In short, we’re confused.

Nearly half the people who completed the CSIRO’s survey more than once over the past five years changed their mind. Some changed it more than once, and some appeared to do it in the course of filling out the survey. Those who said they don’t believe climate change is happening at all also attributed (on average) over a third of the climate change that is happening to humans.

The basic 2015 stats were:
46% believe humans are to blame for climate change
39% think climate change is natural
8% think it isn’t really happening
7% don’t know.

Source: CSIRO, 2015

World leaders are meeting in Paris to discuss combating climate change, and the tide is changing. In previous meetings the two most powerful economies on the planet, the US and China, were at loggerheads and their inability to agree stalled international action. This time they came to the talks with an agreed approach.

“Okay, but what does this have to do with my investments,” you might ask.

But wait, there’s more… the New York attorney general has begun an investigation of Exxon Mobil to determine whether the company lied to the public over the last 40 years about climate change, or to investors about how those risks might hurt the oil business. The largest coal producer in the US (Peabody Energy) is also under investigation.

Here’s another one… earlier this year, Norway’s US$900 billion sovereign wealth fund – the largest in the world – announced it would sell all its coal-related investments… over US$8 billion worth.

What does all this mean? It means that it doesn’t matter whether you believe in climate change or not (see right). If you invest heavily in high carbon producing companies, your investment performance may suffer as:

  • companies fall out of favour with investors
  • governments phase out fossil fuel industry subsidies (as agreed by the G20 in 2009)
  • regulatory change and emerging energy technologies make it more likely that at least some of the ‘reserves’ that company valuations are based on will be left in the ground.

In fact, Australia’s new Chief Scientist Alan Finkel envisages “a country, a society, a world where we don’t use any coal, oil, or natural gas because we have zero-emissions electricity in huge abundance.”

But surely, as our Prime Minister says, coal fired electricity will be a major part of our energy mix for many years to come? Yes. It certainly will. And coal remains a major export.

Even Dr Finkel admits, “you can’t get there overnight.”

So investors shouldn’t expect our coal industry to shut down quickly. That would leave us without power and be economically disastrous.

But it certainly doesn’t look like a growth industry, an industry for long term investors to be excited about.

What should you do?

If you manage your own portfolio, have a look at the companies you invest in. Are any of them heavily dependent on coal or oil revenues? If so, consider a strategy of gradually selling down your holding, based on price targets, or selling into strength or simply averaging out over time.

If you invest through a managed fund (inside of, or separate from Superannuation), contact them and ask them how their investment policy takes climate change into account.

What are your thoughts?

Do you own shares in carbon intensive companies? Would you like to know more about sustainable investing? Join the conversation — leave a comment below and let us know what you’re thoughts are.

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