Reality Check: Warren Buffett Says Climate Change No Risk To Berkshire Hathaway

  • Date: 29/02/16
  • Stephen Foley, Financial Times

Warren Buffett has dismissed the possibility that climate change could prove a big risk to Berkshire Hathaway’s insurance business, in a combative annual letter to shareholders.

In the letter, released on Saturday, Mr Buffett took on a dissident shareholder who plans to raise global warming at Berkshire’s annual meeting next month, as well as critics of the company’s Clayton Homes mobile homes subsidiary and politicians who paint a gloomy picture of the US economy.

Its passage on climate change sets the stage for a showdown at the annual meeting over whether Berkshire should file a formal report on the risks posed to its business. A proposal to that effect has been filed by the Nebraska Peace Foundation, which owns a single Berkshire share.

For society, the issue bears a similarity to Pascal’s Wager on the Existence of God, he said: “Pascal, it may be recalled, argued that if there were only a tiny probability that God truly existed, it made sense to behave as if He did because the rewards could be infinite whereas the lack of belief risked eternal misery.”

However, for Berkshire, which is one of the world’s largest property insurers and insurers against catastrophic risks, climate change is not on its list of worries, he said. Since insurance policies are customarily written for one year and repriced upwards to reflect growing risks, climate change could actually increase Berkshire’s profitability.

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