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October 15, 2020

A win for Biden in the 2020 U.S. elections could be the best thing to happen to climate change investors this year, according to a Morgan Stanley survey of investors, released Monday.


According to the poll, 51% of investors think the U.S. election will be the “most impactful event” of the year for sustainable investing. An “impact” could be negative or positive, of course, but Morgan Stanley has previously said it considers a second Trump term simply status quo, so a Biden victory is the only outcome that will have an “impact” at all—and it will be largely positive.


In August, Biden unveiled his $2 trillion plan to tackle climate change, targeting a carbon neutral electric grid by 2035, the development of a decarbonized transport sector, and massive investment in new green tech and clean energy.


Besides the obvious environmental impacts of those goals, the switch to clean energy could create new jobs—10 million by the Biden campaign’s estimate, although critics are sceptical of such a high number.


(It’s worth pointing out that the Biden plan is not the Green New Deal advanced by Democrats in 2019, despite President Donald Trump asserting at the first presidential debate that it is.)


Of course, Washington wouldn’t be the only major government tackling climate change next year (in the event of a Biden presidency). In December, the European Commission, which heads the EU, announced its own $2 trillion Green New Deal tying post-pandemic recovery to decarbonized growth. It was the largest green stimulus package ever at the time, earmarking $572 billion for climate action.


Last month China announced an ambitious plan to go carbon neutral by 2060, too. Decarbonizing China—the world’s largest emitter of carbon dioxide—would mean completely eradicating the nation’s coal consumption by 2050. But only 7% of Morgan Stanley’s survey respondents thought Beijing’s pledge would be the “most impactful” event of the year.


That’s understandable. China’s decarbonization drive will likely be fueled more by state-owned enterprises than publicly-listed private companies, creating few investment opportunities.


The EU’s green deal isn’t deemed as significant as a Biden victory, either, with 37% ranking it as the most impactful event of the year. That may be because any action by the U.S., the world’s largest economy and second-largest carbon emitter, overshadows moves by the EU, which is smaller in terms of GDP and emissions.


But investors will likely continue to seek sustainable projects even if there is no Biden victory. The number of sustainable-minded index funds has doubled over the past three years, covering $250 billion. That capital flow might be enough to lobby for greener regulation regardless who’s in the White House.


But it’d be better for change to come from the top.


More below.


Eamon Barrett
— eamon.barrett@fortune.com


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CARBON COPY


Smoke


Supreme Court nominee Amy Coney Barrett described climate change as a “very contentious matter of public debate” when questioned by Sen. Kamala Harris on the topic. Barrett agreed cigarettes cause cancer—because warnings on the packages say so—but referred to climate change as a “matter of public policy.”


Slow


The IEA published its World Energy Outlook report on Tuesday. It predicts that energy demand might not recover until 2025 and, even then, the “damage sustained during a decade of subdued recovery” will leave “deep scars” in the 2030s. For more on this, see Katherine Dunn’s reporting below.


Regulate


A leading executive at one of the world’s largest commodity traders, Trafigura Group, says the brokerage would welcome stricter regulations that force the shipping industry to green. Last month, the group proposed a tax of $250-$300 per ton of CO2 for ships, but board member Jose Maria Larocca says the call isn’t financially motivated. “We are doing this because we believe in this,” Larocca says.


Risk


Australia’s banking and insurance regulator warned the country may have to spend $3.5 billion a year to limit damage from climate disasters. The money would be spent on mitigation measures—such as clearing to prevent bushfires, or on advanced storm warning systems. It’s a steep bill but the cost of simply repairing damage after disaster strikes could be 11 times higher.


Sustain


The Journal has published a list of what it considers the 100 most sustainably managed companies. Topping the list are a cluster of heavy goods manufactures, such as steel, glass and cement makers—all heavy polluters. The logic appears to be that because heavy industries have greater financial exposure to climate change, they will be more compelled (possibly by regulation) to mitigate climate risks.


IN CASE YOU MISSED IT


Facebook A.I. researchers push for a breakthrough in renewable energy storage by Jeremy Kahn


Solar power is “the new king of electricity” by Geoff Colvin


‘Risky and dangerous’: Energy industry body IEA sounds the alarm on oil demand and even uses the P-word by Katherine Dunn


Inside the plan to radically remake BP by Beth Kowitt


The next President must tackle the intertwined crises of racial injustice and climate change by Adrien Salazar and Lennox Yearwood Jr.


5 years in, damages from the VW emissions cheating scandal are still rolling in by Geoff Colvin 


With backing from Hollywood, French startup Ÿnsect plans to bring edible insects to America by Vivienne Walt


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Content From BHP

Big thinkers leave smaller carbon footprints.


BHP supplies the copper big thinkers need to build electric cars.


Get the big picture.


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CLOSING NUMBER


50%


The Great Barrier Reef—the 133,000 square mile ecosystem off the coast of Australia—has lost more than 50% of its corals over the past 25 years. The destruction is an existential threat to fish that thrive in the coral habitat, creating a potential food shortage for humans, too. Most of the coral death has been caused by “mass bleaching events,” propagated by rising sea temperatures. As more coral dies, the reef’s ability to heal itself diminishes since new coral are spawned by the old.


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