Divestment Goes Full-Billy Madison

By David Middleton – Re-Blogged From WUWT

This post employs Billy Madison as a euphemism.

Fossil fuel divestment is, by definition, Billy Madisoned. It is a concerted effort hold back or slow down fossil fuel production by cutting off access to capital. Fossil fuel divestment is “a really futile and stupid gesture”. An investment can only be divested if an investor is willing to invest in the divested interest.

Perhaps realizing that fossil fuel divestment is nothing but “a really futile and stupid gesture”, Alicia Seiger, a lecturer at Stanford Law School and an affiliate of the Steyer-Taylor Center for Energy Policy and Finance, has determined that divestment is not sufficient…

Mother Nature is Not Calling for Divestment

May 20, 2019 By Alicia Seiger
Related Organization(s): Steyer-Taylor Center for Energy Policy and Finance

In honor of Earth Day, Harvard University students, faculty and alumni held rallies to pressure the university’s $39.2 billion endowment to divest from fossil-fuel related companies. Having scored what sounded like a victory five years ago, when Stanford University announced a coal divestment decision, Fossil Free Stanford is doubling down to demand the school’s $26 billion endowment sell oil and gas stocks. The divestment rallying cry has been echoing across the halls of elite universities, through US state legislatures (which govern state pension funds), and as far north as Norway, home to the world’s largest sovereign wealth fund, for more than half a decade. While some calls appear to have been answered, the response won’t move the climate needle far enough or fast enough and meanwhile, pensions and endowments remain woefully underprepared to weather climate change.

The divestment movement has been helpful in drawing attention to the impact of climate change on investment portfolios and increasing the stigma around fossil fuel companies. It was also well-timed. Less than two years after Bill McKibben first ignited calls for endowments to go ‘fossil-free’…


Stanford Law School Blogs

Let’s pause right there. Do these buffoons have any idea how Billy Madisoned the phrase “fossil-free” is? Or how Billy Madisoned it is to take credit for a “a disastrous five-year run” for oil & gas stocks due to the collapse in oil prices in late 2014? It’s particularly Billy Madisoned because she even cites the real reason for low oil prices…


The US shale boom had much more to do with driving asset values down than carbon math, but lower prices forced portfolio managers to reconsider what had long been their highest performing asset class.


Stanford Law School Blogs

Apparently, just being Billy Madisoned wasn’t good enough…


[W]hile investors tinker around the margins and activists claim victories, mother nature is sounding a deafening alarm. Fueled by climate change, extreme weather has been decimating economic value across the world. In the past two years alone, global financial losses from hurricanes, droughts, wildfires and other natural disasters amounted to roughly $500 billion. The scale and scope of climate impacts on investment portfolios demand investment and legislative policies more ambitious and effective than divestment. Mother nature is not calling for a Tylenol, she’s demanding interventions that address the root causes of her fever.


Stanford Law School Blogs

The source she cites for the $500 billion claim…

According to preliminary sigma estimates, total economic losses from natural and man-made catastrophes in 2018 declined to USD 155 billion from USD 350 billion in 2017. Global insured losses are estimated to be around USD 79 billion, higher than the annual average of the previous 10 years. There have been a number of smaller and mid-sized loss-generating disaster events across all regions this year, also affecting regions with well-established insurance cover. Together, these have made 2018 the fourth costliest year on sigma records in terms of losses covered by the insurance industry. Globally, more than 11 000 people have died or gone missing in disaster events in 2018, similar to the number of victims in 2017.

Total economic losses from natural catastrophes and man-made disasters are estimated to be USD 155 billion in 2018. Natural catastrophes caused USD 146 billion of the losses, and man-made disasters USD 9 billion. Of the total economic losses, USD 79 billion have been covered by insurance, down from USD 150 billion in 2017, but more than the previous 10-year annual average (USD 71 billion). Natural catastrophes accounted for USD 71 billion of this year’s insured losses, and man-made disasters for the remaining USD 8 billion. This year is projected to be the fourth most expensive year on sigma records for insurance. More than 11 000 people have died or gone missing in catastrophe events in 2018. The earthquake in Sulawesi, Indonesia in September had the highest human toll of the year, with over 3 500 estimated dead or missing.


Swiss Re Group

My first thought was that $155 billion is less than half of $350 billion.

My second thought was that natural disasters aren’t all weather-related.

My third thought was that not all weather-related disasters are due to the mild warming Earth has experienced since the coldest climatic episode of the Holocene Epoch, the Little Ice Age.

Little Ice Age bad!

My fourth thought was that we had bad storms before Col. Edwin Drake drilled America’s first oil well… Technically, it wasn’t America’s oil well. It belonged to the people who paid for its drilling.

Major New England hurricanes (some worse than Sandy) and sea surface temperatures back to 1000 AD.

My fifth thought was that if a warmer Atlantic Ocean caused bad weather, the Medieval Warm Period would have been really bad and the Roman & Minoan Warm Periods must have been veritable schist storms…

Major New England hurricanes and sea surface temperatures back to 1200 BC.

