With so much about our lives in some level of flux, or dare I say turmoil, it's easy to forget that today is Earth Day. (And the 50th anniversary of the first one, at that.)
So, I am going to suggest that, despite the volatility in the markets and the economy, we can't forget that it's Earth Day. The Covid-19 crisis that is gripping the world is our reminder. A wakeup call to all of us -- that all of this is interconnected within a far bigger picture.
It's a reminder to give Mother Nature her due.
What does this mean in practice? Simply put, the world needs a massive reallocation of capital away from those activities that are harmful. As investors, we can play an important role in that process. As Neville Isdell, former CEO of Coca Cola often said about his company, "We have a social license to operate, and it needs to be renewed every day."
The coal industry, as an example, lost its social license to operate when investors walked away, followed by the banks. Bankruptcies soon followed. We investors implicitly, through our dollars, renew such licenses each day. We should be choosy.
The current price war in the oil sector is another interesting example of this interconnectedness. Oil prices and consumption have been in a general decline for years, but new supply continued to come on stream. A price war was not an unforeseen possibility as producers fought over a shrinking pie. The oil companies who "get it", and reduce exploration, just might be those whose share prices respond to this more sensible use of shareholder capital.
During difficult markets, it's easy to forget that our portfolios are the manifestation of what we care about -- i.e., "voting with our dollars." Yes, markets everywhere went down this year, but it's worth noting that sustainable and impact funds have performed better than their benchmarks (per Morningstar) in this environment.
Meanwhile, private investments in solar energy, affordable housing, farmland and other impact sectors continue to execute their strategies, largely removed from the vicissitudes of the markets. Let's not forget the role that our investments have in generating both financial and social returns.
And lastly, WE (as humans) are at the center of this connectivity. We need to take care of ourselves and the space we inhabit.
It's well documented that time spent in nature has a calming effect on us humans. The Japanese have a term for it: Shinrin-Yoku, which means "forest bathing", or taking in the forest atmosphere during a leisurely walk. These activities reduce stress hormone production, improve feelings of happiness, lower one's heart rate and blood pressure and help boost the immune system.
How often do we take time for our own health? How often is the atmosphere around us undermining it?
If this period has shown me anything, it's that, even in the city, there is space for peace and natural beauty. A slower pace allows us to see it, to take it in, and to benefit from it.
Best wishes for good health and prosperity in sync with all that Earth Day stands for.