Week 45: Are you ready for the next pandemic?

In this issue: ▸ Life in the pandemic ▸ A world of viruses ▸ The next pandemic ▸ From global warming to human health ▸ Impact investment without the impact ▸ Top 60 CO2 emitters in Sweden

Dear all,

I hope everyone is well and safe. This week is about pandemics and the future of health.

It’s also about impact investments with no impact, and about sixty Swedish companies who emit a lot.

Life in the pandemic

Shutdowns, restrictions, isolation, quarantines, taking calls in a closet because all family members are home, eating breakfast for lunch, late lunch for dinner, late evenings, boring calls, occasional therapy conversation with a friend in the same situation.

You wake up asking when will this stop, when we will have a vaccine?

Dull faces in the queue in a local shop, careful not to come too close to someone who is just as dull as yourself.  

You get the picture. In fact, we are all in the picture.  

The world of pandemics is heavy to carry even for the most patient and resilient people. It sort of takes the edge off everyday life, step by step.

Silently, without too much noise, the virus creeps into the mental fabrics of people and societies. We get numb, tired, alienated. We need our context back, whatever that context is.

It will take time to get back to normal. Or should we, despite how bad it sounds, see this as a new normal?

A world of viruses

Planet Earth is (we sometimes forget it) a living organism continuously looking for balance. When we alter or damage, as we do, that systemic balance, we create systemic imbalances.

In this article you can explore what it could mean, in terms of systemic imbalances and what is next to come.

Viruses have been on the planet for millions of years, much longer than Homo sapiens. Not quite technically “alive”, a virus is a strand of genetic code enclosed in a protein sheath and needs a living host to reproduce.

We know about only a tiny fraction of the viruses in the world, although the work of finding them has sped up recently with the advent of genetic sequencing.

There are about 1.6 million viruses on the planet in mammals and birds, of which about 700,000 could have the potential to infect humans. But of these, only about 250 have been identified in humans.

The rest are still out there — they just haven’t made the leap.

The next pandemic

Zoonotic viruses are responsible for a long list of illnesses: HIV, Ebola, Sars, Zika and swine flu, just to name a few. And more are emerging all the time. Each year between two and five new zoonotic viruses are discovered.

This year alone has seen several zoonotic outbreaks in addition to Covid-19. There was an Ebola surge in the Democratic Republic of Congo — where the disease has claimed thousands of lives — and a spike in Lassa fever cases in Nigeria. Over the past three decades, outbreaks of zoonotic disease have increased.

The diseases don’t emerge from just anywhere. Often they come from rainforest edges and places of great diversity, where humans and animal species are mingling. These “hotspots”, where diseases are more likely to spill over from animals to humans, are closely linked to environmental change such as deforestation.

From global warming…

For a more scientific angle on this topic, I suggest you read this very interesting research which attempts to explain interconnections on a systemic level. Among other things, it provides a sober description of the well-known story of global warming:

Human activity is changing the climate by changing the chemical balance in the air. Certain gases in the atmosphere, called ‘greenhouse gases,’ absorb outgoing long wave radiation and re-emit back to the surface heat that would otherwise escape to space. The atmospheric concentrations of several greenhouse gases emitted by human activities, including carbon dioxide and methane, are increasing dramatically.

Because these gases are causing the atmosphere to recycle heat and hold in more warmth, the average temperature at the surface of the planet is going up. The rate of increase has accelerated in the last 50  years, and significant further increases are expected in the next century and beyond.

The global average surface temperature has increased over the twentieth century by about 0.6°C, and is projected to rise by an additional 1.4–5.8°C, over the twenty-first century, depending on future emissions of greenhouse gases.

… to human health

A question that naturally arise is what effect will this have on human health, specifically on infectious diseases?

There is solid scientific evidence that increasing temperatures can lead to increased transmission of disease, through direct action on infectious agents (e.g. malarial parasites develop in the mosquito more rapidly in higher temperatures), effects on vectors (e.g. greater geographic range and longer active season for mosquitoes, ticks, etc.), or changes in host behaviour (e.g. shifts in migratory bird patterns). And birds move around without borders…

It looks more and more like the time of pandemics, unfortunately, is here to stay.

Our systemic weakness of altering systemic balances so they become imbalances will lead to dynamic challenges that the financial industry will need to address. There is no question about it.

Instead, the question is how, given it is so systemic? Where do we start? What is possible?

Perhaps finding a way to invest in the future solutions is one of the things we actually can do.

This week, I spent some time talking to Pierin Menzli, a colleague of mine, about the Future Health fund that he manages. 

Impact investment without the impact

We have addressed “green-washing” several times before, but this article goes even further and gives an interesting perspective on “impact”.

“Impact” investment only has real meaning if it means funding activities that would not otherwise happen. Otherwise, where’s the impact? You are simply dressing up “business as usual” investments that would be made anyway.

These do not so much help the planet as provide a decent income to the rubber-stamp merchants and those investment firms charging high fees for running ethical portfolios.

Maybe we need to use “impact” a bit more carefully in our industry, and maybe a more honest way would be to call it opportunities.

Top 60 CO2 emitters in Sweden

And last but not least. In my interview with Robin Rouger, he described his “forward-looking engine” giving us a good understanding of what temperature path a listed company is on.

Looking ahead, we need to frame the topic right. The question is not about the challenges related the emissions embedded in companies’ business models and systems. The question is how we can manage the transition we need to meet the climate targets set in Paris.

The investment community is struggling to find a way to address these challenges. But the starting point must be to look at the facts we have in front of us right now, and to develop investment solutions to tackle this.

In other words: we need solutions that take out emissions, not only solutions that reallocate them on the secondary market.  

To make this challenge more tangible and make it clear what we are dealing with, below you find the top 60 CO2 emitters in Sweden (only listed equities), scope 1, 2 and 3. The accuracy of the scope 3 data will be improved over time, but the real question right now is: How can we invest us out of this and create a more sustainable tomorrow? It’s much, much easier said than done.

And that’s it for now. Have a great week!

Best regards, Sasja