My sixth thought was that a total elimination of fossils (fossil-free) is impossible.

My seventh thought was that a total elimination of fossil fuels wouldn’t fix the weather any time soon (if ever) and it would kill half of the human population rather quickly.

“Trends in human population and nitrogen use throughout the twentieth century. Of the total world population (solid line), an estimate is made of the number of people that could be sustained without reactive nitrogen from the Haber–Bosch process (long dashed line), also expressed as a percentage of the global population (short dashed line). The recorded increase in average fertilizer use per hectare of agricultural land (blue symbols) and the increase in per capita meat production (green symbols) is also shown.” Erisman et al., 2008

My eighth thought was that the proposed solutions for fixing the weather will cost a lot more than what weather-related disasters are likely ever to cost in the future… And none of the solutions will fix the weather.

My ninth thought was that even if anthropogenic climate change was a contributing factor to the $500 billion, that’s chump change compared to the cost of just about everything else. In arguendo let’s accept the latest National Climate Assessment’s claim that “extreme weather events and natural disasters caused $91 billion in damages in 2018.” Not all of these costs were to businesses, but we’ll run with that number. What else takes bites out of businesses?

  1. March Madness $13.3 billion
  2. Shoplifting $44 billion
  3. Absenteeism $84 billion
  4. Weather <$91 billion
  5. Surfing the Internet $200 billion
  6. Regulatory compliance $1,900 billion
  7. Federal taxes $3,594 billion

Federal taxes include personal income taxes, Social Security taxes, corporate income taxes, excise taxes and estate taxes because, ultimately, it’s businesses that generate the revenue, enabling the taxation.

The IPCC calculated that it will cost $122 trillion to avoid 1.5 °C of warming relative to the alleged pre-industrial average. The average annual cost through 2050 would be $800 to $2,900 billion…

IPCC Demands $122 Trillion to Fight the Global War on Weather

And there isn’t one shred of evidence that a $122 trillion Global War on Weather will have any effect on the weather.

“Paris climate promises will reduce temperatures by just 0.05°C in 2100” (Bjorn Lomborg)

If all of this wasn’t good enough, we haven’t even gotten to the full-Billy Madison bit yet…

First, asset owners should immediately carve out a climate solutions allocation, staff it with a dedicated team empowered to source deals across all asset classes, and give them an absolute return benchmark. A dedicated allocation will help put climate-friendly investments on a level playing field with more traditional assets and serve to drive a portfolio’s overall sustainability. This type of proactive approach will also be critical in achieving the tripling of low-carbon investment experts indicate is required to achieve the ambition of the Paris Agreement.

Next, and this is the big one, investors must establish a process through which all buy, hold or sell decisions are sustainable by 2030, where “sustainable” is defined as being consistent with a 2-degree Celsius or lower warming scenario. The reason for this is not altruism, nor is it a bet on a policy response. This step is about risk management. Markets are not fully pricing climate risk, due in part to incomplete data and inertia. As a result, investors own mispriced assets.


Finally, and this cannot be said enough, mother nature has canceled business-as-usual. Investors must recognize that they are taking a bet on climate whether they act or not.

Stanford Law School Blogs

Not just “no”… But NO FRACKING WAY! I make investment decisions based on obtaining the best return on capital over a timeline that is meaningful to me… I’m not making bets on anything that may or may not happen 80 to 200 years in the future. Nor would I ever trust a dime of my money to someone who would invest on the basis of what they think the weather will be like 80 to 200 years in the future and would intentionally p!$$ some of my money away on carving “out a climate solutions allocation” and staffing it with people who can’t find real jobs because they majored in sciencey-sounding liberal arts subjects.

And then, full Billy Madison went full circle…

“Fossil free” signs often generate a visceral reaction from those on the receiving end. The most disappointing responses are ones that misunderstand the message as demanding “social change” or as “a means to achieve policy ends.”

Stanford Law School Blogs

The phrase “fossil-free” earns Ms. Seiger eleventy gazillion Billy Madison’s

“’Fossil free’ signs” should draw “a visceral reaction” from everyone who has a real job, because the “fossil free” crowd is nothing more than a bunch of egg-head miscreants, incapable of holding real jobs, “demanding ‘social change’” as “a means to achieve policy ends,” namely global socialism.

“This is probably the most difficult task we have ever given ourselves, which is to intentionally transform the economic development model, for the first time in human history”, Ms Figueres stated at a press conference in Brussels.

“This is the first time in the history of mankind that we are setting ourselves the task of intentionally, within a defined period of time to change the economic development model that has been reigning for at least 150 years, since the industrial revolution. That will not happen overnight and it will not happen at a single conference on climate change, be it COP 15, 21, 40 – you choose the number. It just does not occur like that. It is a process, because of the depth of the transformation.”


You people need to get real jobs and stop annoying the productive segment of society.


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