Moneycontrol Pro Panorama | Not another COP-out, please 

Cop28

Dear Reader, 

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of. 

Way back in 2015, when the Paris pledge to combat climate change was announced, investors and the world of business and finance sat up and took notice. Here was a target that could lead to measures that could alter the future of industries and companies they invested in. This could be across sectors such as mining, metals, industrial goods, automobiles and their component-makers or even giant data centres that require energy. Most sectors could get affected to varying degrees.

But eight years later, the progress on those measures and the provision of financing to underwrite those measures are so patchy that it won’t be a wonder if this year’s COP28, being held in Dubai, does not draw much attention from investors. Maybe, when investors and citizens least expect it, an event being held in a region that ironically owes its prosperity to oil may announce progress that is both significant and tangible.

With governments dragging their feet, investors too appear to be questioning why companies should be doing more than what policies mandate. This pushback from investors against ‘woke’ policies, and even from conservative governments, has dimmed the allure for ESG funds. Recent news reports had mentioned about outflows from ESG funds and funds changing their investment objective, based on Morningstar data. While climate change remains as serious a risk for humankind, the risk to investments or investors from climate change mitigation measures appears to have receded, for now. Will COP28 change that perception? We will know soon.

My colleague Abhijit Dutta writes in today’s edition that 2023 is set to be the hottest year on record and traces developments going back to the 2015 Paris agreement. He writes, “Despite this pledge and the annual follow-up summits, our planet is careening towards climate disaster and it appears that governments are acting too slowly to avert the crisis. Ironically, the ongoing year is on track to become the hottest on record with the average global temperature inching 1.43 degrees Celsius above the pre-industrial average.” We could breach the 1.5 degrees Celsius mark in temperature increase by 2030, unless emissions fall by 43 percent. As a senior official remarked, “stop dawdling and start doing”.

But political compulsions are another thing. Major world economies such as India and the US are heading for general elections next year. China is striving to emerge from an economic slowdown and may stimulate its industrial economy to support it. Today’s Chart of the Day is from an OECD study that shows how a number of countries have cut taxes on fuel used in road transport since 2021.

Today’s FT selection is written by Pilita Clark, who has attended eight of the COP summits so far, and reflects her view of the ground reality. She sketches out, in a superb piece, what makes progress so difficult but she also raises hope by writing that a “climate change turning point is in sight”.

Some of this hope can be attributed to the articulation of the problem instead of a vague assertion of climate change. By measuring it and by calculating what needs to be done to stem it, we have targets that are also being monitored. Advancements in clean technology are helping and multi-lateral financing efforts for implementing this technology are taking place. However, much needs to be done. Developing countries lose little time in pointing to the $100 billion promised by developed countries that never came as an empty promise.

Of course, tough measures, joint efforts, financing and a lot more needs to be done. But why it’s difficult is, as Jean-Claude Juncker, a former European Commission president said, “We all know what to do, but we don’t know how to get re-elected once we have done it.”

Lastly, if you want an overview of the main issues, particularly from India’s viewpoint, here’s a Moneycontrol explainer that does a very nice job of sketching them out.

Investing insights from our research team

Hindustan Aeronautics: Strong earnings visibility and order pipeline to support stock valuation

Esaf Small Finance Bank – Any more upside beyond listing gains?

CGD sector: Why the sector deserves a relook now

Kirloskar Ferrous Industries: Capex completion, cost savings to support earnings growth

What else are we reading?

Assembly Elections 2023: Enjoy exit polls with popcorn, but wait till Dec 3 for real picture

Telangana Elections 2023: Close elections mean GHMC could decide the winner

Telangana Elections 2023: Anti-incumbency a factor but can Congress override KCR’s charisma?

COP28: 2023 is set to be the hottest on record, the time for action on global warming is now

We already know what will happen at COP28

BIS paper says significant tightening could lie ahead even if central banks stop raising policy rates

The new charter that the Railways must have

Start-up Street: Bumper exits in 2023 provide cheer for VC investors 

How fast can Big Tech grow? (republished from the FT)

One Year Of ChatGPT: Five domains disrupted by generative AI

The Charlie Munger principles to invest and live by

Airlines are watching one number, the return to normal metric

Personal Finance

How to accumulate gold for your children's wedding?

Technical Picks: Mahindra and Mahindra, LIC, TCS, Coriander and PVR Inox (These are published every trading day before markets open and can be read on the app)

Ravi AnanthanarayananMoneycontrol Pro