Drawing on John Steinbeck’s East of Eden, the letter examines how a warming climate is not only raising average temperatures but widening the tails of the distribution, making once-improbable extreme events increasingly common. For the property and casualty insurance industry, which has long set rates by looking back at its own loss history, that shift calls for a forward-looking view of risk. The letter highlights Verisk Analytics, a new position, whose catastrophe models are calibrated to today’s climate and to future warming scenarios rather than long historical averages. Redwood Grove sees a recent lull in severe weather, along with investor concerns about AI, as a “wet years” mindset. In the firm’s view, that mindset overlooks the long-term rise in catastrophic damage and the value of proprietary, auditable data. The letter closes with reflections on opening the Theodore Roosevelt Presidential Library, one of the most sustainable buildings in the world.
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Builds on last year’s finding of a market-wide retreat from Net Zero commitments, showing RGC’s portfolio held its ground even as voluntary reporting slipped. Only 3% of the portfolio is Not Aligned with net zero goals — the lowest of any benchmark tracked — while 48% is Aligned or Aligning (62% once non-reporting clean tech holdings are included), and the portfolio remains the most carbon-efficient among its peers at 65 tons of CO₂ per $1 million of sales versus 105 for the Russell 1000 Value. Also asks whether AI is becoming the next high-emissions sector, as data center growth is now outpacing Big Tech’s own decarbonization targets.
Fires, Air Quality and Climate
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Water Under Pressure: Climate Risk and the Economics of Scarcity
Climate-driven disruptions to the water cycle are creating mounting economic pressures—from municipal credit risk to infrastructure demand—highlighting a critical and often overlooked investment theme.
