Early on in the year I normally do a quick update on our journey into natural capital investment which started about five years ago. Background on this HERE and last year's update HERE.
To keep this short, a lot has happened in five years but the main change has been a global pendulum shift to the right and the establishment of several anarcho-capitalist states, including to a large degree the US (although Trumponomics is an odd mix of anarcho-capitalism with tarriffs) which is currently down sizing it's state (via Musk's DOGE) and transferring more wealth and power to the billionaire oligarchy.
This is basically pretty bad news for liberals and lefties but also not good news for the Green Transition and Natural Capitalism (right wing environmentalism). The US is not a real billionaire oligarchy (like Russia) because there is still a relative spread of wealth in the US but it's the closest the US has come in modern times to being one which means the only real hope for nature at the moment is if one billionaire is a birder and decides to blow the lot of nature reserves. Considering these billionaires own the equivalent wealth of millions of poeple, one billionaire could out perform the RSPB or Birdlife International or the World Wildlife Fund in a stroke. Fingers crossed someone steps up to the plate.
In the abscence of a billionaire nature mogul it's not looking great out there and from my limited perspective I can't see many investment opportunities. As part as the shift away from neoliberalism and towards right wing anarcho-capitlaist populism there has been a massive retreat from Environmental Social Governance (ESG aka ethical capitalism) in both compliance and a retreat in management funds and ETFs investing in ESG companies. Some ESG funds have adapted by including arms manufactering into their portfolios on the basis of fighting Putin is ethical- a novel definition of the word ethics made fashionable in the Palestinian conflict. Carbon prices are on the floor on for instance the Californian Carbon Credit exchange (holding up better in Europe) and the voluntary carbon market is just a joke and being exploited by corporations to offset carbon at a few quid a tonne (carbon needs to be about £150 a tonne to have any meaningful impact on markets). Even the UN Biodiveristy COP has resorted to a global nature fund that basically corporations invest in, then that money is invested in global markets, the corporations get part of that profit and a small fraction remaining then goes on nature. Just sounds a bit flawed as the fund could invest in destroying nature and making profit from that.
Here in the UK what has happened to the laudable proposed changes proposed in the post EU-exit, Agricultural and Environmental Bills? Seems like a lot of the more ambitious objectives have been rolled back and only minimal progress made on the Nature Recovery Network, Sustainabale Farming Initiative and Biodiversity Net Gain framework is pretty flawed too. The latest on the Beddington Farmlands project is that Valencia are trying to use BNG to water down conservation objectives in their new planning application. It's just exhausting what is going on there and simply highlights the fundamental flaws of corporate led nature conservation. Will update soon following the embargo on some strictly confidential developments.
I've been following the Green Finance Institute over the last few years and after a initial period of optimism and even growth in many areas, it now seems that most Green Finance ideas are turning into fantasies with the Task Force for Nature Related Disclosures being their lead initiative for biodiversity which all seems a bit fuzzy to me (some of their green transport initiatives seems less fanciful).
So basically, I would certainly welcome any feedback from anyone who knows more about this than I do but as a private natural capital investor I can't see any opportunities at the moment apart from maybe buying carbon credits when they are very cheap? I think any investment is tricky at the moment- a global recession is well overdue and could get triggered by this Trump-Musk-Putin alliance and a global trade war is literally kicking off today, the buy-to-let market is barely profitable, US stock indices are at all time high but looks like are beginning to fall (the Trump bump is already over), crypto looks like its beginning to fall after all time highs too despite the announcement of a crypto reserve by Trump. Who knows we could be on the verge of a global meltdown? One source of optimism for me is a global meltdown that initiatives a global AI reboot that integrates natural capital indices into it's algorithm.
As I meant to keep this short, I'll wrap this up. As Charlie Munger said, the main thing about investing is not to do anything stupid. I think that's true and seems like doing anything at the moment is pretty stupid so my investment advice to myself this year is do nothing (apart from keeping the projects ticking over and growing slowly HERE). Maybe save any spare cash and wait for an opportunity to appear (interest rates are still high so getting 4-5% in an ISA will probably outcompete US major indices and shift to Treasury Bonds if interest rates keep coming down) or blow it all on birding trips or pay some of the mortgage off if the interest rates don't come down. I like the sound of option two most!
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