Investment implications of Climate Change

[sptrawler]

Thanks for that.

Alan Kohler always seems to have a lot of commonsense and business nous, it will be interesting to hear what he has to say on 7:30 this week.

Jeez Rumpy, how long have I been banging on about hydrogen, it well could be the saviour of Australia's living standard.
Because nothing else stands out, as saving us from the abyss, to a third World Country.
Just my opinion.

 

[Smurf1976]

Also eventually Antarctica will open up.

I'll simply say that I'm glad I'm not the only one to have realized this.

I won't try and work out the timing beyond speculating that most children born today will live to see it happen.

 

[orr]

Thanks for the Appreciation Mr Jack.
Just to be clear, because I can't know your broader experience.
When the term 'mobilisation' is used in the way the above CEO's are using the term, there are a number of important bits of background.
First to be noted is they, the CEO's, preface with 'like'. A pretty plastic term if ever there was.
But an understanding of the economic controls put in place to conduct the mobilisation associated with WW2 is one that would have the Capitalist cheer squad with a little more room for circumspection.

John K Galbraith, writing, noting his first hand involvement, on WW2 US economic control is highly recommended as a reference point.

The International resolve to treat the AGW threat as an Emergency is only going to grow.

Maräng.

 

[basilio]

Something to think about when investing in companies.

ASIC investigating large companies' climate change risk management
By political reporter Jackson Gothe-Snape
Posted about an hour ago

Photo: The corporate watchdog has advised company directors to be proactive about climate change risk. (ABC News: Sarah Gerathy)
Related Story: Did he say it or not? Defence Chief's climate speech warns of 'serious ramifications' of climate change
Related Story: Climate change is accelerating, with alarming new data revealing the extent sea levels are rising
The corporate watchdog has launched a new surveillance program to ensure Australia's biggest companies are dealing with the risks of climate change.

Key points:

• ASIC has commenced surveillance of large listed companies to investigate how they are addressing climate change risk
• Former banking royal commissioner Kenneth Hayne warned last month that company directors faced court if they were negligent about climate change risks
• Directors of government enterprises like the Murray-Darling Basin Authority face the same obligations to address risk

The move follows comments by former High Court judge and royal commissioner Kenneth Hayne that directors of companies could end up in court if they do not properly deal with the risk.
https://www.abc.net.au/news/2019-12-10/asic-launches-climate-surveillance-of-big-companies/11786070

 

[sptrawler]

Something to think about when investing in companies.

ASIC investigating large companies' climate change risk management
By political reporter Jackson Gothe-Snape
Posted about an hour ago

Photo: The corporate watchdog has advised company directors to be proactive about climate change risk. (ABC News: Sarah Gerathy)
Related Story: Did he say it or not? Defence Chief's climate speech warns of 'serious ramifications' of climate change
Related Story: Climate change is accelerating, with alarming new data revealing the extent sea levels are rising
The corporate watchdog has launched a new surveillance program to ensure Australia's biggest companies are dealing with the risks of climate change.

Key points:

• ASIC has commenced surveillance of large listed companies to investigate how they are addressing climate change risk
• Former banking royal commissioner Kenneth Hayne warned last month that company directors faced court if they were negligent about climate change risks
• Directors of government enterprises like the Murray-Darling Basin Authority face the same obligations to address risk

The move follows comments by former High Court judge and royal commissioner Kenneth Hayne that directors of companies could end up in court if they do not properly deal with the risk.
https://www.abc.net.au/news/2019-12-10/asic-launches-climate-surveillance-of-big-companies/11786070

What will be the outcome of that? Should Banks lend money to people who want to buy a home near water? Should Banks lend money to people who want to buy a farm in drought affected areas? Should Banks underwrite insurance policies for properties in aforesaid areas?
If they do will they be held responsible for negligent behaviour?
So in summation the Banks shouldn't lend or insure those properties near the coast, well that is 90% of properties, FFS why post up this shyte?
What will you be pasting up, if the Banks say we can't lend for housing near the coast, only for those over the blue mountains?
Jeez i'm going to sit under a pyramid for a while.

