Monday.Nove mberlZ. 20 12 Jakarta Globe

33

Colin Bloodworth looks intoour wallets
and how the weather may change it

Preparing
Financially
ForaChange
InClimate
ust days after the biggest everstorm hit New York, a storm
which apart from causing deathand destru ction, closed down
Wall Street, cut off power tom.illions and shut down the city's
subway system for the first time in it'> 100
years' plus history, is there anyone out
there who still believes climate change isnot happening?

JIsthere anything we can do to stop it?
Given that carbon emissions are clearlypart of the problem we could make indi vidual contrib utions such as switchingfrom cars to public transport
Not so easy if you live in a city likeJakarta where nothing seems capable ofstopping the avalanche of private carsand motorcycles entering the scene. In
China, barely one person in 50 owns a car.
But their ambition is to be on a par with .
the US, where one in two owns a vehicle.
Singapore alone sets an example to thewo rld by making car ownership prohibitively expensive and by provi ding a public
tr anspo rt system so efficient that few
have need for a private vehicle.
There have been numerous global
conferences on clim ate change. Unfortunately the outcome has been little morethan hot air as each country has its own
agenda so only limited progress has beenmade. Maybe a few more big storm s,
floods and droughts will persuade politicians to act in unison.
Should we be changing ourfinancial
planning strategies?
As individuals, we are not able to reverse
the trend overnight. But we can at least
antic ipate the personal effects of climatechange and take practical and financial
steps to miti gate the effects.

Investing in theclimate change
theme is an area

for serious
investors to .
consider but itshould notconstituletoo
big a portion of

a portfolio

Practical measures wo uld include
ensuring we are prepa.red for floods andother disasters by being adequately
stocked with non-perishable foods,
drinking water a.ndemergency
items like torches and candles.
The recent conditions we witnessed in New York could soonbe easily repeated in Jakarta
Financial measures would
include checking if we haveadequate insurance, both personal in terms oflife and medi cal cover and also generalinsurance to cover our homes
and cars. Be sure to check
whether your insurance
includes flood damage.
Make sure you have ade qua te cash reserves to can)' you
through any emergencies. If
you are an expatriate you should keep
funds not just locally bu t also in yourhome countrv or in an offshore bank.
Whether man -made or a natural ph enomenon, clima te change is clearly hap pening and one ofi ts effects will be shortages of food, drinki ng water and othernatural resources.This in turn will lead tohigher prices and the need for future savings will become even more important.
Are there investmentopportunities?

Every cloud has a silver lining and for
those who can afford th em, there areindeed opportunities that could help tooffset the higher cost of'living. Until theworld embraces greener forms ofenergy- the problem is that they are generally
too expensive today - the demand for oiland related products will keep rising.

Consequently, inves ting in oil andenergy companies or funds is bound to bea good long-te rm play. That is, if you canlive w ith periodic downturns when falling deman d de presses prices,
Not only is climate change alreadyleadingto shortages of certain foods tuffs,
but the insatiable demand for energy ispersuading ma ny fanners and even governments to convert crops once destinefor the table into biofuels. This too offers
opportunities by identifying companies
that invest in this aJ'eaor by investing
indirectly via managed funds into forestry
or agrib usiness. However, expect volatility in the short term. Like energy it should
be seen as a long-term strategy.
Interestingly,a fund was launched five
years ago that embraces the theme of climate change by investing in companies
that are likely to benefit from efforts toaccommodate or limit the impact.
Ironically,it has lost mon ey since its
launch but has had a return of14 percent
in the past tz months, suggesting that theworld is finally wakin g-up to reality.
Investing in the climate change themeis an area for serious investors to consider
but it should no t constitute too
big a portion of a portfolio. Likegold, it shoul d be seen as ahedge or insurance against possible troubled times .
If the world economies andmarkets thrive, it could still be
a profitable investment and atworst you would have paid asmall premium.
Colin Bloodworth, director of PPI
Indonesia. has spent over 20 years
in Indonesia. If you have any
questions on thi s or a related
subject you can contact the writerat indonesia@ppi-adv isory.com