Dire UN Global Warming Report Calls Investors to Action

NEW YORK (TheStreet) -- While the media headlines covering the latest report from the United Nations' Intergovernmental Panel on Climate Change painted the darkest picture, the panel itself balanced the dire warnings with a more constructive call to action.

"We live in an era of man-made climate change," Vicente Barros, co-chair of Working Group II, said in a press release. "In many cases, we are not prepared for the climate-related risks that we already face. Investments in better preparation can pay dividends both for the present and for the future." 

"Panel's Warning on Climate Change: The Worst Is Yet to Come" is the New York Times' headline from Yokohama, where scientists unveiled the report, and the article itself highlighted quotes outlining a grim future of continuing physical and economic damage. Likewise, the BBC topped its story on the report, "Climate impact 'overwhelming' - UN." 

Both of those are true, no doubt. But the tone of the IPCC press release also implied that solutions to some of the most painful outcomes from climate change can be found. At the same time, national economies that will suffer by maintaining the status quo could begin to act now to adapt to the new future, bolstering their prospects, creating whole new industries and jobs in the process.

Chris Field, co-chair of the working group that oversaw the report, said in the press release, "Understanding that climate change is a challenge in managing risk opens a wide range of opportunities for integrating adaptation with economic and social development and with initiatives to limit future warming. We definitely face challenges, but understanding those challenges and tackling them creatively can make climate-change adaptation an important way to help build a more vibrant world in the near-term and beyond."

The IPCC noted the world is warming mostly as a result of man-made carbon dioxide emissions, combined with the effects of other greenhouse gases, including methane and water vapor, and that the risks from climate change are already upon us.

Glaciers have melted. Mountaintops in the U.S. have lost snowpack. Sea levels have risen and coastal and island communities are being threatened. Fresh water sources are being contaminated by salt water. People are at risk right now from changing weather patterns that involve drought in some parts of the world and flooding in others. Food supplies are under increasing pressure. All of that will get far worse, even if carbon emissions were halted right now.

Yet each of those also presents an opportunity, through constructive investment and new ideas, to avert the worst-case scenario and to prevent the suffering of millions.

"Governments, firms, and communities around the world are building experience with adaptation," Field said. "This experience forms a starting point for bolder, more ambitious adaptations that will be important as climate and society continue to change."

What Investors Can Do

Climate change is the great challenge of the current generation. As World War II dominated the lives of our grandparents, so working to ameliorate the worst effects of this man-made catastrophe is the defining work of our day. What we do with that challenge will create the future.

Yet, for most of us, quitting your day job to shut yourself in the garage and invent a new energy source is probably not the best way to contribute. Investors can make a difference by correctly recognizing the risks from climate change and choosing where to put their money.

The best choices we can make involve isolating the problems and addressing them within our sphere of influence, one by one. Addressing the entrenched patterns of investment by oil companies, investors Arjuna Capital and As You Sow recently won a major concession from Exxon (XOM) to issue a report detailing the company's strategy for handling impending government regulations on carbon emissions.

To avoid catastrophic surface temperature warming of 2 degrees Celsius, no more than a third of the world's existing oil reserves can be burned, the investors noted. Continuing investment in developing new oil reserves is pointless and outside the best interests of shareholders unless some way to address that problem can be developed.

Energy producers who burn oil and natural gas already have proven technology to capture and sequester carbon dioxide safely, as demonstrated by projects by Statoil, Archer Daniels Midland (ADM) and Dakota Gassification, among others. Pressure on energy companies to deploy these existing technologies and pressure on government regulators to allow those companies to pass some costs to the consumer could see a radical change in the energy industry in a relatively short period of time.

Alternative energy sources have made tremendous strides in the last decade. With new technology driving down prices and increasing the potential for round-the-clock electricity, solar energy in particular has emerged from the pack to occupy a significant and growing market share.

Real estate investors and investors in companies building new facilities could seize on this momentum to demand the construction of green energy facilities, as showcased by Apple (AAPL) at its Maiden, N.C., plant.

Investment in battery technology is key to making solar and wind power viable options. The latest battery technology is already being used by Solar City (SCTY) to augment its solar plants and home installations and its sister company, Tesla (TSLA), is breaking ground on a battery factory that will facilitate that deployment.

Threats to agriculture, housing and fresh water are similarly huge challenges but can be met in part by investor pressure on companies to put more money into research and development toward establishing a plan for the future, not merely respond to the present.

Denial of the challenges posed by climate change is not in your best interests. Finding investments that simultaneously grow your portfolio and reduce the risk of large-scale disaster and loss of life can help everyone. That means becoming something of an activist yourself, stepping up pressure for responsible decisions, to ensure the comforts available to you and the world today are still there in the future

-- Written by Carlton Wilkinson in New York 

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