But first, let’s talk about climate change.

The wildfires, hurricanes, and floods we’ve seen in 2020 (on top of an already-awful global pandemic) make this an important conversation to have.

Think climate change isn’t an issue? Well, the market consensus is moving in the other direction.

Insurers, government entities, and large investors are treating climate change as a major systemic risk to financial markets.¹

Do scientists agree on climate change? Yes, the vast majority of actively publishing climate scientists – 97 percent – concur that humans are causing global warming and climate change.

Most of the leading science organizations around the world have issued public statements expressing this, including international and U.S. science academies.³

So, what does climate change mean for investors?

Investors worry that climate risk could cause the prospects of certain companies to drop dramatically and ricochet throughout the financial system (much like what happened during the 2008 financial crisis).

But, unlike a global issue such as the coronavirus, the effects will play out differently around the country and the world.

Flood- or wildfire-prone areas could experience disruptions in business or find it difficult to insure homes and structures against damage.

Agriculture could be damaged by droughts and heat stress.

Already-warm areas could become too hot for comfortable habitation.

But, if the world goes all-in on sustainability too suddenly, there’s also a danger that the “transition risk” caused by new regulations or widespread shifts in energy use could also hurt markets or certain sectors of the economy.⁴

Well, what’s the good news?

There’s always hope. Many of the worst effects of climate change will play out over years and decades, not weeks and months.

There’s time for people, businesses, and governments to adapt. And humans are infinitely adaptable.

And there’s hope that the worst-case scenarios about a hotter world might not come to pass.⁵

I believe that optimism and pessimism can (and often should) co-exist.

I’m pessimistic about the climate path we’re on.

I’m optimistic that we will make the changes needed to get on the right path and steer away from the worst effects of climate change.

As a financial planner and wealth manager, I’m also staying on top of the growing body of risk models and research to help my clients chart a path through an increasingly uncertain world.

Ok, enough about climate change. Here are the distractions I promised.

Here’s a jaguar kitten learning how to swim.

And a four-year-old playing Mozart.

And a livestream of the jellyfish at the Monterey Bay Aquarium (with music!).

Deep breath. We can do this.

What do you think? Are you worried about climate change?

What do you think we should do about it?

Warmly,
Chris

Chris Mullis, Ph.D., CDFA® Founding Partner Financial Planning. Wealth Management. Since 2006AskNorthStar.com (704) 350-5028

P.S. Markets have been volatile this month. It’s to be expected with so much uncertainty swirling about. We’ll reach out if I have anything critical to share.

¹_{https://www.nytimes.com/2020/09/08/climate/climate-change-financial-markets.html https://www.nytimes.com/2020/07/21/climate/investors-climate-threat-regulators.html}

²_{https://www.spglobal.com/en/research-insights/featured/the-big-picture-on-climate-risk}

_{³https://climate.nasa.gov/faq/17/do-scientists-agree-on-climate-change/}

⁴ _{https://www.bankofengland.co.uk/knowledgebank/climate-change-what-are-the-risks-to-financial-stability}

⁵_{https://www.scientificamerican.com/article/the-worst-climate-scenarios-may-no-longer-be-the-most-likely/}