The Winners of Climate Change — Introduction to the Series

Focused on the crucial fact that global warming is global, along with the humans it affects and who are affecting it, investigative book Windfall — The Booming Business of Global Warming, from author McKenzie Funk, means to provide an answer to the increasingly urgent question “What are we doing about climate change?”

McKenzie Funk and his book, Windfall

McKenzie Funk and his book, Windfall

Grappling with the consequences of climate change

According to the book, 2006 is the year we began to believe in global warming, not in the abstract science of it, which was understood already, but in the fact that there were money and power to be won and lost. Some were already seeing opportunity, especially in the wealthy nations that were causing climate change in the first place. Skepticism was only a smoke screen; for those who considered climate change’s strategic rather than ideological impacts—militaries, corporations, the rare politician—it had become time to grapple with the consequences.

This book is about how we’re preparing for the world we are creating. It’s about climate change, but not about the science or politics of it, but about bets being placed on a simple, cynical premise: that we won’t stop it anytime soon. Poor, mostly tropical countries, those least responsible for the consumption that fuels the factories that produce the emissions that cause the warming, will be hit hardest. Wealthier, higher-latitude regions—Europe, Canada, the United States—are not entirely immune, however for them climate change is not yet an existential threat. It’s a shorter ski season, a more expensive loaf of bread. And also, a new business opportunity.

During the six years that McKenzie Funk spent reporting Windfall, he traveled around the globe interviewing people who thought climate change would make them rich. He met profiteers, engineers, warlords, mercenaries, vigilantes, politicians, spies, entrepreneurs, and thieves, people that driven by ideology, fear, or hard-nosed realism—or all three—thought they were doing the necessary thing to come out ahead in a new, warmed world. In six years, McKenzie Funk says, he never met a bad person.

The truth about climate change is that it is not equally bad for everyone. There would be winners. There would be losers. The process of determining who was who was getting under way.

Climate investment, or how to “capitalize on exciting opportunities”

“A lot of people think, ‘How do you invest in climate change?’ and essentially come up with one or two or maybe three areas, like alternative energy. For us, well, there is an awful lot more to it. We have to separate out the ethical values. We have to move away from the environmental issues. We have to take a step back. We have to think about the reality of climate change.”
Sophie Horsfall, manager at Britain’s F&C Global Climate Opportunities Fund

Already by early 2008 half a dozen major investment houses had launched global-warming-themed mutual funds. Deutsche Bank response to climate crisis was its $2.9 billion DWS Climate Change Fund. Its press release explained: “Without taking a position on climate change, DWS Climate Change Fund is on the cutting edge of climate change investing.” Another release went further. “The debate around climate change is shifting away from cost and risk, toward the question of how to capitalize on exciting opportunities.” DWS fund not only invested in the technology to fight climate change—in wind power and solar power, in smart grids and smarter electrical meters—, but also in companies that would benefit from a warmer, less habitable world.

Among others, DWS Climate Change Fund invested in:

Company Details
Veolia Planet’s largest water company, manages pipes and builds desalination plants in seventy-four countries on five continents
Monsanto and Syngenta Ag-biotech giants , tweak genes to develop drought-resistant crops
Viterra Fast-growing agribusiness in temperate Canada
Duoyuan Global Water One of the biggest water-treatment companies in desiccating China
Yara and Agrium Fertilizer multinationals
Royal Boskalis Provides services related to the construction and maintenance of maritime infrastructure

Other climate investors were also starting to hedge:

Who Investment Reason
Wall Street banks, Schroder Global Climate Change Fund Ukranian and Russian farmland Cheap and fertile, made dear by milder winters and drought-fueled global food crises
Schroder Global Climate Change Fund Carrefour and Tesco “If climate change will be a negative for crop yields, then people will just have to spend more on food. Retailers are a clear beneficiary.”—Schroder Global Climate Change Fund’s manager
Climate change funds Reinsurers Munich Re and Swiss Re Natural disasters allow insurers to jack up rates: “As natural disasters start to be more common, as climate change starts to cause flooding and droughts, insurance companies—reinsurers in particular—should get pricing power. Hurricane season is actually quite a positive thing.”—A climate change fund’s manager

Citigroup’s report Climatic Consequences: Investment Implications of a Changing Climate, released in January 2007, was particularly helpful in advising investors on how to wring a buck out of global tailspin. It highlighted investment opportunities at seventy-four companies in twenty-one industries in eighteen countries, including:

  • Aguas de Barcelona (drought-afflicted Spain’s “leader in water supply”)
  • Monsanto (drought-resistant crops)
  • John Deere (more tractors needed in America as drought wiped out Australia’s wheat exports)

An ecological catastrophe is not necessarily a financial catastrophe for everyone.

Roadmap to the Series

Following on this Series, we will explore:

  • A new world map: how climate change is altering the worldwide landscape
  • Techno-fixes: the idea that innovation and market forces, when unleashed on climate change, can save us from it
  • Extreme weather: the zero-sum economics of distress, or how to profit from someone else’s crisis

So, please stick with me for the following chapters… Coming soon…

Featured image by drivethrucafe.

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