Per Capita Davis: Money talks; a lot of money shouts
This and the next couple of columns focus on money, specifically money spent or committed to mitigate or adapt to the climate crisis. How do companies, investors and others whose profits or losses could be affected by the climate crisis plan to allocate their resources to respond?
A recent “opinion and analysis” from Scientific American’s board of directors noted that “politicians, especially in the U.S., have abjectly failed to address the threat that climate change poses to health, national security and the environment. President Trump has repeatedly said he does not see climate change as a problem, despite strong and steadily growing scientific evidence from the world’s researchers, and his own government agencies.”
In my words, our president is the “New Nero,” fiddling while the planet burns.
The article cites recent attempts by shareholders of publicly traded companies to propose and vote on resolutions to establish climate-friendly policies. These shareholders are not individuals like you or I, with a 401K or other investment that amounts to one millionth or billionth of the total number of proxy votes. In many cases, these are huge investment firms and retirement funds, whose votes can actually make a difference in the outcome for the resolution.
The article points out that, much as we might like to think otherwise, “The motive of these investment funds is not unfettered altruism. While they hold company stock, they also invest in real estate along coastlines threatened by rising seas, in health care firms whose costs will increase, and in dozens of other sectors that stand to take a substantial hit if climate change is not brought under control. So they have to take a long-term and global view.”
Ceres is one of the organizations leading the effort to, in their words, “catalyze the flow of capital to support low-carbon emissions.” According to their website, over the past 30 years, they have obtained commitments from businesses that generate huge amounts of greenhouse gases to “change their ways.” As of now, “Of the more than 600 largest publicly traded companies in the U.S., 64 percent have made a commitment to reduce emissions … many of which have come in response to proposals made at annual shareholder gatherings.”
Ceres is also part of Climate Action 100+, “an investor-owned initiative launched in 2017 to ensure the world’s largest corporate greenhouse gas emitters take necessary actions on climate change.” This effort includes “more than 320 investors with over $33 trillion in assets” to engage companies to curb emissions and be transparent about their efforts to do so.
Further, “The companies include 100 systemically important emitters accounting for two-thirds of annual industrial emissions, alongside more than 60 others with significant opportunity to drive a clean energy transition.”
This is a very serious and important group. It’s organized to address the climate crisis with steering committees and advisory bodies in five distinct regions around the planet, including the Asian Investor Group on Climate Change and the Institutional Investor Group on Climate Change in Europe. Ceres takes the lead for North America. Each steering committee includes representation from the investor community, with our own CalPERS on the steering committee for North America. The regional steering committees are overseen by a global group, the Climate 100+ Steering Committee.
Climate 100+ is thus able to think and act both globally and, if not locally, regionally.
Without getting too far into the weeds, if I haven’t already, each regional steering committee has an “Engagement Working Group” that reports up to the steering committee on progress in their area.
I point out these details for a couple of reasons. One, $33 trillion is a lot of money, and money talks and a lot of money shouts. Second, the organization of this effort signals a seriousness of purpose and involvement of people who can actually move the needle on the flow of money in the world economy. Their strategy and approach are to deploy investors to engage with target companies and discuss the need for the corporation to accept responsibility for its contribution to the climate crisis.
Subsequent inaction on the part of the company triggers investor and shareholder actions to convince the company it’s in its own best interest, both financially and in terms of public perception, to respond.
Examples of companies that have agreed to participate and reduce their emissions include Maersk, Airbus, American Airlines, Bayer, Boeing, British Petroleum, Caterpillar, CEMEX, Chevron, China Petroleum and Chemical, Coal India, Duke Energy, DowDupont, Exxon Mobil, Ford Motor, General Electric … Well, you get the idea.
It’s important to point out that it’s easier to make a commitment than to keep one, but the overall message is that huge amounts of investor money is working, on a global scale, to move the corporate economy towards sustainability.
It is also worth noting that sovereign wealth funds, such as that of Norway, that control large sums of capital are doing the same. Not to mention that militaries of countries around the world, including ours, are identifying the climate crisis as a threat to national security and focusing resources and developing strategies for responding to current and potential threats from the climate crisis. More about those in a future column.
— John Mott-Smith is a resident of Davis. This column appears the first and third Wednesday of each month. Please send comments to email@example.com.
Crossposted from the Davis Enterprise
Published online on August 07, 2019 | Printed in the August 07, 2019 edition on page A2
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