 

[qldfrog]

Actually, with the current focus on drought and fire, it is now easier to buy forested good acreage for cheap.i know as i am unlucky enough to try to sell one now.
you then will have 14 to 18y until the next drought cycle.
Just ensure it is properly managed fire protection wise as i do not expect much change in fire management once the crisis will be over and forgotten in NP and state forests

 

[Jack Aubrey]

What will be the outcome of that? Should Banks lend money to people who want to buy a home near water? Should Banks lend money to people who want to buy a farm in drought affected areas? Should Banks underwrite insurance policies for properties in aforesaid areas?
If they do will they be held responsible for negligent behaviour?
So in summation the Banks shouldn't lend or insure those properties near the coast, well that is 90% of properties, FFS why post up this shyte?
What will you be pasting up, if the Banks say we can't lend for housing near the coast, only for those over the blue mountains?
Jeez i'm going to sit under a pyramid for a while.

Why exaggerate? Banks and insurance companies already factor in all types of risk and you can't build a house anywhere you want. Local and State governments determine planning anyway. ASIC is simply firing a small shot over the bows of medium sized companies (I believe this thread already contains links to what the majors are already doing) and (probably) superannuation trustees who have been slow to react. If the best scientific advice available says to eg. avoid building less that 3M above current high water levels, why would a financier or insurer take on that risk for their own shareholders? If that same advice says productivity (and therefore profitability) of some current cropping land will fall, do you want companies that you have shares in making large investments in that area?

Exaggerated claims of the predicted rate and level of sea level rise don't help anyone. Nor does saying we won't have "normal" rain fall ever again. (I don't think saying that "this is the new normal" is particularly true either, but it may shake a few more people out of total denial.)

There is a asset price and risk re-rate underway whether you believe climate change is real or not. The only questions relate to who bears the losses and whether there are compensating gains in other sectors or places. Hence this thread.

 

[sptrawler]

Why exaggerate? Banks and insurance companies already factor in all types of risk and you can't build a house anywhere you want. Local and State governments determine planning anyway. ASIC is simply firing a small shot over the bows of medium sized companies (I believe this thread already contains links to what the majors are already doing) and (probably) superannuation trustees who have been slow to react. If the best scientific advice available says to eg. avoid building less that 3M above current high water levels, why would a financier or insurer take on that risk for their own shareholders? If that same advice says productivity (and therefore profitability) of some current cropping land will fall, do you want companies that you have shares in making large investments in that area?

Exaggerated claims of the predicted rate and level of sea level rise don't help anyone. Nor does saying we won't have "normal" rain fall ever again. (I don't think saying that "this is the new normal" is particularly true either, but it may shake a few more people out of total denial.)

There is a asset price and risk re-rate underway whether you believe climate change is real or not. The only questions relate to who bears the losses and whether there are compensating gains in other sectors or places. Hence this thread.

My attitude completely.

 

[qldfrog]

Why exaggerate? Banks and insurance companies already factor in all types of risk and you can't build a house anywhere you want. Local and State governments determine planning anyway. ASIC is simply firing a small shot over the bows of medium sized companies (I believe this thread already contains links to what the majors are already doing) and (probably) superannuation trustees who have been slow to react. If the best scientific advice available says to eg. avoid building less that 3M above current high water levels, why would a financier or insurer take on that risk for their own shareholders? If that same advice says productivity (and therefore profitability) of some current cropping land will fall, do you want companies that you have shares in making large investments in that area?

Exaggerated claims of the predicted rate and level of sea level rise don't help anyone. Nor does saying we won't have "normal" rain fall ever again. (I don't think saying that "this is the new normal" is particularly true either, but it may shake a few more people out of total denial.)

There is a asset price and risk re-rate underway whether you believe climate change is real or not. The only questions relate to who bears the losses and whether there are compensating gains in other sectors or places. Hence this thread.

