ESG Investing

Mark Campanale: Championing Climate Change Mitigation through Investing

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As founder of financial think tank Carbon Tracker Initiative and a lifelong champion of climate solutions through capital, Mark Campanale is uniquely qualified to discuss the current state of climate change as outlined in the November 2021 UN climate summit known as COP26. Here, he sits down with Glenmede to share his views on COP26 and addressing climate change through investing.

A History of Tracking Climate Change

Campanale boasts 25 years of experience in sustainable financial markets and is recognized as the creator of the “unburnable carbon” thesis, detailed in a 2011 report highlighting the financial risk of stranded or unused oil and gas assets and arguing for the decarbonization of investments.

He is also the founder and director of Planet Tracker, named nonprofit of the year in 2021 by Environmental Finance for offering “break-through analytics that reveal the role of capital markets in the degradation of our ecosystem and show the opportunities of transitioning to a zero-carbon, nature positive economy.”

Similarly, Campanale’s Carbon Tracker Initiative analyzes “the impact of technology change on fossil fuel producers.” Carbon Tracker models future oil and gas projects planned by companies for insights into each one’s break-even prices—how much it costs to get a barrel of oil out for a particular project. Carbon Tracker then determines which companies are low-cost producers versus high-cost producers. In turn, the organization provides investors with that information, as well as analysis about whether those companies are climate aligned.

 

Responding to COP26

Campanale joined Glenmede to discuss the COP26 climate summit and his recommendations for those looking to impact the climate with their investments. He begins with figures presented at COP26: They show current emissions at 41 gigatons of CO2, with approximately 300 gigatons remaining in the “carbon budget.” That leaves the planet with only seven years to achieve a 66% chance to keep warming to 1.5⁰C. In short, he calls these levels of emissions “astonishing.”

He also puts this technical data into perspective: “We have to think of this in terms of human history. We are moving from a stable period for the last 10,000 to 20,000 years to a very unstable period through an exceptionally short period of time.” As he points out, “In last 50 years, we have burned enough coal, oil, and gas to change the CO2 content of the outer atmosphere.”

Campanale highlights the consequences of this CO2 buildup, including physical ones such as the melting of the ice caps as well as social consequences like the mass migration of “climate refugees” due to drought.

“In last 50 years, we have burned enough coal, oil, and gas to change the CO2 content of the outer atmosphere.”

Recommended Climate Risk Reviews

In Campanale’s view, foundations and endowments should be undertaking “climate risk reviews” to determine exactly what kinds of climate risks they can expect in the next 15 years. He also puts forward a few questions investors should be asking of portfolio managers:

  • Are you exercising proxy votes in line with climate risks?
  • Are there arguments to divest from certain companies that contribute to the problem?
  • Is your mission aligned with your investments?
  • Do we have the right metrics to measure climate risk?

Climate Risk Creates Opportunities

Ultimately, Campanale cites the shift toward more sustainable investing as an opportunity for entrepreneurs to come up with novel solutions. “Tesla as an example of an opportunity taken by an entrepreneur that has created a world-leading, groundbreaking company. How many more are out there that can impact the future?” Certainly, there’s no shortage of examples, including advancements in nuclear fusion energy to high-tech greenhouses. In addressing what some may see as an impossible problem, Campanale sees hope.

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