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Q: What's the easiest way to become a millionaire?
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A: Invest a billion dollars in the airline industry.
A small piece in the most recent New York Times Magazine (the green issue) reports that Standard Life, a big Scottish investment house, has decided to pull airline stocks from it's roster of "socially responsible" funds, citing the industry's impact on the environment. With this move, airlines join an elite Standard Life blacklist that includes animal testing labs, weapons manufacturers, tobacco companies, and brewers.
Standard Life says its decision to stop investing in airlines is an ethical choice that reflects the mission of its socially responsible funds. The European airline industry disagrees, saying that the move is hypocritical and unfairly singles out just one of many climate unfriendly businesses. Both sides are right.
There's no denying that jetliners aren't doing much good for the environment. Airplanes are responsible for only about 3% of global carbon emissions, but they also spew other gases and produce contrails that create heat trapping cirrus clouds. With airline traffic expected to grow 60% by 2025, things aren't likely to get any better.
And it's also true that the industry has been glacially slow when it comes to acknowledging the role they play in our current environmental mess and finding solutions to deal with it. Climate change is on everyone's mind these days, but it's not exactly a new issue. Shame on the industry for not getting its act together sooner.
But there are a few things about the Standard Life move that don't quite ring true. For one thing, European airlines are required to join a carbon trading scheme by 2011. The jury is out an whether this is actually going to work, but it does mean steps are being taken to address aircraft emissions. The International Air Traffic Association also makes a good point: Standard Life's home base of Edinburgh is 331 miles away from London, the financial hub of Europe. Do you think Standard Life executives are hopping into their hybrids and driving 4.5 hours every time they need to do some business in the big city? Unlikely.
Furthermore, the choice to pull airlines out of the Standard Life funds seems a bit arbitrary. The company says 30% of the investors it surveyed were in favor of the move, which means 70% were against it or didn't care either way. And if you're going to start weeding companies based on their environmental impact, why stop with airlines? Are automakers and all the companies that supply them off the list? How about food multinationals who might buy beef raised on a clear-cut Amazon rainforest? What about any company doing business with a factory in enviro-unfriendly China?
Anything that puts the airline industry on notice over its environmental impact is a good thing. If the Standard Life move creates financial pressure and publicity that pushes the industry to move more urgently toward sustainable aviation, then I'm all for it. But if you're going to very publicly remove companies from an investment fund because of their environmental impact, make sure you're doing it consistently.
