It's becoming more difficult by the day to ignore the multi-trillion-dollar market being created by the upcoming COP-15 summit.
Today, let's look at where companies, consumers, and investors stand.
The Corporate Leaders Group on Climate Change is an organization headed by Prince Charles. Comprised of no fewer than 500 top-tier international companies, the CLG is demanding "immediate and deep" emissions control commitments from December's UN Conference of Parties (COP-15) in Copenhagen.
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Publicly-traded corporate titans like Coca-Cola (NYSE:KO), Royal Dutch Shell (NYSE:RDS), BP (NYSE:BP), British Airways (OTC:BAIRY), and General Electric (NYSE:GE) have signed on to a memorandum called the Copenhagen Communiqué that squares action on emissions with the health of the global economy.
That's right: though naysayers would have you believe that preventive measures to cut greenhouse gas output will destroy the world's wealth, boards of directors disagree vociferously. In fact, they're clamoring to get their names on the Corporate Leaders Group list.
The Copenhagen Communiqué bears the signatures of execs at retailers such as Britain's Tesco (OTC:TSCDY), which can lead the charge to reduce packaging, encourage reuse of shopping bags, and make distribution networks more efficient.
With a U.S. market cap of over $56 billion, German insurance giant Allianz (NYSE:AZ) is concerned about the heightened underwriting risk posed by rising sea water and worsening weather events. Lower emissions could mean lower future payouts and higher margins for Allianz, so they're on board with Prince Charles and the CLG 500.
We also see unlikely champions of climate action like Shell and BP — oil and gas companies whose declining North Sea production base is forcing them to move into wind, solar, and other renewable energy sources. BP has nearly 100 wind energy projects in the U.S alone, adding up to 20 gigawatts of potential output.
Rather than viewing the political echelon as an enemy to profits, these petroleum powers want a guarantee that their clean energy efforts will be met with grid purchasing agreements and effective subsidies.
And let's be real — there's also a sizable public-relations element to the CLG effort. The drive to earn clean energy cred has turned from a few companies' push for good press into an agglomeration of multinational firms that now has its own gravitational pull. . .
Only 150 companies signed onto 2007's Bali Communiqué, named for that year's abortive UN climate conference in Indonesia.
This time around, the number of companies totals 500.
Nevertheless, the public may continue to be skeptical of corporate credibility on green matters. For example, survey data from Boston College and strategic marketing agency Cone, Inc. show that environmentally-friendly messaging is penetrating, but may not yet be clear enough to the U.S. consumer base.
Consumers and Corporations Get on the Same Page
The 2008 Boston College/Cone Green Gap Survey shows that less than half (47%) of Americans trust a company's own representation of its sustainability practices.
Of those polled for the survey, 39% prefer purchasing "environmentally-friendly" products, but only the same number of respondents said they really understand the terms industrialists use to establish their green reputations.
Those companies at the front lines of consumer awareness may have the easiest job. Just look at Chile's Viña Concha y Toro (NYSE:VCO), which is changing about 68.4 million bottles per year to a new, lighter Eco-Glass design. The company is also setting carbon neutrality targets and developing local geothermal resources to that end.
It's not perfection, but it's effort. . . and you can bet you'll see stickers on each bottle soon, alerting you to the changes Chile's biggest winery has made.
Being a listed company, Concha y Toro joins many of the Copenhagen Communiqué signatories in calculating that energy efficiency will pad profits and yield higher earnings per share.
In turn, investors in all sorts of industries will find themselves on the receiving end of "green dividends."
Again, the multi-trillion-dollar chorus is growing. . .
Investors Present $13 Trillion to Fund Action
On September 16, investors at the International Investor Forum on Climate Change in New York issued a joint statement calling for climate action.
Representing 180 of the largest investment firms and funds in the world, their word is worth $13 trillion in assets. Those dollars, euros, yen, and yuan can be diverted away from high-risk polluters and companies that don't get with the program.
All told, we're looking at an unprecedented tailwind for climate change progress. On Tuesday, Chinese President Hu Jintao promised to "cut CO2 emissions per unit of GDP by a notable margin by 2020 from the 2005 level." As he spoke, Hu removed one last arrow from the quiver of those who keep trying to pop what they see as a big green bubble.
The Corporate Leaders Group wants to help Hu and his peers in developing countries by safeguarding forests and transforming black-sky nightmares with carbon capture and other clean technology.
Hu wants to parlay the cleantech success China has already had with solar power companies like Trina Solar (NYSE:TSL) into end-to-end emission-lowering solutions that are marketable to other developing countries.
The gap is quickly closing between consumers and corporations, between countries and companies, and among the world's biggest polluters. Consensus is on the way, and you don't want to be behind the 8 ball when COP-15 kicks things into high gear in December.
As it turns out, the trillions I've talked about here are only the first waves of money moving into and around emissions reduction efforts.
You can read Green Chip International's complete report on the Copenhagen climate conference and gain instant access to our portfolio of advance plays on COP-15 by clicking here.
Regards,
Sam Hopkins
International Editor
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Today there are two sunspots in evidence, so perhaps Cycle 23 finally is ending and No 24 is beginning. (See this for yourself at NOAA's Spaceweather.com.)
If so, No. 24 is arriving two or two-and-one-half years behind schedule. The last time such an unusual delay ocurred, around 1879, Earth suffered a prolonged period of global cooling.
The Generalissimos hotly pursuing their attacks against carbon may soon find they have been fighting the wrong war, and eventually they may be exiled to Antarctica.
Folks, its a paper market where the paper describes permits to emit certain levels of CO2, and where investors can buy and sell carbon surpluses in the market. Sounds easy, however the opportunities for this market to hit a brick wall is very possible when the players in the market won't know on the day of trade, what the true credit remains on a permit that is for sale. Unless there is a transparent process for evaluating permit holders' records on their performance - and that means daily and hourly - then doubt will grow as to the true price of carbon in the market that will lead to discounting. A fair bit of this has already occurred in the European ETS market, where market volatility indicates a lot of doubt in carbon value.
It appears we are going to have 'cap & trade' markets so that global entities can participate. Fine. Then let's get some rigour into the process as to how these markets will function, and that means a detailed process of monitoring and evaluation of permit holders' performances. They might not like this, but this approach will (a) help protect the price of carbon in the market, which means it protects residuals on their permits, and (b) ensures transparency in that the ultimate goal of the market is to reduce the emissions of mankind caused carbon dioxide emissions.
Seeing what is currently going on in small ETS markets, the above two points seem reasonable measures to assist in the ETS process which to me is not clear. I challenge anybody to convince me otherwise that the majority in the general populace whose money will be put into this market, don't understand how it's going to work. All they hear are the great stories of fortunes to be made. We're just coming out of a major global financial crisis right now, and I would think that there many who would be hesitant about being burnt twice in a lifetime. This ETS market trade, should it fail and because of its potential scale, would make the recent financial crisis look like a weekend school dance.
The ETS market process will require a substantial infrastructure to be developed. Some have said this infrastructure is too massive and would be too invasive. But it is possible, we know how to do it. because of current communication systems, the essential architecture of the infrastructure already exists. I've written papers on this and spoken at seminars on the matter, and am regularly amazed at the lack of knowledge of what the process would be to assist in minimising investors' risk. I find many do not understand this market, and borrowing on an old adage: 'don't invest in something you know nothing about' comes to my mind, even when confronted by so-called experienced fund managers who one would think would practice some caution in this new market. There's a whole education process needed. Thing is - we all don't mind learning, but we don't like being taught.
Question: who has done the risk assessment for this new market?