Veris Guest Blog: By Timothy P. Dunn, CFA

Pacific Gas & Electric (PG&E) Corporation, California’s largest investor-owned utility, which serves roughly 5.2 million households in central and northern California, filed for bankruptcy and is facing an estimated $30 billion of potential liabilities stemming from its equipment’s role in the historic 2017 and 2018 wildfires.

PG&E’s bankruptcy is indicative of how our changing climate presents real economic and financial risks for companies and investors. Prior to the wildfires that burned over 240,000 acres, PG&E included warnings that weather-related disasters could weigh on or disrupt its operations in its regulatory filings. In a statement, the company noted that the state’s most recent climate assessment “found the average area burned statewide would increase 77 percent if greenhouse gas emissions continue to rise,” and that “prolonged drought and higher temperatures will triple the frequency of wildfires.” Further, PG&E performed extensive water risk assessments, water management was integrated into its business strategy, and the company spent hundreds of millions of dollars every year in fire prevention, including pruning or removing thousands of trees. This awareness and action, though necessary and important, was not enough.

In an environment that continues to be challenged by climate change, PG&E’s situation could be a harbinger of the economic toll of spatially-related climate risk. “California is now a riskier place to do business,” said the Environmental Defense Fund’s Michael Colvin, a former adviser to the California Public Utilities Commission. “This is a statewide problem.”

The bankruptcy not only points out the danger that warming poses for many companies, it also underscores how difficult it is for investors to analyze risks linked to climate change compared to conventional business challenges. It is becoming increasingly clear that economic damage from climate change will affect a variety of sectors, and even companies regarded as forward-thinking might not be able to directly prepare for all the externalities associated with this systemic global problem.

Source: Seeking Alpha

Terra Alpha first purchased PG&E in 2015 based on the fact that it was a leading US regulated power provider with solid fundamentals and a strong record of shifting to lower carbon power generation. Nearly 80% of the electricity that PG&E delivered in 2017 was a combination of renewable and GHG free. Accordingly, PG&E was well-positioned to benefit from increased regulatory action in California aimed at furthering the shift toward renewable energy.

We sold our shares of PG&E in mid-October of 2017, after PG&E’s equipment was linked to the start of several wildfires. We had determined that the risk profile for the stock had dramatically worsened and it was no longer prudent to own. We felt that its exposure to such enormous liability, coupled with CEO Geisha Williams’ concerns about the growing financial risk for PG&E from forest fires, intensified by a changing climate, and California’s unique inverse condemnation laws, represented material undiscounted financial risk.

While PG&E may represent the first climate change bankruptcy it likely won’t be the last. Investors need to learn how to account for long-tail climate risk in their portfolios.

Timothy P. Dunn, CFA, is Founder, Managing Member and Chief Investment Officer of Terra Alpha Investments, LLC, a global equities asset manager.

*The information presented by Mr. Dunn is not an endorsement of Terra Alpha Investments by Veris Wealth Partners.

By Helene Marsh, Veris Client

Climate change can be an overwhelming topic for any individual or community. So how can anyone make a meaningful difference?

That’s the question my friend, Sarah Loughran, and I had been asking ourselves for several years. Today, supported by a concerted community effort, we’ve succeeded in helping eight Marin County municipalities reduce greenhouse emissions by purchasing 100% renewable energy for their government facilities.

At the same time, we’ve helped raise awareness about how individuals can support the renewable energy market in their community by purchasing energy from renewable providers for just a few dollars more a month.

As an impact investing client of Veris, I wanted to share my experience to hopefully inspire others to think boldly and creatively in addressing climate change.

Creating Impact
Sarah and I met while serving on the Marin County Civil Grand Jury in 2013. Fast forward four years, and we were together again taking the signature Master Class of Environmental Forum of Marin, a local leader in training environmental advocates for the last 45 years.

We soon learned that the passage of climate change legislation in California requires communities to meet specific greenhouse gas emission reductions over the next 30 years. That law requires each community to produce a climate action plan that details how these goals will be achieved.

When we looked at how Marin County municipalities were meeting the intent of the law, we were surprised by what we found: Each of the climate action plans, for the 12 Marin municipalities, included residents and municipalities purchasing 100% renewable electricity as options for reducing greenhouse gases. Only 4 municipalities made the switch to clean energy for their own operations.

With the support of 19 environmental groups and members of the community, Sarah and I launched a campaign to change this in 2017.

Working together, we convinced eight of the 12 Marin jurisdictions – Corte Madera, Larkspur, Novato, San Rafael, Ross, Mill Valley, Tiburon and the County of Marin – to make the switch to using 100% renewable electricity for government buildings, facilities and streetlights.

The four other Marin jurisdictions – Fairfax, Belvedere, San Anselmo and Sausalito – had already made the switch prior to the start of our campaign.

The upshot: Marin County leads the way in California and across the country in purchasing 100% renewable power for its municipal accounts.

The whole process took only ten months!

We met with every town or city manager and many council members to understand the challenges they faced. We wrote reports and talking points to make the case for 100% renewable energy. We gathered supporters in each jurisdiction to attend public hearings. We kept jurisdictions informed of progress across the country and sent follow-up correspondence. In total, we attended 17 council meetings.

The positive results speak volumes about the effectiveness of citizen power and democracy.

How You Can Buy 100% Renewable Energy
So how did Marin County source the renewable energy?

Through the local “Community Choice Aggregation,” MCE. The non-profit company is one of many Bay Area companies providing clean energy that can be purchased by households, businesses and government agencies. (See below for a list.)

While it’s true that 100% renewable energy is more expensive than non-renewable energy, the difference is minimal. On a $200 power bill, 100% renewable electricity is less than $10 a month more.

Many of the Community Choice Aggregation companies listed below provide comparisons of buying renewable vs. traditional power sources.

MCE: Marin, Napa, Solano and Contra Costa Counties. The 100% renewable option is called Deep Green.

Clean Power SF: San Francisco. The 100% renewable option is called Super Green. Peninsula Clean Energy: San Mateo County. The 100% renewable option is called Eco100.

Sonoma Clean Power: Sonoma and Mendocino Counties. The 100% renewable option is called Evergreen.

Silicon Valley Clean Energy: Santa Clara County. The 100% renewable option is called Green Prime.

East Bay Community Energy: Alameda County. The 100% renewable option is called Renewable 100.

Sarah and I are continuing to advocate for the purchase of clean energy to reduce our carbon footprint. Our work and experience demonstrate what can be done by those committed to having impact in their communities.

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About Helene Marsh
Helene Marsh is a clean-energy advocate who lives in Tiburon, California. In addition to co-leading the effort to transition Marin County municipalities to 100% clean energy in government buildings, Helene built one of the first LEED certified homes in the country and sells power to the grid from solar panels on her house. She is also an MCE Deep Green customer and drives an all-electric vehicle to further reduce her carbon footprint. Helene earned a Bachelor’s degree in Engineering and Visual Arts from Harvard University and a Master’s degree in Environmental Science & Management from University of California, Santa Barbara.