Warren Buffett might be the GOAT when it comes to investing but the one weak point in recent years might be his over dependence on fossil fuels. At a time when sovereign funds, pension funds and major financial institutions are divesting away from fossil fuels and dirty energy, Buffett is doubling down on the sector. What’s more, he has at times lobbied to kill solar projects that threatened his utility empire (read THIS, THIS and THIS!).
Just as perverse was Buffett’s decision to buy Burlington Northern Santa Fe railroad to transport coal and oil by rail, a transaction that complemented Berkshire’s coal powered utilities (read THIS!). Predictably, the deal was widely hailed as a great success and the press pimped it as another bet on America. It was a PR stunt meant to propagate the “good guy” narrative that Buffett has enjoyed for years. And although he isn’t a climate change denier like so many corporate douchebags, he doesn’t exactly see it as an existential threat, which is why Berkshire Hathaway keeps investing in dirty fuels. So we can admire his ability to make money, but as a climate leader Buffett is a disappointment.
But why continue to invest in a sector with no apparent long-term future? There’s only one logical answer: greed. There’s too much oil and too much money to be made right now, and the risks to Berkshire are minimal. Buffett also made some terrible bets in recent years, so there is pressure to offset those losses. But that’s an incredibly shortsighted strategy given the nature and magnitude of the problem. It’s ironic because Buffett is an insurance man and what might be a limited risk today could potentially be something catastrophic tomorrow. That’s something Berkshire investors will have to consider in the not so distant future as the impact of climate change transforms the way we travel, invest and consume.