Peabody CEO Greg Boyces climate change hedge
by Charlie Cray
March 10, 2014
In the world of stock and options trading, a straddle is a trading strategy in which investors hold both call (buy) and put (sell) positions at the same strike price (the price at which the stock is bought or sold) and expiration date.
Straddlers may not know or even care which direction the stock or commodity will move. What they really profit from is volatility i.e. the margin value created by trading off significant price movements.
Theres another kind of straddle that exists in the world of big business and the environment one in which companies or individuals profit both by first making a mess and then cleaning it up afterwards.
Examples include EPAs hiring of companies like Lockheed Martin and Halliburton to clean up pollution they may have made.
A good example of an individual who stands to profit from the mess he helped create is Greg Boyce, the CEO of Peabody Energy, the giant coal company.
In 2010 Rolling Stone ranked Boyce as the fourth worst Climate Killer on earth, two spots above ExxonMobils CEO, Rex Tillerson.
What few people outside of St. Louis (where both company’s are headquartered) have noticed is that Boyce also sits on the board of other companies, including Monsanto, where hes on the Sustainability & Corporate Responsibility and Science & Technology committees.
Boyce might seem like an odd choice for someone responsible for vetting science and policy issues, particularly since his views on climate change seem out of sync with those of Monsanto, which takes the position that were just beginning to feel the impacts of climate change.
But it makes sense in a certain way when you understand that Monsantos business strategy is organized around the expectation that global warming will get worse much worse creating an opportunity to sell new genetically-engineered seeds for crops such as drought-resistant corn and cotton. Monsanto also has plans to profit from its recent acquisition of Climate Corporation, a company which markets weather forecasting data to farmers facing severe droughts and other extreme weather conditions tied to climate change.
Running a big coal company and sitting on the board of a company that is betting on climate change may not seem like an odd contradiction to someone who straddles the commanding heights of short-term corporate business strategy.
But from the outside it certainly looks like a cynical case of opportunistic fatalism.