Credit Suisse ESG Conference Keynotes

Carbon capture is expensive, investing in alternative fuels is growing faster, and is divestment but it’s best to focus more capital on energy (Bloomberg,

Gates). Views from divestment are now focused on transition (Fink). For instance in Alaska, every $1 investment in oil generates $20 in investment activity, and the artic not ideal for solar fields, locationally. Development of natural resources may contribute to creating new energy resources but years of regulation hinders the speed of technological economic scale (Rodel).

CAT Bonds: Pay outs to government via natural disasters, kind of terrible investing in… tragedy though, along with carbon credits (Tesla makes more money selling green credits than it does making cars), the right to pollute. Another leading to natural disasters is question of who is responsible for land, via ownership and investment, short-term land tenure affects ability to preserve and resources: most things address ESG but not conservation of biodiversity. It becomes a question of how we attribute valuation to disaster; ESG is not a speculative asset class, but rather a long-term investment.

Investment in ESG Supply chain: investor duty to find companies that have efficient supply chains, and look into management of product safety (biotech), and worker liability (mining). Making the supply chain more sustainable historically reduces costs as well, from The Economist Conference noted 7% standard portfolio investment in companies that are ESG compliant, and much public data on said companies can be found via the TCFD (Task Force on Climate-related Financial Disclosures), via showing public data, and Dynamic Materiality index.

A core mindset that can be applied is viewing the ESG investment in the context of different industries, of how financial motivators drive non-sustainable investments. 1900’s alcohol in U.K, 1 pound investment would be 491,000 pounds today versus engineering but 4,000 pounds, and same with tobacco in the U.S. with astronomical returns of 1 dollar to 8 million. Having more financial incentives via taxation on lesser socioeconomic good industries and promoting companies with values aligned with ESG will realign progress.

Funds are looking for more alternative data in this space, and no incontrovertible unified standard on means of reporting on accordance; position within industry rates how one is seen. Large funds like Blackrock holds a mixed sentiment on companies that currently are not transitional on ESG focuses but may pivot. For instance positions in Shell is convoluted as they hold a long LNG position, but have potential to leading impact within the energy space. However, of future value holds water on how fast they can pivot to adapt as alternative energy sources and renewables exceed that of natural gas, awareness and long-term plans.