Two articles caught my eye this week. First of all on Wednesday, The Times published a piece on the woes of the horticultural industry. The torrential summer rain has led to a squeeze in the peat supply chain!
Peat may be seen as cipher for the more usual hydrocarbons. Re-growth is rare and slow – about 1mm per year. Professional growers are reluctant to explore alternatives and so the 30% reduction in harvesting will lead to 10 to 15% price rises. This should be put into the context of a Natural England report two years ago that three quarters of England’s peatlands have already been damaged or degraded by excess harvesting. The share price of one of principal retailers has slumped.
The other article was forwarded to me by a colleague. It is a review of the work of Jeremy Grantham, an American hedge fund manager of note. His conclusion is that:
“The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their values. We all need to adjust our behaviour to this new environment. It would help if we did it quickly.”
The full article can be found via his investment web site at GMO LLC - Home
Jeremy’s analysis looks at 33 of the more common commodities and while oil, sugar and soybeans feature, peat does not - although it just as well could have done. The importance of this article is it’s the first I’ve seen from the investment community looking at sustainability that points out the absurdity of any long term future predicated on continuous growth.
He provides a mathematical proof to substantiate his proposition and concludes that whilst commodity prices have shown an overall decline over the last century, the current price changes represent a new departure from the long term downward trend. They are not just short term aberrations as we have witnessed as a result of previous depressions, the two World Wars and the oil crisis of the 70’s.
It is a new normal and we need a paradigm shift in investment policy to reflect the fact and we need it now. What was the definition of a Ponzi Scheme again, someone?
Jonathan Tapp is a Senior Sustainability Consultant with Capgemini UK