Category Archives: Divestment in fossil-fuels

Putin’s war shows autocracies and fossil fuels go hand in hand. Here’s how to tackle both

Democracies are making more progress than autocracies when it comes to climate action. But divestment campaigns can put pressure on the most recalcitrant of political leaders
Autocrats are often directly the result of fossil fuel. Composite: The Guardian/Getty Images

The Guardian, by Bill McKibben, Mon 11 Apr 2022

At first glance, last autumn’s Glasgow climate summit looked a lot like its 25 predecessors. It had:

  • A conference hall the size of an aircraft carrier stuffed with displays from problematic parties (the Saudis, for example, with a giant pavilion saluting their efforts at promoting a “circular carbon economy agenda”).
  • Squadrons of delegates rushing constantly to mysterious sessions (“Showcasing achievements of TBTTP and Protected Areas Initiative of GoP”) while actual negotiations took place in a few back rooms.
  • Earnest protesters with excellent signs (“The wrong Amazon is burning”).

But as I wandered the halls and the streets outside, it struck me again and again that a good deal had changed since the last big climate confab in Paris in 2015 – and not just because carbon levels and the temperature had risen ever higher.

The biggest shift was in the political climate. Over those few years the world seemed to have swerved sharply away from democracy and toward autocracy – and in the process dramatically limited our ability to fight the climate crisis. Oligarchs of many kinds had grabbed power and were using it to uphold the status quo; there was a Potemkin quality to the whole gathering, as if everyone was reciting a script that no longer reflected the actual politics of the planet.

Now that we’ve watched Russia launch an oil-fired invasion of Ukraine, it’s a little easier to see this trend in high relief – but Putin is far from the only case. Consider the examples.

Brazil, in 2015 at Paris, had been led by Dilma Rousseff, of the Workers’ party, which had for the most part worked to limit deforestation in the Amazon. In some ways the country could claim to have done more than any other on climate damage, simply by slowing the cutting. But in 2021 Jair Bolsonaro was in charge, at the head of a government that empowered every big-time cattle rancher and mahogany poacher in the country. If people cared about the climate, he said, they could eat less and “poop every other day”. And if they cared about democracy, they could … go to jail. “Only God can take me from the presidency,” he explained ahead of this year’s elections.

A climate activist holds a sign depicting Jair Bolsonaro with the slogan ‘Exterminator of the Future’. Photograph: Luis Robayo/AFP/Getty Images

Or India, which may turn out to be the most pivotal nation given the projected increases in its energy use – and which had refused its equivalent of Greta Thunberg even a visa to attend the meeting. (At least Disha Ravi was no longer in jail).

Or Russia (about which more in a minute) or China – a decade ago we could still, albeit with some hazard and some care, hold climate protests and demonstrations in Beijing. Don’t try that now.

Or, of course, the US, whose deep democratic deficits have long haunted climate negotiations. The reason we have a system of voluntary pledges, not a binding global agreement, is that the world finally figured out there would never be 66 votes in the US Senate for a real treaty.

Joe Biden had expected to arrive at the talks with the Build Back Better bill in his back pocket, slap it down on the table, and start a bidding war with the Chinese – but the other Joe, Manchin of West Virginia, the biggest single recipient of fossil fuel cash in DC, made sure that didn’t happen. Instead Biden showed up empty-handed and the talks fizzled.

And so we were left contemplating a world whose people badly want action on climate change, but whose systems aren’t delivering it. In 2021 the UN Development Programme conducted a remarkable poll, across the planet – they questioned people through video-game networks to reach humans less likely to answer traditional surveys. Even amid the Covid pandemic, 64% of them described climate change as a “global emergency”, and that by decisive margins they wanted “broad climate policies beyond the current state of play”. As the UNDP director, Achim Steiner, summarized, “the results of the survey clearly illustrate that urgent climate action has broad support amongst people around the globe, across nationalities, age, gender and education level”.

The irony is that some environmentalists have occasionally yearned for less democracy, not more. Surely if we just had strongmen in power everywhere they could just make the hard decisions and put us on the right path – we wouldn’t have to mess with the constant vagaries of elections and lobbying and influence.

But this is wrong for at least one moral reason – strongmen capable of acting instantly on the climate crisis are also capable of acting instantly on any number of other things, as the people of Xinjiang and Tibet would testify were they allowed to talk. It’s also wrong for a number of practical ones.

Those practical problems begin with the fact that autocrats have their own vested interests to please – Modi campaigned for his role atop the world’s largest democracy on the corporate jet of Adani, the largest coal company in the subcontinent. Don’t assume for a minute that there’s not a fossil fuel lobby in China; right now it’s busy telling Xi that economic growth depends on more coal.

