Screw the Environment, Get Sued?

This is probably way off, and may not even happen, but it certainly paints a nice picture of growing positive sentiment for cleantech.
According to a Reuters write-up of a United Nations report released this week, “Investment advisors and asset managers could be sued for negligence if they do not consider the environment and other social issues when making investment decisions.”
Now, I’m not much on religion, but that would certainly be an Hallelujah moment.

Specifically, the report points to “ESG”–environmental, social and governance issues. Those issues, the report says, must be considered by money managers when “tendering investment and advising clients.”
The report calculated global stimulus money set aside to “fund the transition to a low-carbon and resource efficient ‘green’ economy” at $430 billion.
Aside: The fact that global governments have chosen cleantech as a vehicle to combat recession is an undeniable validation of the sector and its potential for job creation, energy security, and positive impact on the future global economy.
What’s more, this isn’t some grandiose U.N. idealist policy wish–it’s actually grounded in reality. The report came out of the U.N.’s Asset Management Working Group, made up of more than 180 actual financial institutions.
They’re worried about a problem far worse than the current recession, something they’re calling a looming “natural resources crisis.”
This, of course, is code for the basic realities of a shortage of energy, freshwater, and natural capital (biodiversity, the hydrological cycle) in the face of a population headed to 9 billion by 2050.
In even simpler speak, these financiers would love to solve the current economic crisis, but they’d also like to start solving imminent problems that would lead to a breakdown of fundamental systems–like having water at the tap or light at the flick of a switch.
How kind of them.
This is just the latest in a line of major lenders wanting to take responsibility for the effects of their capital dispersements. The World Wildlife Fund has said investors face “increased risks” when lending to companies that pursue fossil fuels without considering the implications of ongoing climate and energy legislation.
Even better, and going largely unnoticed, three major Wall Street banks concocted a set of “carbon principles” last year. Citi, JPMorgan Chase and Morgan Stanley put forth this set of guidelines to deal with the increasing risks of financing the construction of electricity generation assets.
And if that doesn’t make you all warm and fuzzy inside, maybe this will: Even American Electric Power (the biggest coal burner in the country, if memory serves) and Southern Company (no explanation needed) were partners in the “carbon principles” plan.
Granted, this is mostly because they want to be at the table when the slaughter is planned.
But these events should be sending a clear signal to the market. As hackneyed as it is to say this by now, the sea change is coming.

Nick Hodge is a regular contributor to Green Chip Review and Energy & Capital. One of the bright young minds in today's cleantech industry, Nick is putting his knowledge of nascent green markets to use in several ways. . . He's the Managing Editor of Alternative Energy Speculator, an investment advisory service focused on taking advantage of every aspect of cleaner energy, from the stop-gap companies that are making a fortune lowering carbon emissions to makers of more fuel efficient engines and other technologies that will help the U.S. successfully build a bridge from current fuel to the energy of the future. Nick also runs Green Chip International, which is dedicated to giving you the sharpest insight, not just into clean technology trends but also the geopolitical context that makes markets move. A featured guest on Canada's Business News Network and Yahoo!'s Tech Ticker, Nick is also very interested in uncovering the massive profit opportunities associated with a growing lack of freshwater and the maturation of the global carbon markets. Nick is also the co-author of the bestselling book, Investing in Renewable Energy: Making Money on Green Chip Stocks.

2 responses

  1. Ironically, the opposite could also be true. I fear a new wave of lawsuits AGAINST environmental action by lawyers who see a way to exploit a company’s commitment to shareholder value. There are those who argue that a proactive stance toward environmental progress is anti-short term shareholder value and may make a valid legal claim against it. Now that’s scary!

  2. When we put our garbage in the side-walk, and neglect it there, the neighbor can sue us and he will be full of reasons.
    When companies neglect the environment, they do harm humanity, mainly, by destroyng, poisoning, its source of food, water and air.
    For sure they deserve to be sued.
    Religiously, if necessary.
    Lawsuits can put any company out of business, whenever guilty they are.
    Indeed a solution, as I see it.
    Examples is what we need in order to learn how to interact safelly and cleanly with our environment.
    Applauses to the law.

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