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Early in my investing profession, an older colleague told me, “Stocks don’t care what you think about them.” What he meant was that my opinion of a stock had no bearing on how it might behave. This was a particularly precious insight because all too often individuals think that their opinions influence real-world outcomes, which ends up in very serious errors.1
It’s the identical with climate change. What individuals take into consideration it will not change the proven fact that we are able to see in real time that climate change is having real-world impacts.
Let’s start with the impact of climate change on short-term weather. Scientists debate whether warming oceans and other phenomena are increasing the number and frequency of hurricanes, tornadoes, fires and other natural disasters. We may have the option to develop a scientific model that proves a reference to absolute certainty.
Markets don’t care what you concentrate on climate change
But the markets don’t care whether we are able to construct a model or not. What we are able to observe is that there was a construction boom in coastal Florida, that hurricanes have caused a whole bunch of billions of dollars in damages, and that homeowners insurance is difficult to acquire and far more expensive than in the remaining of the country.
Homeowners in Florida face serious obstacles Home contents insurance. Many insurers have reduced their presence in Florida as a consequence of non-renewals and limited latest business.
Additionally, 16 corporations have voluntarily withdrawn from the state, including AAA, Bankers Insurance, Centauri Insurance and Lexington Insurance. An extra 16 insurers have been insolvent since 2017. However, other corporations similar to Liberty Mutual haven’t responded to requests for quotes for Florida ZIP codes, and Farmers Group has stopped writing latest policies nationwide.
All this market volatility is putting a strain on homeowners higher costs and so they find it difficult to seek out the insurance coverage they need.
Insurify’s own data shows that Florida homeowners already pay a mean annual insurance premium of $11,759 per yr. This is the very best of any state and rates are expected to rise even further next yr.”2
The insurance markets don’t care what you concentrate on climate change
Insurance markets don’t care whether anyone thinks climate change is real or not, whether Florida’s home insurance market is flawed, or whether constructing on barrier islands was bad planning. All it knows is that hurricanes have increased in frequency and intensity and that the damage sustained requires much higher insurance premiums. Or don’t provide prices in any respect.
Energy markets don’t care whether anyone actually believes that wind turbines kill birds and whales, cause cancer, or produce other unconventional ideas. All it knows is that the wind blows strongly in Texas, a significant oil-producing state, and that wind turbines are very profitable.
The Texas Comptroller of Public Accounts3 notes that Texas has led the U.S. in wind energy production for 17 years, producing greater than 1 / 4 of all wind energy within the U.S., producing greater than 40 MW and supporting 25,000 jobs earning greater than $100,000 per yr. About 28% of all electricity in Texas is generated by wind power, and marginal costs are sometimes the bottom within the state.
Climate change doesn’t care whether people prefer internal combustion engines over electric vehicles (EVs) or not. What we’re seeing is that electric vehicles now represent about 9% of the automotive market (up from 5% in 2022) and that electric vehicles and hybrid vehicles combined now account for about 30% of the automotive market.4
As unit prices fall, batteries develop into cheaper and charging infrastructure grows, the share of electrical vehicles will increase. The market doesn’t care if anyone objects to the rise of electrical vehicles or that the trend may be barely influenced by incentives. Objection to horseless carriages as devil’s chariots[4] didn’t work. Like the early electric vehicles, the primary cars were curiosities owned by wealthy eccentrics. It took some time for them to develop into ubiquitous, however the trend was irreversible because they were cheaper, higher and faster than horse-drawn carriages.
What is the lesson from this? That the markets, the true world and the economy don’t care whether someone believes in climate change or not. There are direct consequences of climate change, a lot of which we cannot yet observe, but the true world is already adapting and changing as a consequence of the immediate consequences of climate change.
Climate activists can stop worrying about individuals who do not believe in climate change. You can stop worrying because climate change doesn’t care what others think.
You may additionally like: Navigating benchmarks, incentives and time horizons for net zero investments
