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Climate Change: A Potential Valuable Investment Opportunity for the Next 100 Years


Living in a World of Misinformation

The recent federal election in Canada was dubbed as "The Climate Election" with all parties addressing the issues and concerns that Canadians have for the future. This brought the issue to the forefront of debate among the political leaders but also brought it into every social media account as well. We live in a world of misinformation and what is scary about this is that social media platforms can perpetuate this as the algorithms will continue to send you information which supports past "likes" "shares" or even just interests.

In seeing all of the posts come across my feeds on both sides of the issues I decided that I wanted to dive deeper into the science and see if I could get closer to the root of the issues at hand. To become more educated on the subject I downloaded two reports from the IPCC (Intergovernmental Panel on Climate Change). This organization was formed by the UN to provide the world with a balanced scientific view on climate change.

The two reports I reviewed were the "AR5 Report: The Physical Science Basis" and the "Global Warming of 1.5 C" report. My goal was to try and learn some real facts about the issue so I could speak more intelligently on the subject. Admittedly, these reports are not easy reads and a lot of the technicalities were over my head, being that I am not a scientist. But out the readings I was able to solidify my own beliefs on the subject matter. In full disclosure, these are my own beliefs and I respect that not everyone shares them. I am always open for respectful debate.

Here are my conclusions from the reports:

Climate change is real and is happening, the evidence is undisputable around the world (I have seen it firsthand in Jakarta, Indonesia which is sinking into the ocean)

Climate change is proven to be a naturally occurring phenomena throughout the Earth's history but the current rate of change is faster than natural change and is increasing which could have catastrophic effects for people in time

People are not the only contributing factor to climate change, some are natural, but our behavior and habits are significant. This will only continue as the population grows and along with it the demand for energy

Scientists are not necessarily in agreement about exactly what impacts climate change will have over the next 80 years, but the vast majority are in agreement about the trendline which is showing rising surface temperatures and the impacts that will have

Wealthy people in the world will likely be fine in the next 80 years because they have the resources to move away from impacted areas or the resources to adapt their environment to protect them from it

People who live in areas where resources and money are scarce will see significant negative impacts, especially those who live close to shorelines and depend on the sea for protein sources (1/8th of the world lives within 100 km of the shoreline)

As a country, Canada produces a small amount of carbon emission compared to many other countries, however, per capita Canadians are one of the highest contributors according to The conference board of Canada

The solution does NOT include grinding the Canadian economy to a halt and our energy industry which I believe requires better support

Investment Opportunity of the Generation

I have many more beliefs and opinions on this matter but what I really want to talk about is why I believe this is the greatest investment opportunity in a generation. I mentioned that the solution to solving climate change is not to stop using fossil fuels immediately and it certainly does not involve grinding our energy industry to a halt. In my opinion we should be doing the exact opposite.

The fact the remains that the world economy still runs on oil and likely will for some time. Removing the political boundaries, which is no small task admittedly, the infrastructure projects which could be built including pipelines could represent a great investment opportunity. In the absence of our energy production some countries around the world may continue to or even revert back to using dirtier energy sources including coal when they could be using cleaner natural gas produced in Canada.

But we shouldn't stop there. If we are going to live with climate change and/or have any hope of limiting or reversing the impacts, then it is going to take incredible innovation in technology and processes. This is not just limited to industries like transportation (car emissions make up just 14% of greenhouse gasses going into the atmosphere) but also other areas including agriculture, food production, energy production (25% of greenhouse emissions), manufacturing, building materials and many more.

Competitive Nature of Capitalism

There are many people out there who look at the future and are disappointed and maybe even depressed over the lack of progress we have taken. I am optimistic and hopeful. People are capable of great things and the competitive nature of capitalism will lead the way forward. Today there are highly innovative companies and very smart people working on solutions to these problems and it is only a matter of time before their creativity catches up to the task at hand.

Canadian companies could be well positioned to be leaders in this category and lead the world. Our society and systems can support this level of innovation and we are home to some of the most talented people in the world with an entrepreneurial mindset. Currently I believe the story is a bit early for most investors but it is our job to provide the environment that can lead to the success of these companies and be ready to support with the capital that will be needed. In time, your reward could be the potential returns which come from participating in what I believe to be a successful investment opportunity for the next 100 years.

- Grant White, CIM, CFP

Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with Industrial Alliance Securities Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.

This information has been prepared by Grant White who is a Portfolio Manager for Industrial Alliance Securities Inc. (iA Securities) and does not necessarily reflect the opinion of iA Securities. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered.


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