Responsible Investing

General
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I’m bothered by the idea that appears in this blog post, among others, concerning this topic:

“Would you like to get rich and combat climate change at the same time?”
“Responsible investing can be an effective way to reduce carbon dioxide emissions compared to many other methods, writes Merja Mähkä.”

Given that almost all of us ordinary people invest in the secondary market, how do you practically improve the world, combat climate change, and reduce carbon dioxide emissions as a “responsible investor,” as these types of articles constantly suggest? Money primarily moves from one investor’s pocket to another’s, not from investors to companies, which would then be financing these companies’ operations. I encounter the same idea when I read (from roughly the same crowd, naturally) that, for example, Saga Furs shares are not wanted because people don’t want to support such a business. What?

Is there something lacking in my line of thought, or do these people completely misunderstand how the secondary market works? Or do we both understand everything, and this is just a “marketing trick” for investing? :thinking:

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Investors have the power to choose which companies pass their ethical screen: if no one in the secondary market wants Saga Furs’ stock, which would then fall sharply, the company (the board reprimands the CEO) might face pressure to change. The same applies to the bigger picture.

On the other hand, unsustainable businesses (in an environmental/ethical sense) also seem to be making truly poor investments as regulatory pressure/consumer preferences for more sustainable development increase.

Of course, a regulatory stick is also needed, but for example, BlackRock (the world’s largest investment firm) is increasingly demanding responsibility and a positive impact on society from companies; the tables have turned and ethics has moved from the shouts of extremists to the mainstream.

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Okay, so the crackle in my ear is probably due to my different interpretation. For me, reducing/preventing/influencing means some active action to promote the matter, and the ideas you presented don’t fit within those definitions for me. I do understand that someone (probably the majority) can interpret it that way.

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Of course, investors can do more, like making a fuss at the general meeting. Larger investors naturally have greater power (and responsibility) in this, but even big deeds are ultimately born from small streams. As large investors, a well-functioning insurance business might also be one of the worst hit as the number of claims rises.

Today, the IPCC’s latest report on global warming has been filling the media’s columns (the original report can be found here).

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In addition to - or instead of - investing in mitigating climate change, one can also apparently invest in mitigating its effects, such as flood barriers, desalination plants, inland areas, or even emergency shelters in hurricane-prone regions. I won’t comment on the ethical implications, though I suppose this is a kind of problem-solving too.

https://www.bloomberg.com/news/articles/2018-10-08/climate-change-will-get-worse-these-investors-are-betting-on-it

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I was thinking about buying Tesla stock just for the cause.

Even if the company never makes a profit, if it helps usher in the transition to electric cars, that’s already a huge win.

There are more useless projects that have been funded through taxes.

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The environmental friendliness of electric cars is a myth. Even though the car itself doesn’t produce emissions, the electricity it uses is generated with fossil fuels that burden the environment. Especially now that Germany has decided to abandon nuclear power, even more consumption will shift to fossil fuels in electricity production. Renewable energy cannot possibly compensate for emission-free nuclear power. Nuclear power policy has been quite short-sighted. Electric cars can certainly be driven emission-free if the electricity were only produced in emission-free ways.

Currently, energy from nuclear power produces nuclear waste, but it can be safely stored, so it doesn’t cause environmental burden. The risk of environmental contamination in the case of nuclear power is so minimal that it would be worth taking to produce energy with nuclear power. In the long run, we would achieve fusion power in nuclear energy, and then even nuclear waste would not be a problem.

If we were to think long-term, as is often demanded when discussing pollution, the only sensible solution would be to invest in nuclear power and use renewable energy alongside it. People and politicians are just too short-sighted, or they simply don’t understand the potential for technological development, even in nuclear power. If only more was invested in nuclear power research, it would have a promising future. It might take 100 years or more, but if the goal is truly to solve very long-term energy problems, nuclear power would be the solution. But if nuclear power is destroyed by political decisions, what entity would then develop nuclear power for commercial purposes? Fusion power would then be even further away.

