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Economy and Climate Change

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Wednesday, April 14, 2021

The past year has shown us just how quickly things can go off the rails if a crisis strikes. Climate change is no longer something that can be ignored. It doesn’t matter whether you believe the science to be accurate or argue about pointy heads and conspiracy theories — the law is the law and as we move forward into the next decade it’s going to be a hot point.

As with every global shift or change, there is the destruction of the old and invention and adoption of the new. Climate change is having a similar effect. Humans are flexible by nature and we will adapt both in lifestyle and economic terms.

Companies exist to make money and they provide employment and livelihoods for their workers. From 2016 to 2018 sustainable or green investments rose 34 percent in just two years. In 2018 $30 trillion of green initiative investment was held in the five major markets. Recently a group of the world’s largest investors, with more than US$2 trillion in assets under management, initiated the Net-Zero Asset Owner Alliance at the recent UN Climate Summit. They have all committed to reaching carbon-neutral portfolios by 2050.

If you are looking into the future, it may be for investment opportunities, or just to see how your business or way of making money may shift in the coming years. No matter the reason, it needs to be said that there are various scenarios that may play out.

If the planet were to experience a 2°C increase in temperature, it has been projected that the United States would lose about 0.5 percent of GDP. Rising mortality, as well as changes in labor supply, energy demand, and agricultural production all affect the outcome. The fact remains that disruption is already on the cards and we have to be prepared for what is on the horizon. If the United States were to lose as much as 5 percent GDP that loss would be roughly equivalent to $1 trillion.

A vast majority of Americans are behind the change from fossil fuels to alternative energy sources. Over the last 15 years, the percentage of Americans who believe that the government should offer tax breaks to utilities in exchange for making more electricity from water, wind, and solar power has held steady at 83 percent.

We will see more and more consumer incentives that will reward people for reducing their carbon footprint. If you are a business owner or manufacturer you’ll want to keep up with any tax incentives from increasing the energy efficiency of any products you make.

Climate change is a hot topic and it isn’t going away. The sooner we become a part of the solution the sooner the problem will disappear. In the words of the late conservationist, Lawrence Anthony, “The debate over climate change will rage on, but I have yet to hear a convincing argument to not take care of the environment.”




Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Lawrenceville, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 800-367-3000 Visit our website: www.davidlerner.com

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