And beyond that, autocrats are often directly the result of fossil fuel. The crucial thing about oil and gas is that it is concentrated in a few spots around the world, and hence the people who live on top of or otherwise control those spots end up with huge amounts of unwarranted and unaccountable power.

Boris Johnson was just off in Saudi Arabia trying to round up some hydrocarbons – the day after the king beheaded 81 folks he didn’t like. Would anyone pay the slightest attention to the Saudi royal family if they did not possess oil? No. Nor would the Koch brothers have been able to dominate American politics on the basis of their ideas –when David Koch ran for the White House on the Libertarian ticket in 1980 he got almost no votes. So he and his brother Charles decided to use their winnings as America’s largest oil and gas barons to buy the GOP, and the rest is (dysfunctional) political history.

The most striking example of this phenomenon, it hardly need be said, is Vladimir Putin, a man whose power rests almost entirely on the production of stuff that you can burn. If I wandered through my house, it would be no problem to find electronics from China, textiles from India, all manner of goods from the EU – but there’s nothing anywhere that would say “made in Russia”. Sixty per cent of the export earnings that equipped his army came from oil and gas, and all the political clout that has cowed western Europe for decades came from his fingers on the gas spigot. He and his hideous war are the product of fossil fuel, and his fossil fuel interests have done much to corrupt the rest of the world.

Vladimir Putin and Alexei Miller, CEO of Russian natural gas giant Gazprom, attend a ceremony to mark the launch of the Sakhalin-Khabarovsk-Vladivostok natural gas pipeline in 2011. Photograph: Sasha Mordovets/Getty Images

It’s worth remembering that Donald Trump’s first secretary of state, Rex Tillerson, wears the Order of Friendship, personally pinned on his lapel by Putin in thanks for the vast investments Tillerson’s firm (that would be Exxon) had made in the Arctic – a region opened to their exploitation by the fact that it had, um, melted. And these guys stick together: it’s entirely unsurprising that when Coke, Pepsi, Starbucks and Amazon quit Russia last month, Koch Industries announced that it was staying put. The family business began, after all, by building refineries for Stalin.

Another way of saying this is that hydrocarbons by their nature tend towards the support of despotism – they’re highly dense in energy and hence very valuable; geography and geology means they can be controlled with relative ease. There’s one pipeline, one oil terminal.

Whereas sun and wind are, in these terms, much closer to democratic: they’re available everywhere, diffuse instead of concentrated. I can’t have an oilwell in my backyard because, as with almost all backyards, there is no oil there. Even if there was an oilwell, I would have to sell what I pumped to some refiner, and since I’m American, that would likely be a Koch enterprise. But I can (and do) have a solar panel on my roof; my wife and I rule our own tiny oligarchy, insulated from the market forces the Putins and the Kochs can unleash and exploit. The cost of energy delivered by the sun has not risen this year, and it will not rise next year.

As a general rule of thumb, those territories with the healthiest, least-captive-to-vested-interest democracies are making the most progress on climate change. Look around the world at Iceland or Costa Rica, around Europe at Finland or Spain, around the US at California or New York. So part of the job for climate campaigners is to work for functioning democratic states, where people’s demands for a working future will be prioritized over vested interest, ideology and personal fiefdoms.

But given the time constraints that physics impose – the need for rapid action everywhere – that can’t be the whole strategy. In fact, activists have arguably been a little too focused on politics as a source of change, and paid not quite enough attention to the other power center in our civilization: money.

If we could somehow persuade or force the world’s financial giants to change, that would yield quick progress as well. Maybe quicker, since speed is more a hallmark of stock exchanges than parliaments.

And here the news is a little better. Take my country as an example. Political power has come to rest in the reddest, most corrupt parts of America. The senators representing a relative handful of people in sparsely populated western states are able to tie up our political life, and those senators are almost all on the payroll of big oil. But money has collected in the blue parts of the country – Biden-voting counties account for 70% of the country’s economy.

That’s one reason some of us have worked so hard on campaigns like fossil fuel divestment – we won big victories with New York’s pension funds and with California’s vast university system, and so were able to put real pressure on big oil. Now we’re doing the same with the huge banks that are the industry’s financial lifeline. We’re well aware that we may never win over Montana or Mississippi, so we better have some solutions that don’t depend on doing so.

The same thing’s true globally. We may not be able to advocate in Beijing or Moscow or, increasingly, in Delhi. So, at least for these purposes, it’s useful that the biggest pots of money remain in Manhattan, in London, in Frankfurt, in Tokyo. These are places we still can make some noise.

