At 5 AM on Thursday November 1st, just days after Superstorm Sandy battered the east coast I boarded a plane from Portland, OR to Newark, NJ. Originally, I was simply going east to visit my 93 year old grandmother; yet as I spoke to my family that morning I rapidly began to realize that I was in fact embarking on a rescue mission. Without power and without enough gas in our vehicle to leave, my grandmother was “trapped” in her home. Over the next two days, like so many of those affected by the storm, I saw the immense destruction and newsworthy photo-ops around every turn. I waited in endless lines for gas and quickly came to see that while the fallen power lines did not discriminate, the resources being delegated to the various neighborhoods were clearly distributed disproportionately.
For those who lost their homes, their businesses, their lives or the lives of loved ones, Sandy was tragic. For me, reflecting back on my experience I am grateful. I am grateful that my family is all safe, though not yet all with power, I am also grateful for the insight that this experience provided me. As a research analyst that considers resource constraints and environmental risk, Sandy reaffirmed my personal perspective and insights that I bring to my work.
As we state in our Investment Philosophy, we believe that, “Human demand continues to exceed the earth's supply of renewable resources, which in turn creates stress on these systems and their ability to serve the economy through the 21st century.”
The Intergovernmental Panel on Climate Change has confirmed that an overwhelming majority of scientists now accept the fact that anthropogenic activity is the cause for climate change. Climate scientists also agree that an increase in the frequency of extreme weather is the result of climate change. According to a recent report by a leading global reinsurance company that tracks global trends in the insurance industry, “Nowhere in the world is the rising number of natural catastrophes more evident than in North America.” The report also states that between 1980 and 2011 weather catastrophes created an overall loss burden of $1.06 trillion, an average of $34 billion a year, and took the lives of approximately 30,000 people.
It is imperative that companies in North America and around the world recognize the heightened volatility that climate change is bringing. Companies must develop vulnerability assessments, set reduction goals to minimize resource use, and lobby for climate legislation that will create equal playing fields for all businesses.
The long-term cost of natural disasters will impact everyone across every industry sector from local municipalities to utility companies to food producers. However, therein lays opportunity. Once a company, independent of sector, recognizes its environmental risks and associated costs, investments to reduce that risk become economically viable. At Portfolio 21 Investments, it is our belief that proactively managing environmental risks simultaneously builds financial resilience as well as resilience to deal with inevitable unforeseen events that will likely increase in an ecologically constrained future.
Beth is a Senior Research Analyst with Portfolio 21 Investments. She has 10 years of environmental and social investing research experience.