It’s Not Easy Being Green
Business as usual?
Business as usual?
Continents are burning, climate activists are camping out in tents in Davos, and Jane Fonda is getting arrested regularly. Investor letters to CEOs proclaim that climate change “has become a defining factor in companies’ long-term prospects.” Money-making hedge funds are pushing portfolio companies to reduce greenhouse gas emissions / disclose their carbon footprint or face major opposition. Corporations like Nestle and Microsoft are making splashy announcements on their lofty investment ambitions in sustainability.
#mood
But onlookers remain skeptical about how businesses are adapting to and addressing the climate crisis. When BlackRock joined Climate Action 100+, Matt Levin’s op-ed in Bloomberg offered some pointed criticism: “…Larry Fink [CEO of BlackRock] will write strongly worded letters to CEOs about how coal is bad, because that is his hobby, and then he will invest your money in coal stocks, because that is his job.”
Although BlackRock’s vocal stance on climate change is energizing, their portfolio raises questions. (Note: Their portfolio is largely passively managed, meaning the company automatically invests in indices or parts of the market.)
According to SEC filings, Exxon Mobil is BlackRock’s 12th largest holding (they own almost $20 billion worth of stock).
Exxon’s annual sustainability report states that since 2000, ExxonMobil has invested “nearly $10 billion in projects to research, develop and deploy lower-emission energy solutions.” Cool, but considering how Exxon had over $20 billion in capital expenditures in 2019 alone, that’s just a drop in their carbon-intensive bucket…
Additionally, according to Carbon Tracker, of all the Big Oil companies, ExxonMobil is projected to spend the most on projects that would keep global warming above 2˚C (#ParisAgreementThrowback).
Are these corporations and investors really making progress on climate change?
What now?
How can we influence companies and funds to be more proactive on climate change? A few ideas:
Think about how you’re investing your money! Consider a small tweak like investing in clean energy index funds and ETFs, instead of generic S&P 500 indices. Check out this guide by Trillium Asset Management on how to start
Visit www.350.org to see how you can petition your state pension fund or alma mater endowment to divest
Push for better disclosures on low carbon targets and climate risks from companies. The Task Force on Climate Related Financial Disclosures is a framework many investors have supported. However, Exxon (and other companies) have shot down requests to publicly disclose in accordance to these frameworks (see this riveting back-and-forth between Exxon and two of its shareholders on this very topic!) Nevertheless, shareholder resolutions (or new SEC regulation) can help push corporations in this direction
Follow the efforts of Americans for Carbon Dividends PAC — it’s a Big Oil supported PAC that hopes to influence climate policy. To start, check out this Vox article about its efforts
It’s primary season…research candidates’ platforms on climate change, particularly around curbing carbon emissions and investing in low carbon solutions
What else?
ICYMI, the prices of more than 200 drugs increased at the start of 2020. The largest U.S. healthcare investor conference (the J.P. Morgan Healthcare Conference) happened last week, and pharma execs pitched ideas on how to lower drug costs. Yet, nobody considered dropping their own prices…shocker! See what they’re saying here
“For years, Microsoft has moved billions in profits to Puerto Rico to avoid taxes. When the IRS pushed it to pay, Microsoft protested that the agency wasn’t being nice. Then it aggressively fought back in court, lobbied Congress and changed the law.” Read what happened here
“Stereotypes that working moms are less devoted to their careers may also contribute to moms being paid a mere 71 cents on the dollar compared to working fathers.” Here’s a list of how companies can be better…
Research from the University of Calgary finds that “gender diversity [on boards of directors] is positively associated with firms’ environmental performance scores primarily in the more environmentally impacting industries.” Find the research here
SmileDirectClub has worked to limit information about customer dissatisfaction. “They’ve been almost like nervous bullies to critics…” Check out more here
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