Why I might not invest in that coal plant after all

By Josh Ran

So there I was, thinking about this GREAT opportunity I just heard about to invest in a new coal-fired power plant.

But then, just yesterday, our own special envoy for climate change to the state department Todd Stern said in an interview with the Financial Times:

“How good will the business judgment of companies that make high-carbon choices now look in five, 10, 20 years, when it becomes clear that heavily polluting infrastructure has become deadly and must be phased out before the end of its useful life?”

He then followed this thought to its logical conclusion and pointed out that companies investing in things like coal-fired power plants and gas-guzzling cars – will start to see financial losses in the near future for their greenhouse gas emissions. I would argue with him on the “start” piece, but overall – nicely put.

But as if this weren’t already enough to make me think twice about that new coal-fired power plant investment…..today Dow Jones Newswire reported that in response to a new Trucost report that estimated the carbon footprint of 75 mutual funds’ portfolios, some mutual funds have stated that they will start to include carbon exposure in their evaluation of a company as a worthy investment.

So, what would I do if I was someone thinking of investing in a coal-fired power plant…..and I read these two things? Hmmmmm what would I do?

Are the CEOs of our major banks reading the news? Are they following current events? It looks bad for coal. Lets face it, it looks bad for all fossil fuels. So personally, I wouldn’t have financed several new coal-fired power plants in the last few months alone. Which is exactly what Citi, Bank of America and JP Morgan Chase have done — even since the release of the much heralded Carbon Principles. More to come on this, watch this space…..