Thesis answer requested: Rio Tinto has sold its coal mine to EMR Capital and PT Adaro Energy, an Indonesian listed coal Co. Rio is now ex-coal. Reasonable people can disagree about the stranded asset, business and financial risks of coal and this impact on Rio’s cost of capital.
But, from the point of view of the Planet, its inhabitants and the climate this has made no meaningful difference. Ownership has changed. How the mine will be run in the future has potentially changed. Certain reasonable people could argue it has made the situation from that point of view, worse. Discuss. 100 marks available. CEO Jacques has said that Rio is not exiting coal because of environmental concerns, but because it had better investment opportunities in iron ore, copper, bauxite and aluminium. I read both the gofossilfree movement on the arguments for divestment + Cary Krosinsky on the cons of divesting. (see links below) I advocate listening to the arguments, engaging in thoughtful disagreements, examining evidence and then making up your mind. Ray Dalio thinks we are losing the art of thoughtful disagreement. Meghan Phelps suggests there is hope.
Cary Krosinsky on the Pros/Cons of Divestment https://www.linkedin.com/pulse/lets-honest-divestment-isnt-answer-cary-krosinsky/
Good data based research by Carbon Tracker: https://www.carbontracker.org/
And by Vaclav Smil can be seen here: http://vaclavsmil.com/publications/ Bill Gates review of Vaclav Smil’s book Energy and Civilization (good summary_ https://www.gatesnotes.com/Books/Energy-and-Civilization
Movement advocating fossil free https://gofossilfree.org/divestment/what-is-fossil-fuel-divestment/
Tom Sanzillo FT Op-Ed advocating for divestment. https://www.ft.com/content/b5346cac-1e45-11e8-a748-5da7d696ccab
Stephen Beer response to Tom Sanzillo https://www.ft.com/content/ce1899ce-25fb-11e8-b27e-cc62a39d57a0
FT Editorial on divestment question at Cambridge University https://www.ft.com/content/1d8f3438-acfb-11e7-aab9-abaa44b1e130
Clara Vondrich response to FT advocating divest https://www.ft.com/content/c711a590-ad19-11e7-beba-5521c713abf4
One of the best Munger speeches on how to think about a mental model of inversion can be found here.
If you'd like to feel inspired by commencement addresses and life lessons try: Neil Gaiman on making wonderful, fabulous, brilliant mistakes; or Nassim Taleb's commencement address; or JK Rowling on the benefits of failure. Sheryl Sandberg on grief, resilience and gratitude or investor Ray Dalio on Principles.
Cross fertilise. Read about the autistic mind here.
More thoughts: My Financial Times opinion article on the importance of long-term questions to management teams and Environment, Social and Governance capital.