Green bonds reach USD354.2bn at end Q3 2021, surpassing 2020 total and now likely to reach half a trillion by year end
  • Trillion in annual green bond issuance within reach for 2023
  • Sustainability-linked bonds reach USD78.7bn this year; transition finance reaches USD5bn this year

PDF icon Sustainable Debt Summary Q3 2021

Posted Nov 2, 2021 by Leena Fatin

  • Cumulative total labelled issuance stood at USD2.3tn at end Q3 2021; cumulative green at USD 1.2tn
  • Source: https://www.ethicalmarkets.com/sustainable-debt-summary-q3-2021/

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