The “reallocation of capital” that Fink writes about will not be smooth or pleasant. It will amount to a phase shift and many firms will not be able to make the leap.

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BlackRock joins the Climate War.

This post is the first in a series exploring the implications of what I call the “Climate War”.  I use the war analogy because nothing has paralleled the ability of war to mobilize humanity. I believe that within a year or two the entire world will be in the Climate War. In

many ways, the war has already started (the mobilization has not).  In this war there will be no Switzerlands.  That is, neutrality will not be possible.  Every person, community, company, and country will be in it, whether they want to or not. In this war, humanity faces an…

Small changes at the axis can cause enormous changes in layers further out.

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Is this the future of investment philosophy?

I have written extensively about the rising threat of environmental risks for investors.  Now The Wall Street Journal has caught up, calling the PG&E bankruptcy "the first climate-change bankruptcy", and positing that it won't be the last.  I wrote about PG&E back in November in a post about environmentally resilient portfolios. I believe

the PG&E bankruptcy is small potatoes compared to the systemic environmental costs that are coming. In this post, I want to introduce a new way of thinking about investments that utilizes a framework for time and change called “Pace Layering”.  This framework enables the easy visualization of…

Throughout human history, the economy and the environment have been inexorably linked.

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Photo: Brazdil and Kotyza, 1995

Hunger Stones In Central Europe, people beginning in the 1100's have marked droughts by carving warnings and dates on rocks in the Rhine, Elba, and other major rivers.  These rocks are known as “hunger stones”.  Like ghosts from the past, these stones and their warnings are being revealed as a

record European drought combined with record heat reduces water levels to all-time recorded lows.[1] Some of the hunger stones’ messages include: “If you see me, weep”; “If you will again see this stone, so you will weep, so shallow the water was in the year 1417”; “Who once saw me,…

Oil has no answer for renewable energy, just as whale oil had no answer for kerosene.

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Apocalypse Numerous. Photo Credit: ABC News.

This blog post continues my series on environmental risks and how to make portfolios environmentally resilient.  You can find my previous posts here. The Environment as the Ultimate Rhizomatic Risk® Most investors, no matter how sophisticated, have portfolios that are shot through with environmental risk.  What's worse, environmental risks frequently

make what were thought to be uncorrelated assets, correlated. I call this phenomenon Rhizomatic Risk® because the assets are connected in an unseen way, the same way the root system of a rhizome is connected underground.  You can read more about Rhizomatic Risk® here. The California Fires Besides the devastation…

The ratings agencies can, and will, act in capricious ways.

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Be careful what you wish for.

Just a quick update on two events from yesterday that relate to some of my writing on risk management: S&P downgraded $2.27 billion of outstanding Build Illinois Bonds from AA- to BBB, and; AIG reported a $0.34/share loss when the consensus estimate was for a $0.06/share gain. Build Illinois Bond Downgrade

The State of Illinois is in dire financial straights, with a BBB- credit rating.  It has issued over $2 billion in Build Illinois Bonds, which carve out sales tax revenues, and had been rated AA-.  Under S&P's new rating criteria, which caps the ratings of priority-lien tax revenue debt,…