And they are places where there’s some real chance of that noise being heard. Governments tend to favor people who’ve already made their fortune, industries that are already ascendant: that’s who comes with blocs of employees who vote, and that’s who can afford the bribes. But investors are all about who’s going to make money next. That’s why Tesla is worth far more than General Motors in the stock market, if not in the halls of Congress.

Moreover, if we can persuade the world of money to act, it’s capable of doing so quickly. Should, say, Chase Bank, currently the biggest lender on earth to fossil fuel, announce this year that it was quickly phasing out that support, the news would ripple out across stock markets in the matter of hours. That’s why some of us have felt it worthwhile to mount increasingly larger campaigns against these financial institutions, and to head off to jail from their lobbies.

The world of money is at least as unbalanced and unfair as the world of political power – but in ways that may make it a little easier for climate advocates to make progress.

Putin’s grotesque war might be where some of these strands come together. It highlights the ways that fossil fuel builds autocracy, and the power that control of scarce supplies gives to autocrats. It’s also shown us the power of financial systems to put pressure on the most recalcitrant political leaders: Russia is being systematically and effectively punished by bankers and corporations, though as my Ukrainian colleague Svitlana Romanko and I pointed out recently, they could be doing far more. The shock of the war may also be strengthening the resolve and unity of the world’s remaining democracies and perhaps – one can hope – diminishing the attraction of would-be despots like Donald Trump.

But we’ve got years, not decades, to get the climate crisis under some kind of control. We won’t get more moments like this. The brave people of Ukraine may be fighting for more than they can know.

  • This story is published as part of Covering Climate Now, a global collaboration of news outlets strengthening coverage of the climate story

Major Bank Ends New Investment in Arctic Drilling, Tar Sands/Oil Sands, and (Most) Coal Projects

Repost from The Globe and Mail

HSBC to stop funding most new fossil fuel developments

LONDON REUTERS, PUBLISHED APRIL 20, 2018
The HSBC bank logo is seen at their offices in the Canary Wharf financial district in London on March 3, 2016. | REINHARD KRAUSE/REUTERS

Europe’s largest bank, HSBC, said on Friday it would mostly stop funding new coal power plants, oil sands and arctic drilling, becoming the latest in a long line of investors to shun the fossil fuels.

Other large banks such as ING and BNP Paribas have made similar pledges in recent months as investors have mounted pressure to make sure bank’s actions align with the Paris agreement, a global pact to limit greenhouse gas emissions and curb rising temperatures.

“We recognise the need to reduce emissions rapidly to achieve the target set in the 2015 Paris Agreement … and our responsibility to support the communities in which we operate,” Daniel Klier, group head of strategy and global head of sustainable finance, said in a statement.

HSBC said it would make an exception for coal-fired power plants in Bangladesh, Indonesia and Vietnam.

“There’s a very significant number of people in those three countries who have no access to any electricity,” HSBC chief John Flint told HSBC shareholders at the bank’s annual general meeting in London on Friday.

“The reasonable position for us is to allow a short window for us to continue to get involved in financing coal there … if we think there is not a reasonable alternative,” he said.

Aside from the coal exemptions environmental campaigners Greenpeace welcomed the move and said HSBC’s new energy strategy would prevent it from providing project finance for TransCanada Corp.’s proposed $8-billion Keystone XL oil pipeline to Nebraska.

“This latest vote of no-confidence from a major financial institution shows that tar sands are becoming an increasingly toxic business proposition,” John Sauven, executive director of Greenpeace UK, said in a statement.

Investing in socially responsible companies makes sense

Repost from the San Francisco Chronicle
[Editor:  Significant quote: “Studying the performance of over 2,000 companies in six sectors, the researchers discovered the stock price of companies that invested to improve sustainability in ways that were material to their businesses outperformed companies that did not.”  – RS]

Investing in socially responsible companies makes sense

By Tom Kiely, Lenny Mendonca and Steve Westly, September 17, 2015

What do CalPERS, and many of the world’s largest sovereign wealth funds from Scandinavia to the Mideast have in common? They’re betting big on sustainability.

In May, the California Public Employees’ Retirement System, a $307 billion retirement fund, said it will require its asset managers to factor environmental and social risks into their investment decisions. Norway’s giant national sovereign wealth fund, with $890 billion in assets built off its oil and gas reserves, is divesting from companies that mine or burn coal. A majority of the world’s largest institutional investors — pension funds, insurance companies, sovereign wealth funds — incorporate considerations about a business’s environmental and social track record into their investment decisions.

However, too many company managers are still under the spell of the myth that shareholders are the only stakeholders who count. For decades, neo-classical economists suggested — and business schools taught — that sustainability investments unnecessarily raise a firm’s costs, creating a competitive disadvantage. Invest in anything but the bottom line, and you risk your survival we’ve been told endlessly.

