Remember the environmental
While the world’s attention has been focused on the coronavirus pandemic, climate action seems to have become lower priority for people, governments and corporations. In June, as most of us concentrated on lockdowns and social distancing, some of the coldest regions on the planet reached record-high temperatures. Siberia’s frozen tundra, made famous in the pages of Doctor Zhivago, is usually snowbound well into June, but last month, it topped 100 degrees Fahrenheit. The Arctic had its hottest temperatures ever recorded.
Antonio Guterres, secretary-general of the United Nations, cautions that while we must urgently attend to the heartbreaking human tragedy that has been unfurled at our doorstep by Covid-19, we must also be vigilant in our pursuit of climate action. Long-term ramifications for climate change also can take a deadly toll as weather grows more extreme—heat waves, droughts, wildfires and floods. For example, unseasonably hot temperatures brought about an early wildfire season in the U.S; more than 200,000 acres already have burned in Arizona. Elsewhere, melting ice, snow and thawing permafrost are contributing to accelerating greenhouse gas emissions as previously frozen organic matter—be it ancient plants or wooly mammoths—decomposes.
A survey done earlier this year by the Yale Program on Climate Change Communication showed that 73% of Americans think climate change is happening, and 66% are at least "somewhat worried" about it. Rightly so, the effects of climate change could bring about the next life-disrupting crisis. Climate change and its effects continue to top the World Health Organization’s top 10 risks to global health.
Here at Federated Hermes, our engagement and stewardship team, EOS at Federated Hermes, has continued to engage successfully with companies about climate issues throughout the pandemic. Our 56-member EOS team believes that climate change continues to be the biggest single issue of concern for long-term investors and sees opportunities for positive action including:
- A U.S. utility working toward 350% increase in renewable power generation by 2023, resulting in more affordable clean energy in the markets it serves
- A shift by the auto industry to build more electric vehicles with opportunities for investors across the value chain
- A push toward greener buildings, which account for some 40% of greenhouse gas emissions today
- An engagement with a large financial institution to align its lending practices with the PRI’s sustainable development goal on climate action by funding companies in the energy space that are committed to decarbonization
In sum, even as coronavirus continues to impact our daily lives, if we ignore the long-term consequences of climate change, we do so at our own peril. As investors, none of us can forget about the E in ESG. And we can all be catalysts to encourage people, governments and corporations to make positive changes amid the climate crisis.