Smart Money Chases Sustainability: Dinosaurs Adapt or Die

May 23, 2013

I’ve written and talked about this for years. It’s not getting any less significant.

Smart money is betting on sustainability and renewable technology.  There’s a new sense of urgency, because in states like mine, where the anti-science crowd has done their best to hold up progress, there is a real threat to the health of our major utilities if we do not update our regulatory structures fast enough to keep up with new technology, and the increasing recognition by the financial community that sustainable business will soon be the only business.

Climate Deniers, WindBaggers and the “Agenda 21″ crowd will take this as more evidence of the vast, left wing conspiracy.

Guys, if you want to argue the science of interdependence, don’t look at me. Take it up with the capitalists at Walmart.

DomesticFuel.com:

According to a recent survey conducted by SRI, 65 percent of retail investors and 53 percent of institutional investors are currently expressing interest in fossil fuel-free portfolios in reaction to climate change. More than 2,000 SRI industry professionals took the First Affirmative Financial Network’s Fossil Fuels Divestment Survey in anticipation of the 24th annual SRI Conference taking place October 28-30 in Colorado Springs, Colorado.

Other key survey findings include:

  • 77 percent see growing risks for investors associated with fossil fuel company holdings in their investment portfolios.
  • 30 percent of those surveyed either already do – or are getting ready to – offer fossil-fuel free portfolios to investors.
  • 63 percent believe that investors will in the next 10 years start divesting in meaningful numbers from fossil-fuel companies due to climate change implications of such energy sources.

GreenBiz:

Since launching its sustainability program in 2006, Walmart has reduced energy consumption in its stores, installed solar panels on its rooftops, curbed emissions from its trucks and recycled millions of tons of its trash. Now that the world’s biggest retailer has streamlined its own operations, it is turning its attention elsewhere — actually, almost everywhere.

Since last fall, Walmart has rolled out what it callsa supplier sustainability index to thousands of suppliers, asking them pointed questions about their operations and prodding them to better understand and manage their own supply chains.

It’s Walmart’s most ambitious environmental project ever, and if all goes according to plan, it will change the way all kinds of consumer products — clothes, toys, electronics, food and beverages — are made. The typical Walmart stocks 125,000 to 150,000 products (!), and the environmental and social performance of most companies that make them soon will be rated and ranked in Bentonville, Ark.

So Walmart is asking lots of questions of its suppliers. Among them:

How can wheat be grown with less water and fertilizer? How can chemicals of concern be removed from toys? What mining practices were used to extract copper, gold and silver for computers or jewelry? What percentage of your televisions sold last year were Energy Star certified? Do the grapes in a bottle of wine come from a farm with a biodiversity management plan? How much water was needed to produce those polyester pants?

If this sounds like a massive and fiendishly complicated undertaking, well, it is. It has been in the works since 2009, when Walmart unveiled The Sustainability Consortium, a nonprofit coalition led by the University of Arkansas and Arizona State University that was set up to provide scientific research to undergird the effort. Since then, a few other retailers (Tesco, Kroger, Ahold, Best Buy) and dozens of consumer products brands (Coca-Cola, Disney, Kellogg’s, Mars) have signed on to the consortium.

Working with research produced by the consortium and its scientists, Walmart last year sent questions to suppliers in about 200 product categories. Hundreds more will be surveyed this year. The surveys will cover about half of the products sold in Walmart, which had revenues of $469 billion last year.

Renewable Energy World:

We conducted a telephone survey of executives involved in corporate energy strategy at 100 companies with revenues of US$1 billion or more. Questions focused on energy spend, types of energy used, energy strategy, and outlook.

The companies were those in energy-intensive sectors with a balanced global distribution. 72% have revenues exceeding US$1 billion, and 28% revenues of US$10 billion or more.
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41% of respondents report generating some form of renewable energy with company-owned or controlled resources. Most of these generate power with photovoltaic solar (25%), followed by biomass/biogas generation (20%) and the use of biofuels in company-owned fleets (19%). Wind and geothermal have 7% uptake.

Renewable energy still makes up a relatively small proportion of company generation though. Only 11% of respondents say it accounts for more than 5% of their total energy production.

This looks set to change though:

  • 51% of respondents say company-owned renewable generation would increase over the next five years
  • 16% expect it to increase significantly
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3 Responses to “Smart Money Chases Sustainability: Dinosaurs Adapt or Die”

  1. andrewfez Says:

    Warren Buffet’s energy company has thrown down $1.9 billion for wind energy in Iowa:

    http://theenergycollective.com/tinacasey/223806/legendary-investor-warren-buffet-pumps-19-billion-iowa-wind-power

    His company also has thrown up over 1 GW of solar energy in the last few years:

    http://www.renewableenergyworld.com/rea/news/article/2013/04/what-does-warren-buffett-see-in-solar

    One of his projects is generating solar electricity for 5 cents per KWh but I can’t find the link to that.

    But what’s important to remember is that 1) Buffet likes things that provide value over the long term; 2) He only has loyalty to value, and not to what’s ‘green’ or politically in fashion. So for example, if he thought tar sands had long term value and they were under-priced, he wouldn’t hesitate to put money into them. There are naysayers out there that say Buffet is just throwing a bone to Obama with his green energy portfolio, or that he’s getting rich off crony-capitalism, etc. But there is a significant probability that he sees how things are going and is making a bet that clean energy is the future.


  2. Money? Sustainability? Really? That would be for the first time in human history ;-)

    Cheers,

    Alexander


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