Extinction rebellion — weighing up the costs to the economy
- Environmental demonstrations have targeted London City Airport.
- The meat industry has also been impacted by demonstration actions.
- The actions of the protestors offer short-term pain for some but indications of long-term investment trends for others.
London City Airport was the focal point for Thursday’s Extinction Rebellion (XR) protests. With the stated aim of using civil disobedience to compel government action on climate breakdown, the environmental pressure group has pitched camp in central London. The programme, which is entitled ‘International Rebellion — UK action in London’ runs from 7th October to 19th October. Other events are being staged in cities including, Berlin, Paris, Amsterdam and Sydney. The group’s actions are certainly gaining coverage for the group, which has been communicating somewhat doomsday-style predictions relating to biodiversity loss and the risk of social and ecological collapse.
London City Airport was aware of its status as the chosen target. Preparations appear to have mitigated some of the disruption, but passengers on the mid-morning Aer Lingus/CityJet light from London City Airport to Dublin were very much caught up in events. As the plane was about to depart, a smartly dressed passenger stood up and walked up and down the aisle, delivering a lecture on climate change. Public exposure of the event was ensured by the many passengers and the man himself filming the incident, which included him saying:“We have two generations of human civilisation left.” (Source: Reuters)
In the terminal itself protestors, have caused disruption including standing on the roof of buildings. Former Metropolitan police officer, John Curran, glued himself to the pavement outside the airport. For the airport at least, it looks like the damage to property and reputation may not be as bad as it could have been. Bloomberg reports that the airport is currently fully operational and has suffered no cancellations.
The figures quoted in terms of future social upheaval are as questionable as they are alarming. Even among XR there is some debate about which scientific case to adopt. In the first two days of protests, around 541 XR demonstrators were arrested. From an investment perspective, there is value in understanding what exactly drives people to such an eventuality.
Bad science and good investments
A lot of the debate revolves around the interpretation of scientific data. From an investment perspective, there is some merit in stepping away from that part of the debate and accepting the conclusions of the United Nations Intergovernmental Panel on Climate Change (the IPCC). Its benchmark report is based on 6,000 scientific references, 91 authors, representing a global consensus with review editors from 40 countries. It includes observations such as the median projection for sea-level rises being 50cm by 2100.
The financial markets are hard enough to predict, so introducing long-term climate calculations into the equation only makes an already difficult task even harder. What is more straightforward is to consider the social trends demonstrated by XR.
Air travel is currently something of a bogey-man for XR. Its appearance high up the agenda is no surprise and the demonstrations at London City Airport today come on day three of the two-week protest.
London City Airport is privately owned, so it’s not possible to measure the effect of the disruption via the share price. One interesting feature that is confirmed by today’s actions is that the law of unintended consequences is all too happy to apply itself in the complex modern economy. Canadian teachers may not necessarily be the intended target of the demonstrators, but the Ontario Teacher’s Pension fund is one of the members of the consortium that owns the airport.
What may have been slightly more surprising was that the meat industry was targeted on day two, Tuesday. Admittedly, it was the offshoot group, Animal Rebellion, that staged that protest. However, if the 400 protestors that occupied London’s 800-year-old Farringdon meat market give a clue towards future consumer trends, then the high valuation of Beyond Meat Inc (Nasdaq: BYND) may not appear so toppy. On the other hand, Tom Mastrobuoni, chief financial officer at Tyson Ventures — which was an early investor in the vegan burger maker — has warned “the numbers aren't there” (source: The Telegraph) to justify Beyond Meat's stock market valuation of $8.64bn.
A large number of XR are pro-active students and could easily be categorised as ‘thought leaders’. If they are successful in taking people with them, there will be considerable repercussions for the economy. For example, it is suggested that meeting the target of net zero emissions by 2030 will require confiscation of petrol cars, state rationing of meat and an allowance of one flight per family every five years. This may sound too extreme to be adopted by governments, but as of Wednesday leader of the UK opposition, Jeremy Corbyn, had tweeted his support for the 2030 target. It may have been Mr Corbyn himself or maybe one of his advisers who quickly deleted the tweet one hour later in an effort to keep the majority of the UK electorate on board.
What are the chances of the policies becoming a political reality? The long timescales involved have always worked against the green campaigners as governments have found it easy enough to promise but not deliver action. It’s a long term game, and the current protests will make a lot of daily commutes harder, but the many signs on the streets are possibly pointing towards ways to profit from future trends.