😎 With airports breaking all kinds of traffic records, peak summer vacation time has definitely arrived.

In case you needed more reason to take some time off: A study found that people who worked more than 55 hours per week had a 35% higher risk of stroke and a 17% higher risk of death from heart disease than people who worked 35-40 hours a week.

“Rest and recovery is important to your physical and mental health, and that includes short breaks during regular days and totally disconnecting by taking a vacation from time to time,” said Dr. George Yiachos, who specializes in cardiovascular disease.

Today, we'll break down William Green’s latest interview, which explores an economic trend with profound implications for your financial well-being: how climate change will affect you as an investor.

All that, and more, in just 5 minutes to read.

— Matthew

Quote of the Day

"One day, you will realize that happiness is not what your house looks like, but how you love the people within its walls."

— Brianna Wiest

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What Else We’re Into

📺 WATCH: Jezz Bezos: ‘Nerd of the Amazon,’ from 60 Minutes archive

🎧 LISTEN: The Starbucks story: Building an iconic brand with Clay Finck

📖 READ: Finding ideas before others by Ian Cassel

Trivia

Investing in the Era of Climate Change

A warming world

For about 300 years, we’ve been constructing a globally market-based economy that’s humming. The average human is about 50 times better off than humans before the Industrial Revolution. We can access food from across the globe, fly virtually anywhere, live in comfortable homes, and enjoy once-unimaginable pleasures. 

But there’s a major catch, according to Bruce Usher, an entrepreneur, investor, and Columbia Business School professor who wrote Investing in the Era of Climate Change.

The global transition to a low-carbon economy is poised to be the most substantial economic transformation since the Industrial Revolution, requiring an estimated $150 to $200 trillion in investments over the next three decades.

“The catch is that the global economy emits massive amounts of greenhouse gasses,” Usher said on a recent episode of Richer, Wiser, Happier. “And we know very well at this point that that is truly unsustainable. We will keep doing that, and that will be the end of the global economy and more.

“We need to reduce emissions, not just a little— a lot. We actually need to reduce emissions essentially to zero. This is going to require a massive, literally rebuilding of the economy. I say rebuilding: It’s not just a software…it will require trillions of dollars of investment.”

Amid hubbub around artificial intelligence investments, Usher believes there’s another “once-in-a-lifetime” investment opportunity created by the economy's transition to a low-carbon future. He also explains how to protect yourself financially as environmental risks intensify and how to try to profit as trillions of dollars flow into innovative climate change solutions that will change the world—from electric vehicles to solar energy.

Enormous opportunities await

The massive shift isn’t just coming in decades — it’s happening now. It’s largely driven by the urgent need to reduce greenhouse gas emissions to near zero, necessitating a complete overhaul of our energy production, transportation, and agricultural systems. 

The increasing frequency and severity of extreme weather events — think wildfires, major heat waves, flooding, hurricanes, and droughts — highlight this transition's urgency, while technological advancements in renewable energy and electric vehicles are making it more feasible.

Usher notes that investors can capitalize on the transition by considering environmental factors in their investment decisions. He has no hot stock picks or must-buy ETFs because investing is never a sure bet. (He does mention it’s worth considering investing in funds and ETFs that reduce exposure to climate risks.)

What Usher does know is that savvy investors who invest with decade-plus time horizons are already assessing sustainability and similar factors when evaluating businesses. 

“You’re going to look at the quality of the management, you’re going to look at competition, you’re going to look at, you know, growth trends, all that stuff,” Usher says. “In addition, you should also consider what environmental factors are going to affect that asset value.”

That process applies when investing in renewable energy projects, climate-focused equity funds, and green bonds. Major corporations and high-profile investors are already leading the way, with big companies like Apple and Microsoft integrating sustainability into their business strategies and billionaires like Bill Gates and Jeff Bezos investing billions in climate solutions. 

Usher also says you don’t have to do a full 180: Berkshire Hathaway, for instance, invests in traditional energy companies like Chevron — our current economy needs these companies — while keeping an eye on the future. Berkshire invests in sustainable energy sources such as wind and solar. 

The world of risk

Though the opportunities are enormous, Usher argues that transitioning to a greener economy also presents risks. 

Some existing businesses may struggle to adapt or become obsolete. Many companies with innovative technologies will run out of money. There's also uncertainty in developing markets, where investments in low-carbon solutions are currently lacking. Plus, the required scale and speed of change may pose challenges for investors, as is the case with AI. 

For property investors, climate change introduces new considerations. Increasing physical risks to properties from flooding and wildfires necessitate adaptive measures and careful consideration of long-term climate projections when making investment decisions. 

Usher’s additional suggestions include:

Understand specific regional risks: He cites examples like flooding risks in Florida and wildfire risks in California, suggesting that investors should be aware of location-specific climate threats.

Consider long-term projections: Usher mentions a Zillow estimate that by 2050, about 800,000 U.S. homes worth a combined $451 billion could be at risk of flood inundation. He says it’s probably a good idea to consider long-term climate projections when investing in property, especially if you plan to hold it for over a decade. 

Adapt and innovate: While Usher doesn't downplay the seriousness of climate risks, he emphasizes human adaptability and innovation. Other measures for property investors include flood-proofing, fire-resistant construction, or ensuring access to high-level cooling systems in areas prone to extreme heat.

Final thoughts

Usher isn’t doom-and-gloom about climate change. He doesn’t see it with rose-colored glasses, either. He calls himself a realist. 

Despite the risks, Usher remains hopeful about humanity's ability to avoid catastrophic climate change through innovation and proper investment. While we already possess the necessary technology to address climate change, what's needed now is the capital to scale the solutions. He says there is still plenty of time to invest in solutions. But the time to act is now, and the window is here for outsized returns. 

Usher concludes his book by pointing out the challenges of mobilizing and investing the capital needed. But he ends on a hopeful note that his work will inspire individual and institutional investors to recognize the impending changes and take action — a proactive approach, he argues, that will benefit the investors themselves and contribute to the greater good of society and the planet.

Dive deeper

For more, listen to William Green’s interview here with Bruce Usher or buy his book.

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