Check your investment portfolios. Have you got nice fat chunks of Hitachi, LG, Daikin, Samsung, and Voltas shares? Disclaimer: NordSIP does not recommend stocks. These are simply the world’s largest air conditioning manufacturers. According to major American banks, we are well on our way to hell in a handcart but can surely make a quick buck on the way! With Morgan Stanly cheerfully predicting a bonanza for air conditioning makers as we all slow-roast in a 3-degree warmer world, one can safely say that disaster capitalism is alive and well.
U.S. banks have been falling over each other in their rush to leave the UN-sponsored Net-Zero Banking Alliance (NZBA), especially now that they benefit from a climate ‘hall pass’ from Donald Trump. The NZBA works under the auspices of the Glasgow Financial Alliance for Net Zero (GFANZ), an initiative kicked off amidst a chorus of good intentions by Mark Carney and others at COP26 in 2021. Along with their counterparts in the Net Zero Asset Managers initiative (NZAM), many large US banks are breathing a sigh of relief at finally being able to drop their unconvincing pretence at a financial race-to-zero carbon. Wacky racers JP Morgan Chase, Citigroup, Wells Fargo (already well behind due to being horse-drawn), Goldman Sachs, Bank of America, and Morgan Stanley are all parked up in the pits having left the NZBA and seemingly happy to register a DNF (Did-Not-Finish) in the Race to Zero.
Some of these departing banks have used the pretext of American political pressure to drop planet-saving ‘wokery’ and get back to their proper job of making lots of money. The Trump administration has been working to eliminate any references to climate change across all areas of the private and public sector in the U.S. These large, powerful, but apparently spineless financial institutions have been only too quick to comply. However, recently released reports from Morgan Stanley, JP Morgan Chase and others provide a deeper insight into the hard pragmatism and short-termism that are also driving some of these decisions.
One such report, seen by Scientific American and the Guardian, is a March 17 document sent to Morgan Stanley clients on the subject of air conditioning stocks. In a classic case of ‘Good News / Bad News,’ Morgan Stanley points its clients to the fantastic opportunities in the air conditioning market. Get in now and benefit from a potential climate-crisis sector growth rate of 41% over the next five years! That’s the good news out of the way. The bad news is that the report reveals that Morgan Stanley considers the Paris Climate agreement to be dead as a dodo and is convinced that we are heading for 3-degree warming, replete with catastrophic heatwaves and other extreme weather events. Hence the excellent opportunity in air conditioning, which Morgan Stanley describes as ‘critical to human health and productivity, and a potent long-term growth opportunity.’
It is not clear exactly how Morgan Stanley defines ‘long-term.’ The International Energy Agency’s (IEA) latest Global Energy Review revealed a sharp rise in global electricity consumption that is partly driven by growing demand for air conditioning in what was the warmest year on record. Although renewables are helping, most of that electricity is still generated by fossil fuels, thus compounding the problem. A UNICEF report states that air conditioning already accounts for 4% of global greenhouse gas (GHG) emissions. The same report also points to the fact that air conditioning units expel heat outdoors, greatly exacerbating the problem of urban heat, with cities typically warming at twice the rate of the surrounding countryside.
Many U.S. banks are dropping their climate commitments and getting behind the ‘drill, baby, drill’ idea, financing new oil and gas projects and stepping away from low-carbon transition investing. Morgan Stanley is extolling the virtues of air conditioning as a ‘long-term’ growth opportunity while providing sector growth estimates only until 2030. Is that where we are? Five years is apparently the new ‘long term’ in this rapidly warming world.
Roll up, roll up, get the air conditioners while you can! When they are gone they are gone!
