29 February 2024
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Crusading billionaires will change the planet and the stocks we buy

Peter Switzer
16 September 2022

When Kevin Rudd became Prime Minister in 2007 he had a big climate change agenda, so I wrote a book called The Carbon Crunch, explaining the business and social implications of his party’s proposed changes. When Rudd backed away from his big promises for political purposes, which incidentally didn’t work for him, that book didn’t have a big audience.

However, the research for the book convinced me that even if the science was wrong or exaggerated, something close to 50% of the populations of countries such as Australia, the UK and the US were either strong or growing believers that modern business and consumer habits had to change.

Big companies such as Toyota were making hybrid cars and people were buying them, especially in places like California. And Elon Musk (and people like him) was sure his idea of an electric vehicle would one day be a winner.

At the beginning of this year, Bloomberg reported that: “Tesla smashed its previous record for global deliveries, putting a cap on the year where it joined the $1 trillion valuation club. The electric vehicle (EV) market leader's stock soared almost 50% in 2021, to give it a market valuation exceeding $1 trillion ­- one of only a handful of U.S.-based public companies to achieve that status.”

Capitalism is changing and climate change believers are making it happen. And it’s now being powered by billionaires, with the founder of clothing brand Patagonia transferring ownership of the company after nearly 50 years into two entities that will help fight the climate crisis. This business has been around since 1973 and its founder, Yvon Chouinard, said in a press release on Wednesday that “effective immediately, [his] family will transfer their entire ownership stake into two newly created entities. Those entities will ensure that the company's values will continue to be upheld — and that Patagonia’s profits are used to combat climate change.” (CNN)

The report went on to reveal this from the founder on Wednesday: “If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have. Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source.”

This comes as two of our well-known billionaire entrepreneurs and public company founders — Atlassian’s Mike Cannon-Brookes and Fortescue’s Andrew “Twiggy” Forrest are throwing a lot of their wealth to find different ways to power their businesses and their profits which are greener and cleaner and will have a gradual impact on what we do to the planet.

Of course, these are still small steps and we need China and the US to commit to bigger reforms of business processes to have a big effect on climate, but this is a trend that businesses and investors can’t ignore.

If you were a cock-eyed optimist and believed in Elon Musk, you would’ve bought shares in Tesla at US$23 in 2017, which now would be worth US$303. If you put $10,000 into these shares at that time, then it would now be worth $150,000! That’s the payoff for being alert to the changing social trends, which always have economic and then stock price implications.

We’re seeing the prices of lithium stocks surge as more and more governments commit to killing off gas-guzzling petrol cars and they pass legislation climate bills as the Albanese Government did recently, which clears the way for a 43% reduction in emissions by the end of the decade.

And the billionaires are being joined by big super funds that are Australia’s biggest stock players. And these owners of stocks are telling Boards to get green or they will be out on their ear.

As Bob Dylan sang: “The times they are a-changin’”.

For investors, Bob’s words are useful guides to where your money might need to go:

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is rapidly fadin’
And the first one now
Will later be last
For the times they are a-changin’.

Following the actions of billionaires can be a useful tip, whether you believe them or not.

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© 2006-2021 Switzer. All Rights Reserved. Australian Financial Services Licence Number 286531. 
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