What Warren Buffett’s Annual Letter tells us about business and climate change

The FT’s Lex points out that Warren Buffett’s Annual Letter to Berkshire Hathaway Shareholders is riddled with inconsistencies on climate change.

Even as insurers have benefited from sharply raising premiums, increasing “convective” (severe) thunderstorms or hurricanes are making insurance another business facing day-to-day climate risks. Buffett in the same letter took a bow for his stake in Occidental Petroleum, one he expects to maintain “indefinitely”.

I’ve always had a huge amount of respect for Buffett, particularly the way he does business, based on a reputation for good and ethical behaviour. But I’ve also long noticed that he (and the late, great Charlie Munger) have never ‘got’ social or environmental issues.

Perhaps that’s because they don’t look at the future, just the past and the present. There are a lot of business people like them so perhaps it’s a sign that, at the moment, it still makes little sense to go ‘all in’ on sustainability if you have profits to protect. I think until regulation changes and the standards for reporting and accounting are updated (perhaps good news on that), big business will continue to do lots of contradictory things on social and environmental issues.

It’s different when you’re a startup (or an investor in startups) where the majority of the value will be created in the future. You have to look at where things are going and you’d be mad to ignore social and environmental issues.

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