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OPINION

Don't be in denial

Don't be in denial
December 7, 2018
Don't be in denial

My suspicion is that powerful industrial interests, especially in the US, are at work to cast clouds of doubt over the science, often with representation at the highest levels of government. In fact, one of the most controversial figures in the climate change debate is President Trump himself, who in 2012 suggested (via Twitter, of course) that it was “a hoax” invented by the Chinese to make US manufacturing less competitive. Despite mildly softening his stance since reaching the White House, many still see him as a major obstacle to tackling pollution, of which the US is one of the world’s pre-eminent belchers. 

Yet despite their clout, President Trump and the denial industry could still find themselves on the wrong side of history. Speaking just a few days after our podcast at the UN climate change summit, naturalist Sir David Attenborough suggested that if society does not act now then “the collapse of our civilisations and the extinction of much of the natural world is on the horizon”. That is a strong claim, which climate change sceptics will no doubt run through their grinder. But history should remind us never to be so blasé – dozens of civilisations have indeed collapsed before, often as a result of their failure to adapt to environmental issues; more recently, academics have identified links between climate change and the conflicts that have led to Europe’s current refugee crisis. 

I say all of this without wishing to evangelise. But whatever you believe, environmental concerns are something that investors should not be blasé about, because even if you dismiss recent dire warnings, there are enough worried people and policymakers to create enormous regulatory headwinds for many companies. That’s obviously important for oil companies such as BP or Shell whose dividends many investors rely on, but whose long-term future is unclear (see page 50). But managing the economic risks of climate change is important to companies across all sectors – take plastic producer RPC, for example, which is spending heavily to keep up with the existential challenges facing its industry in the face of public concerns about plastic waste (see page 51).

Indeed, far from the government pushing environmental reform onto an unwilling world, consumers’ ‘pull’ towards environmentally-sustainable products is also growing, and shaping the behaviour of the companies that supply them. So, even if you are not interested in saving the planet, you – and the companies you invest in – need to adapt to climate change to save your wealth.