When making energy policy decisions, short-sighted policies are made, but long-term demands are used as justification. Causal relationships are not understood, and sensible long-term policies are not made.

The most important thing is to invest in technological development. Technological development is what will solve environmental problems in the long run. In Western countries, pollution has already been reduced in many places, but the problem is growing demand. For example, cars consume significantly less fuel than before, and development has been quite strong. Technology is constantly moving in a direction where individual pollution figures are decreasing in Western countries. Gradually, individual pollution figures in developing countries will also start to decrease, and eventually, we will reach a situation where pollution across the entire globe begins to decline. This will happen with normal development. Things can, of course, be accelerated and made more rational. However, technological development will ultimately solve the problem.

It is sensible, however, to do things in such a way that overall pollution is reduced as quickly as possible. This way, the living conditions of no generations will suffer significantly. The fact remains, however, that the Earth would not be destroyed even if no significant political decisions were made regarding the matter. Nature would simply suffer a temporary (though lasting several generations) harder blow. We don’t have to go there; things can be taken care of earlier.

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I must also add that the decisions of individual companies are quite small in the grand scheme of things. Environmental problems must be solved at the political level. They cannot be solved by individual companies. The problem is that the air and water areas do not have an owner responsible for their sustainable use. That is why the solution is various restrictions on pollution, and these should be developed in international cooperation.

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How did it go. Just the 15 largest cargo ships produce the same amount of emissions as all cars combined… just because there’s no regulation.

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So? Do you think shipping companies don’t care about reducing fuel consumption and thus costs? If there were no regulation, the price of oil would skyrocket much higher, and that alone would drive the development of engine technology and a shift to lower consumption or alternative fuels.

As I said: Political decisions speed things up, but a pure market mechanism would also ensure that the Earth does not face its demise. Fossil fuels will run out if they are continuously used, so eventually energy would necessarily have to be produced in other ways.

To clarify: I personally believe that emissions need to be addressed politically. However, it can be done much more sensibly than what is currently being done politically. This was mainly about air pollution. Water pollution must be restricted more strictly, because polluting them will not stop through market mechanisms as easily as air pollution.

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Now I’ve brought up too many things at once, so here’s some more:

So there are two different issues here:

The first is whether humanity would destroy the Earth with pollution without political regulation. The answer to this is that it would not destroy it, but living conditions would certainly experience a significant decline for a long time before starting to improve again.

The second is that political decisions can ensure that the living conditions of all future generations remain at the current level or even improve. This is, of course, the best possible scenario. Individuals can then fine-tune their responsibility as they wish with their own decisions. However, the most impactful decisions are made only politically, and political influence is much more significant than trying to influence through one’s own consumption. Of course, it’s great if someone wants to reduce the environmental burden with their own daily choices.

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Your green thoughts are good and well-founded. Good luck with your political career from the Inden forum. But don’t join the Greens, as they oppose nuclear power!

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I might not dive deeper into the climate discussion, other than to say that gasoline-powered cars pollute 100% for sure, and electric cars pollute if the electricity is produced by burning fossil fuels. The manufacturing of both produces some pollution. Based on these, I would personally choose electric cars.

Additionally, why I personally can’t wait for electric cars is the air pollution in cities, especially large ones. It’s not pleasant to walk in exhaust fumes.

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Urban air quality is, of course, a relevant factor here, and it certainly favors choosing an electric car. The manufacturing of an electric car produces about one-third more emissions than a comparable diesel car. The total emissions over a car’s lifecycle drop below those of a comparable diesel car at around 70,000 km for an electric car, and if current biodiesels are used, 100,000 km of driving is required. These calculations are without maintenance and possible battery replacements. And even these are not very accurate, but rather results obtained with simplified calculations, which, for example, a VTT researcher provides.

It’s difficult to give an overall assessment. An electric car is therefore far from emission-free, and some small gasoline car is probably better for the environment than electric cars currently sold. In addition, the more electricity cars consume, the more electricity is produced with fossil fuels, so the overall equation is very difficult. It’s impossible to say for sure which one is better for the environment in terms of actual emissions. However, it is clear that an electric car cannot be considered nearly emission-free, as is generally imagined.