Isn't it great to see some proper reasoning and reasonable discussion!
Kudos @Jack Aubrey
Agree on the above
As i like to remind often Stradbroke island was split in two by a cyclone in the late 1800.no climate change needed.just imagine the same happening this year on the Gold coast marinas.
We will have 10 to 20 times the number of houses destroyed by the fires.
This is known history.yet buildings were autorised, still are and we are well past the 1 in a hundred year.
That is why i avoid insurance company shares.even the known is not properly analysed, so why even guessing for what may or may not happen.
I think i will soon try to follow aaoc? The open range beef company.
They should be smashed with the drought, the monthly ABC or vegan scandal does not help either.
They were a dud in the past, but anyone following with this context in mind?
.

 

[SirRumpole]

The impact of higher insurance premiums.

Obviously a lot of people are cancelling their insurance because it's no longer affordable.

The pricing policies of the insurance companies are driving themselves out of business.

https://www.abc.net.au/news/2019-12...ninsured-homes-in-northern-australia/11819814

 

[basilio]

There could/will be some very far reaching consequences of the current bushfire catastrophe . Off the top of my head these come to mind.
1) Risk of many small towns or whole areas becoming unviable because new bushfire regulations prevent rebuilding
2) Similar risk as above but becasue insurance companies refuse to insure properties in many areas or have an impossible premium
3) Very serious consequences for tourism and thus viability of a number of areas
4) Big increase in infrastructure replacement. Well worth looking at building industry investments
5) Challenges to many agricultural industries. Dairying will be hard hit. Knock on effects for producers of all dairy products
6) Very big hits on insurance premiums across the board. Thousands of cars lost as well as houses and general property. Still don't know how the rest of the fire season will pan out.
7) A long and debilitating recovery period. It won't be as "simple" as cleaning out the mud from a flooded house and letting it dry out. Total loss.

In the longer term Governments may be forced to face the uncomfortable realities of ongoing climate change and realise many places in Australia won't be viable. Challenging thought.
https://www.climatecouncil.org.au/r...ow-climate-change-damages-australias-economy/

 

[sptrawler]

There could/will be some very far reaching consequences of the current bushfire catastrophe . Off the top of my head these come to mind.
1) Risk of many small towns or whole areas becoming unviable because new bushfire regulations prevent rebuilding
2) Similar risk as above but becasue insurance companies refuse to insure properties in many areas or have an impossible premium
3) Very serious consequences for tourism and thus viability of a number of areas
4) Big increase in infrastructure replacement. Well worth looking at building industry investments
5) Challenges to many agricultural industries. Dairying will be hard hit. Knock on effects for producers of all dairy products
6) Very big hits on insurance premiums across the board. Thousands of cars lost as well as houses and general property. Still don't know how the rest of the fire season will pan out.
7) A long and debilitating recovery period. It won't be as "simple" as cleaning out the mud from a flooded house and letting it dry out. Total loss.

In the longer term Governments may be forced to face the uncomfortable realities of ongoing climate change and realise many places in Australia won't be viable. Challenging thought.
https://www.climatecouncil.org.au/r...ow-climate-change-damages-australias-economy/

That all could be very true Bas, you may find small hamlets don't get rebuilt, as the infrastructure may not be worth the cost.
People may have to re locate to the closest major Town, there are a lot of places around Australia that no longer exist, first the bank goes, then the post office, followed by the garage and the school.
Then the slow demise follows, these fires may accelerate it, for some small communities.

 

[SirRumpole]

There could/will be some very far reaching consequences of the current bushfire catastrophe . Off the top of my head these come to mind.
1) Risk of many small towns or whole areas becoming unviable because new bushfire regulations prevent rebuilding
2) Similar risk as above but becasue insurance companies refuse to insure properties in many areas or have an impossible premium
3) Very serious consequences for tourism and thus viability of a number of areas
4) Big increase in infrastructure replacement. Well worth looking at building industry investments
5) Challenges to many agricultural industries. Dairying will be hard hit. Knock on effects for producers of all dairy products
6) Very big hits on insurance premiums across the board. Thousands of cars lost as well as houses and general property. Still don't know how the rest of the fire season will pan out.
7) A long and debilitating recovery period. It won't be as "simple" as cleaning out the mud from a flooded house and letting it dry out. Total loss.

