The final straw for engagement
Do a slew of huge divestments signal the end of the engagement orthodoxy?
Welcome to the DivestWMPF Newsletter where we pick out the most interesting stories about the climate crisis, the fossil fuel industry and the financial sector that is finding it. We will see how the greenwashing, slow peddling and declining performance of fossil fuel companies give a powerful and urgent imperative for West Midlands Pension Fund to divest from fossil fuel companies.
Is the Responsible Investment profession waking up to divestment?
The industry trade journal, Responsible Investment featured an analysis of whether major investors are shifting from engagement towards divestment. This would be a significant change because we’ve been told by WMPF for years that engagement will make the fossil fuel companies transition to renewables companies. There’s been little evidence to support this. and the article points to recent news that two of New York City’s five public pension plans have voted to divest $4 billion of fossil fuels, Norway’s vast sovereign wealth fund has divested oil companies ($6 billion) and Aviva Investors have put 30 of the worlds largest fossil fuel companies on final notice of divestment if they don’t move on climate. And the biggest news of all, that Sweden’s €39bn state pension fund has divested its entire fossil fuel sector, 250 companies.
The article quotes Mark Campanale, Founder of influential non-profit Carbon Tracker, saying “a lot of what is being called divestment is actually people coming to a rational investment decision based on prices and signals from the market. [The market] no longer believes in the fossil fuel growth story”.
“As fossil fuel valuations have tanked and there's been a collapse in the valuation of utility companies focussed on fossil fuels, investors have suddenly sat up and said, ‘Oh, I thought this was an ESG issue, but it's really an investment issue'.”
Massive losses for fossil fuel companies
The Guardian reports on the massive losses for the fossil fuel industry - $18bn for BP, $22.4bn for ExxonMobil and Shell has reported a debit of $20bn. The paper acknowledges the steps like vehicle charging that the oil majors are taking, but… “But the real trick to guarding against the risky future for fossil fuel production is to stop producing fossil fuels. None of the major oil companies seem ready to make that leap. They may want to hurry.” The oil industry is at a tipping point. We wonder if WMPF will rethink its investment strategy before it’s too late.
A tipping point for the fossil fuel industry?
Another risk WMPF would be wise to consider is the aggressive pro-climate energy of Joe Biden. The BBC asks if his climate goals mean the beginning of the end for the fossil fuel industry. And Heated has found that big oil is ramping up advertising on social media in an attempt to block or delay regulations, often by presenting itself as progressive on climate, while it continues exploring for too much oil and gas while spending tiny proportions on clean energy.
Shell Loses Significant Pollution Court Case
In more bad news for Shell, the company has been found liable by the Dutch courts for damages from pipeline leaks in Nigeria over 13 years ago. As Bloomberg reports, the fact that it was tried at home for damages abroad has far reaching effects for the industry. “The ruling sets a precedent for where such cases can be heard and potentially increases the number of court procedures in oil companies’ home countries, rather than those where alleged pollution is taking place.”
Time for Ad Agencies to Reject Fossil Fuel Dollars
Grist has an interesting profile of Jamie Henn, who wants the PR industry which works to sanitise the reputation of the fossil fuel industry to face up to the role it plays, and turn away from the polluters. It quotes Bill McKibben, “If money is the oxygen on which the fires of global warming burn, then the snappy catchphrases and images that come out of the PR and advertising industry? That’s the kindling.”
“Meanwhile, Unilever, a consumer-facing brand, is spending $8 billion a year on ads. Unilever has said that it supports carbon neutrality and climate action. It owns brands like Ben & Jerry’s, which is explicitly pro-climate. If Unilever said to an agency like WPP, one of the world’s largest advertising agencies, “We’re not going to work with you if you keep working for BP,” they would drop BP in a second because Unilever is a much more valuable client.”
WMPF is also sanitising the fossil fuel companies, lending them social acceptability by investing in them as a local government fund. The Fund also puts significant effort into defending the records of the companies when it trumpets the meagre successes of engagement. It is time for WMPF to remove this social license and divest from this toxic industry.