Climate Change Takes Center Stage

Posted on by Paul Ellis

Here’s the top issue every advisor should be bringing to clients: “Let’s talk about how the new climate change regulations might affect your long-term investment strategy.”

The much anticipated Environmental Protection Agency (EPA) proposal to reduce carbon emissions from coal burning utility power plants throughout the country went public Monday, June 2,* and every affected special interest group in the country has been responding.

Who’s Affected?

So far I’ve read interviews with and articles by the usual suspects – environmental groups, utility companies, oil and gas companies, alternative energy companies, economists, members of Congress and Obama Administration representatives, state legislators from around the country. But I’ve also read interviews with representatives of health insurance and health care companies, attorneys who engaged in the legal battle with tobacco companies in the 1990’s and ranchers from Wyoming, the number one coal producing state. Because the application of this EPA policy will vary by the state applying it, everyone seems to have a stake in the outcome, and the next mid-term congressional elections will be a hot spot for policy debate related to this issue.

In short, every investor in the US markets will be aware of this policy debate, and I can’t think of a better time for advisors to talk to clients about SRI. Because business, political, environmental and tax policies will be affected across the fifty states, I suspect most clients will want your advice in figuring out how to plan for these new changes in their portfolios.

Utility Sector Downgraded

The new EPA proposed regulation is one of the strongest signals yet that how businesses are dealing with climate change will affect their bottom line. And advisors should also take note that as part of the disruptive challenges facing the utility sector, on May 27, 2014, Barclay’s downgraded the entire sector based on growing competition from distributed solar power generation.**

This is the perfect time to bring in the expertise of your SRI product partners to help you develop the conversation about sustainable investing that will distinguish you from the competition and deepen the trust clients have in your relationship.