In the longer term Governments may be forced to face the uncomfortable realities of ongoing climate change and realise many places in Australia won't be viable. Challenging thought.
https://www.climatecouncil.org.au/r...ow-climate-change-damages-australias-economy/

I'm afraid you are right.

It's not just fires obviously, but floods and drought that make certain locations unviable.

Then there will be the obvious political costs about "killing communities" when in reality it's like putting down a dying animal and just as hard for the residents to accept.

Politicians can either do more to fire/flood/drought proof these areas, because in good times they would be viable ( but it would cost billions), or move the communities elsewhere .


It's a tough choice, especially for governments obsessed with surpluses.

 

[Dona Ferentes]

Sadly, strangely, curiously, disasters are good for GDP

GDP is a measure of the nation’s current production of goods and services. GDP is not directly affected by the loss of property, residential and nonresidential structures, or vehicles and equipment that were produced previously.

- which is probably as good a reason as any that 'old' economic concepts need revision

 

[qldfrog]

Sadly, strangely, curiously, disasters are good for GDP

- which is probably as good a reason as any that 'old' economic concepts need revision

Yes Dona, I hinted on this at the start of the fire: a great stimulus ,sadly the best GDP growth you can have is a population of dying patients in intensive care burning their life savings before being dispatched in a grandiose sent off..
GDP is an aberration, it also is not representative of currencies so I could live like a king on $3k USD a month in China, try this here..

 

[SirRumpole]

Sadly, strangely, curiously, disasters are good for GDP

- which is probably as good a reason as any that 'old' economic concepts need revision

WW2 was certainly good for Germany and Japan in the long term.

 

[basilio]

There is more analysis coming out on the costs of the current bushfires to the economy.

Ross Garnaut's climate change prediction is coming true and experts warn it's going to cost the nation billions
By business reporter Nassim Khadem
Posted about 7 hours ago | Updated 46 minutes ago

Conservative estimates put the final cost of the current Australian bushfires well into billions of dollars, while some analysts say they could set back the economy $20 billion in lost output.

"If you ignore the science when you build a bridge, the bridge falls down."

 

[Jack Aubrey]

WW2 was certainly good for Germany and Japan in the long term.

We need to remember that European and Japanese recovery after WW2 was a deliberate and long-term project by the "victors". There was a short-term, but massive, transfer of resources to the poorer economies to kick start new industries and infrastructure. In the case of Japan, there was also a significant transfer of technology. It stands in contrast to the outcome of WW1, where the victors deliberately punished and tried to hold back the economies of the losers, resulting in, firstly, a huge disparity in economic growth between the "winners" and "loser" economies (the 1920s), then a global economic collapse (1930s) and then a resumption of hostilities.

 

[SirRumpole]

We need to remember that European and Japanese recovery after WW2 was a deliberate and long-term project by the "victors". There was a short-term, but massive, transfer of resources to the poorer economies to kick start new industries and infrastructure. In the case of Japan, there was also a significant transfer of technology. It stands in contrast to the outcome of WW1, where the victors deliberately punished and tried to hold back the economies of the losers, resulting in, firstly, a huge disparity in economic growth between the "winners" and "loser" economies (the 1920s), then a global economic collapse (1930s) and then a resumption of hostilities.

Yes, we have seen the benefits of the Marshall Plan in 70 years of peace and economic progress in Europe and Japan.

One of the US's best efforts in international relations, I wonder if Trump has heard of it ?

 

[qldfrog]

Yes, we have seen the benefits of the Marshall Plan in 70 years of peace and economic progress in Europe and Japan.

One of the US's best efforts in international relations, I wonder if Trump has heard of it ?

Do you think China will give us loans and send experts after the fire?