As Warren Buffett spelled out to his investors over the weekend, the billionaire's attitude toward climate change is not really laissez-faire, but rather one of sang-froid. He can't be accused of doing nothing. But at the same time, his aplomb can seem a little too chill.
In his annual letter to shareholders of Berkshire Hathaway, Buffett, a master investor with an aversion to risk, had this to say about addressing global warming: "Inaction now is foolhardy.
"Call this Noah's Law. If an ark may be essential for survival, begin building it today, no matter how cloudless the skies appear."
But his letter falls short of endorsing the overwhelming scientific consensus that climate change is already a major problem and that the world should quickly bring carbon dioxide emissions to zero, leaving most fossil fuel reserves in the ground.
"It seems highly likely to me that climate change poses a major problem for the planet," he wrote. "I say 'highly likely' rather than 'certain' because I have no scientific aptitude and remember well the dire predictions of most 'experts' about Y2K. It would be foolish, however, for me or anyone to demand 100% proof of huge forthcoming damage to the world if that outcome seemed at all possible and if prompt action had even a small chance of thwarting the danger."
As a cold-blooded investor, Buffett seems driven simply to make money the way a cat catches mice, whether it is black or white.
His railroad is making money even while the market for coal—one of the main commodities it hauls—is collapsing. He is one of the biggest suppliers of renewable energy in the nation, even as one of his utility companies fights to reverse net metering policies that encourage people to supply their own solar while staying connected to the grid.
And Buffett assures shareholders who are asking for more complete disclosure of the climate risks facing Berkshire Hathaway that its insurance business, for example, can cope with climate damages by raising premiums. That means he sees insurance becoming more profitable even as the seas rise and as drought, wildfire, famine and pestilence spread.
"As a citizen, you may understandably find climate change keeping you up nights," he writes. "As a homeowner in a low-lying area, you may wish to consider moving. But when you are thinking only as a shareholder of a major insurer, climate change should not be on your list of worries."
This "what, me worry?" analysis extends equally to his companies like insurance or railroads that face policy or technology risks related to climate change, and to his companies that face non-climate risks, like newspapers or retailers.
"Let me mention just a few examples," he writes. "To begin with an obvious threat, BNSF, along with other railroads, is certain to lose significant coal volume over the next decade. At some point in the future—though not, in my view, for a long time—GEICO's premium volume may shrink because of driverless cars. This development could hurt our auto dealerships as well. Circulation of our print newspapers will continue to fall, a certainty we allowed for when purchasing them. To date, renewables have helped our utility operation but that could change, particularly if storage capabilities for electricity materially improve. Online retailing threatens the business model of our retailers and certain of our consumer brands. These potentialities are just a few of the negative possibilities facing us—but even the most casual follower of business news has long been aware of them."
Buffett, though, is not a stubborn advocate of business as usual.
One holding, Berkshire Hathaway Energy ("BHE"), "has invested $16 billion in renewables and now owns 7% of the country's wind generation and 6% of its solar generation. Indeed, the 4,423 megawatts of wind generation owned and operated by our regulated utilities is six times the generation of the runner-up utility.
"We're not done," he wrote. "Last year, BHE made major commitments to the future development of renewables in support of the Paris Climate Change Conference. Our fulfilling those promises will make great sense, both for the environment and for Berkshire's economics."