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I still have to mention fossil fuels in that they kill and sicken many more people in proportion to the amount of energy produced than nuclear power. Nuclear power accidents cause a truly great local devastation, but the emissions from fossil fuels cause many respiratory and lung diseases in people, and the direct impact is not quite so easily verifiable. For human health and well-being, it would be more sensible to use nuclear power than fossil fuels.

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This also applies to animals. They suffer from particulate emissions in the exact same way. The relationship is certainly different than with humans. However, many politicians seem to be resistant specifically to nuclear power. I don’t understand why it’s so condemned. Even the Greens aren’t thinking about animal welfare here :smiley:

First, we are phasing out the least polluting non-renewable energy source, and to give it up, we have to increase the use of coal and oil. The Germans’ enthusiasm to abandon nuclear power will increase human mortality and greenhouse gas emissions. Great environmental policy indeed.

I would bet that individual consumption changes by people would not be able to compensate for the amount of pollution resulting from Germany’s decision to ban nuclear power.

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g3235286 to the Parliament on some non-Green list! One vote guaranteed :slight_smile:

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A few points about electric cars:

  • The electricity used by electric cars already allows for significantly lower emissions than petrol engines in many areas. For example, in Finland, emissions from electricity production were 89 g/kWh last year, and in Europe, 276 g/kWh. With an average electric car consumption of approximately 15-20 kWh/100 km, emissions are 13-18 g/km in Finland and 41-55 g/km in Europe, which are significantly lower than petrol engine emissions (100-150 g/km).
  • Wind and solar power are the most competitive new electricity production methods, even without subsidies. This means that the specific emissions from electricity production will sharply decrease in the future, making electric cars even more environmentally friendly. In fact, the electricity needed by cars supports the increase in renewable electricity production, as it boosts the growth of electricity consumption, and that growth is specifically produced by renewables. Additionally, smart charging and car batteries help balance fluctuations in wind and solar power production, thus reducing the need for regulation capacity.
  • Bloomberg predicts that electric car sales will grow tenfold by 2025 and thirtyfold by 2030 compared to 2017 levels. By 2030, electric cars are also predicted to be cheaper to manufacture than internal combustion engine cars (meaning they will be more affordable in terms of total cost even earlier, considering the low price of electricity). If anything is to hinder electric cars in the long run, it is likely to be a completely new technology (such as fuel cell cars).

In other words, electric cars are the winners of the transition in both environmental friendliness and costs. However, I will not comment on the original contemplation of the potential goodness of a Tesla investment (the company’s financial figures are not something I monitor). In a rapidly growing market, success is likely determined by the product’s price-quality ratio compared to competitors, and in addition to Tesla, all other major players are also investing heavily in carbon-free transportation.

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Source: “Energiateollisuus ry (ET) is the energy industry’s business and labor market advocacy organization. It represents companies that produce, procure, transmit, and sell electricity, gas, district heating, and district cooling, as well as offer related services.”

As I stated earlier, calculations are difficult and complex and require simplification. It’s no wonder that an organization promoting electricity sales emphasizes factors in its calculations that favor electric cars. Conversely, the oil industry has claimed that internal combustion engine cars are, overall, more environmentally friendly.

Wrong. I can’t interpret from that graph at all that it’s the cheapest method. Moreover, with renewables, you can’t directly compare the price of produced electricity because renewables require balancing power, which is often produced with highly polluting coal. At what latitude were those measurements even taken? At the equator, in sunny and windy conditions? :smiley:

So, I’m not denying that electric cars are winners in a disruptive market. Their environmental friendliness is nowhere near the level generally imagined, and it is summarized, for example, in this:

Carbon-free only directly, but indirectly highly polluting in both manufacturing and use. Over their total life cycle, however, they are somewhat better than internal combustion engine cars.

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