What a piece of virtue signalling nonsense

Virtue signalling is when people express opinions (they most likely don’t really hold) they believe will make others think they are a good person.

It usually takes place in a public forum, say on social media or through a news interview or article.

For example an Oscar winner may state how much they hate Donald Trump in their speech. Or a company director may tweet about helping out in a homeless shelter. Or a politician may wear a “this is what a feminist looks like” T-shirt.

Virtue signalling, like a lot of the trends we see online, stems not from selflessness, but from selfishness.

It’s all about drawing attention to the fact you have righteous views and really care about the world.

But the key there is the “drawing attention” part. It is essentially an approval-seeking behaviour. The only reason people do it is to win adulation. And that’s why most of the time it comes across as hollow.

Most people see straight through this kind of behaviour.

Think of how much it makes you cringe when you see a politician on a news report putting a stint in at a factory and trying to have some “banter” with the workers.

Everyone watching that report can feel how awkward the whole situation is for everyone involved.

But virtue signalling is on the rise. It’s a good way for different tribes of people to show which tribe they belong to and which tribes they oppose.

The reason I bring it up is because of a report I read about in The Times on Monday.

The report was about fund managers turning away from oil investing and putting their money into renewables instead.

From The Times:

Writing’s on the wall for oil firms, say fund managers

Climate change could wipe up to $4 trillion off the value of fossil fuel assets, the governor of the Bank of England has said

Several big fund managers believe that oil companies should shut themselves down because soon they will become impossible to invest in as the world switches to renewable energy.

A survey of 39 fund managers with $10.2 trillion under management found that 24 per cent wanted the oil industry “to wind down their businesses and return cash to shareholders”. All but two of the funds said that oil stocks would not be attractive investments within ten years if they failed to respond to climate risks.

This was the top-rated comment on that article. And all the other well-rated ones outlined similar views:

What a piece of virtue signalling nonsense. Doubt these fund managers even believe it themselves, but the ideological climate demands it in the west now. Fossil fuels will play a key role in lifting billions of people out of poverty (and keep them from returning to it) for the next 3 or 4 decades.  Asia and Africa are not going to give up their chance of affluence!

The question I have is, is this true?

Were the fund managers quizzed for this survey merely virtue signalling, or are we approaching a sea change in the world of investing?

I wrote about this rush for renewables in an Exponential Investor report last year.

Big changes always seem impossible before they happen and obvious in hindsight. The transition away from fossil fuels, even a few years ago, seemed ludicrous.

How could renewables possibly compete? They were far too expensive and far too inefficient.

But as technology advanced, the impossible became the inevitable. As renewables became cheaper and more efficient at an astonishing rate, we reached a tipping point. In 2016, renewables became cheaper than coal in many parts of the world.

As Bloomberg reported in December 2016 (emphasis mine):

This year has seen a remarkable run for solar power… It started with a contract in January to produce electricity for $64 per megawatt-hour in India; then a deal in August pegging $29.10 per megawatt hour in Chile. That’s record-cheap electricity—roughly half the price of competing coal power.

It’s worth going over the above quote again, because it is major. The price of energy generation from solar dropped by over 50% in 2016. In many parts of the world solar power is now half the price of coal power.

And it’s not just price that’s driving demand. Price is a huge factor, but countries installing renewables are also taking step towards self-sufficiency. They no longer have to rely on the whims of the oil-producing nations for their energy needs.

The question has now switched from why would use renewables, to why wouldn’t you?

And since then, the cost of renewables has continued to decline and the investment into them has continued to increase.

Even here in Britain, renewable energy is becoming more and more useful. Over Easter weekend, for instance, Britain went a record-breaking 90 hours without coal-generating electricity.

But public perception, it seems, takes longer to shift.

If, as an investment professional, you mention renewable energy in a major newspaper, people cry, “virtue signalling!”

This must certainly put some investors off. Even if investing in renewables makes complete sense.

Remember, the advantage renewables have always had over fossil fuels was that they are, well, renewable.

Once they are set up, so long as they are maintained, they can keep producing energy forever. The wind isn’t going to just run out. The sun won’t stop shining for billions of years. And the tides will keep rising and falling as long as we still have a moon.

Clean energy, green energy, renewable energy… call it what you like. It’s always had this same advantage over fossil fuels.

Where renewables always lost out, was on price. Until now. As we’ve seen, renewables are now cheaper than fossil fuels in many parts of the world.

As technology gets better, the advantage renewables have is likely to increase even more. For example, in 2017 alone, the price of solar power dropped by 26%.

However, if most people still don’t see the advantage of renewables, it probably means they aren’t investing in them, either.

And if people aren’t investing in them, it would surely mean these investments may well be undervalued.

In Nick O’Connor’s book The Exponentialist in chapter six, you can find out what Stanford University’s Professor Mark Jacobson’s views are on renewable energy along with SolarWidow’s CEO John Conklin and insight from angel investor and tech entrepreneur David Brown and my colleague Eoin Treacy. And you can also get your hands on two energy-based reports, to find out more go here.
Either that, or those fund managers aren’t virtue signalling at all, and they are putting their money where their mouths are.

One thing is for sure though, the argument over whether investing in renewables is nothing more than virtue signalling isn’t going anywhere anytime soon.

I’d be interested to know where you stand on this idea. Is investing in renewables merely just virtue signalling, or is it a better bet than fossil fuels right now?

Let me know: harry@southbankresearch.com.

Until next time,

Harry Hamburg
Editor, Exponential Investor

Category: Energy

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