Climate Change and Investor Activism

On the topic of climate change, one often searches in vain for news that would support a bit of optimism.  From the scientific side, recent predictions seem uniformly more pessimistic as updated projections for the pace of global warming and its effects are ever more dire.  In terms of societal response to the need for action, we in the United States are blinded by the lies and negative responses to climate change that emerge from the Trump Administration and its Republican enablers.  Other nations and many organizations, some international in scope, are being more aggressive in their responses to the need for action.  This does not mean that success in limiting temperature change is likely, but we should at least recognize when people are trying to help.

There is an organization going by the name Climate Action 100+.  It (often labeled as CA100+) describes itself in this way.

“…an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. The companies include 100 ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside more than 60 others with significant opportunity to drive the clean energy transition.” 

And provides this description of its potential clout in the world’s economy.

“To date, more than 300 investors with more than USD $33 trillion in assets under management have signed on to the initiative. In July 2018, Climate Action 100+ released an update that showed more investors are mobilising across dozens of countries to drive corporate action on climate change, and companies on the initiative’s focus list, have started to make progress towards its goals, including a trebling in support for the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.”

It summarizes its goals with this statement.

"As institutional investors and consistent with our fiduciary duty to our beneficiaries, we will work with the companies in which we invest to ensure that they are minimising and disclosing the risks and maximizing the opportunities presented by climate change and climate policy.”

What that statement implies is that there are two topics that investors are examining in terms of corporate policy.  The first involves actions that might be taken to minimize the risks to both the company and to society from corporate activities.  The second involves protecting the rights of investors by encouraging—or forcing—companies to notify investors of the risks climate change might have on their investment.

Kelly Gilblom provided a description of CA100+ and its activities in and article for Bloomberg Businessweek.  It was titled Green, Rich, and Intimidating in the paper magazine.  It is available online as Climate Group With $32 Trillion Pushes Companies for Transparency.  Gilblom makes it clear what corporations expect when confronted by CA100+ activists by beginning with this lede.

“Climate Action 100+ believes companies should detail exactly how climate change will affect their businesses so shareholders can decide which to support.”

If an oil company claims it has $100 billion in petroleum assets underground, but only a fraction of those are likely to ever be consumed, the company and its investors should take note of that fact.

“This group of shareholders has become the biggest, richest, and possibly the most benevolent bully the corporate world has ever seen. What Climate Action 100+, or CA100+, wants is simple to understand and agonizing to achieve. It believes companies should detail exactly how climate change will affect their business, so shareholders can pull money from those that aren’t preparing for the future.”

Goading companies to change their policies to better alignment with climate issues is not a new endeavor.  What this initiative has going for it is that it can claim to be a business-friendly organization with a company’s long-term interests at heart.

“This idea is far from new, and dozens of groups—from the divestment movement to protesters climbing atop offshore oil rigs—have tried. The difference is that CA100+ isn’t out to slay corporate climate villains; it wants to help them succeed, albeit on different terms. The movement is working, and it’s growing. And it’s coming for everyone.”

Gilblom provides a few successes that CA100+ has had.

“In December, citing work with the little-known group, Shell announced near-term climate targets. A common theme was splattered across the headlines around the announcement: Shell had caved.”

“Two months later, BP Plc said it had agreed to a shareholder resolution filed by Climate Action 100+ members and would release specific details about how its investments aligned with the Paris climate accord. Less than a month after that, Glencore Plc, a notoriously hard-nosed miner and trading house that’s one of the world’s largest suppliers of coal, said it would cap output of the fossil fuel because of global warming. It had also been paid a visit by Climate Action 100+.”

Are these activities likely to head off disastrous climatic consequences?  Probably not, but we should at least applaud the effort.  And who knows, such efforts could grow and become more significant over time.

The interested reader might find the following article informative:

Peak Fossil Fuel Use is Near: Global Warming Optimism?