Shareholder idolatry holds executives back from making the investments they should to benefit the planet and their businesses in the long-term. For every corporate leader there is a regiment of laggards.

Sure, most of the Standard & Poor’s 500 companies issue sustainability or social responsibility reports each year, but try reading those reports — they are a catalog of the tepid. Few companies integrate social and environmental factors deeply into their business strategies. U.S business organizations, such as the Chamber of Commerce, have opposed government-led efforts to reduce climate risk as overly bureaucratic and costly for business, while doing little to further business-led initiatives to improve corporate sustainability.

That’s a big mistake. For instance, in one recent study, three Harvard Business School professors showed how “firms with good performance on material (our emphasis) sustainability issues significantly outperform firms with poor performance on these issues.”

When it comes to these investments, the materiality test is crucial. Companies make all kinds of investments in sustainability and in corporate social responsibility programs. But only some of these things have a material impact on performance. The researchers looked at a set of environmental, social, and governance measures that both companies and their investors deemed material and measured their impact on stock prices.

What did they find? Studying the performance of over 2,000 companies in six sectors, the researchers discovered the stock price of companies that invested to improve sustainability in ways that were material to their businesses outperformed companies that did not.

This makes sense to a growing number of investors. Smart sustainability investments allow companies to attract better employees, improve their brands to sell more or sustain a price premium.

What should be done? Companies must do a better job of compiling non-financial data on their environmental and social performance and report it to investors and other stakeholders. Fifty percent of institutional investors surveyed by PricewaterhouseCoopers in 2014 said they were dissatisfied with the environmental-social-governance information companies provided.

Business leaders need to step up and champion these efforts.

Also, executives should act like leaders in policy debates. In early June, 80 companies, including U.S.-based Coca-Cola and Mars, pressed the British government to fight for strong action against climate change in international talks, and to aggressively push for a long-term low-carbon plan for the United Kingdom.

Where are U.S. business leaders on this?

Business leaders should propose a concrete plan for pricing carbon, for instance. After all, more than 150 companies already factor a carbon price into their business planning decisions, according to a recent study by CDP, a sustainability measurement organization. Executives have the public clout to elevate the debate on carbon pricing, and the experience to propose pragmatic frameworks for getting this done.

Corporate executives need to stop thinking of sustainability as a political discussion, and see it for what it is: good business.

Tom Kiely is a member of the Standards Council of the Sustainability Accounting Standards Board. Lenny Mendonca is a consultant to leaders in the public and social sectors. Steve Westly, a former state controller, is managing director of the venture capital firm the Westly Group.

Investor Q&A: Why the Rockefeller Brothers Fund is divesting from fossil fuels

Repost from GreenBiz
[Editor: See also ABC News: Fossil Fuel Divestment Effort Comes to Energy-Rich Colorado – “A campaign to get universities to stop investing in greenhouse gas-producing fuels came deep into energy country Friday as activists asked the University of Colorado to divest from coal and petroleum companies.”  – RS]

Investor Q&A: Why the Rockefeller Brothers Fund is divesting from fossil fuels

IFC SUSTAIN Magazine, Thursday, February 26, 2015 – 2:00am 
Rockefeller Brothers Fund divest fossil fuels
Here’s why a foundation built upon oil is pulling its funds from fossil fuels. Shutterstock/

Rockefeller and oil go together like Starbucks and coffee.

So it took most people by surprise when the Rockefeller Brothers Fund (RBF) announced in September that it would divest from fossil fuels and invest in cleaner alternatives.

In a recent Q&A, Rockefeller Brothers Fund President Stephen Heintz explained what led to the decision, how the foundation is restructuring its investments and how he expects others to react.

Stephen Heintz Rockefeller Brothers Fund
Stephen Heintz, president of the Rockefeller Brothers Fund.
IFC SUSTAIN: Can you explain what led to your decision to divest from fossil fuels?

Stephen Heintz: Combatting climate change with grant dollars alone is no longer sufficient.

Since 2010, the RBF has been working to invest a portion of our endowment (10 percent) in companies that are advancing sustainable practices and clean energy technologies. During Climate Week in September, we announced that the RBF has launched a two-step process of fossil fuel divestment.

IFC SUSTAIN: Can you describe how you are divesting?

Heintz: Our first step was to exit from investments in coal and tar sands oil, two of the most carbon-intensive fossil fuels. The second step of our process has been to undertake a detailed analysis of our remaining fossil fuel exposure (oil and gas) and to develop a plan for further divestment.

We are working to balance our deep concern over fossil fuels with the Fund’s longstanding mandate that our assets be invested with the goal of achieving financial returns that will maintain the purchasing power of our endowment, so that future generations will also benefit from the foundation’s charitable giving.

IFC SUSTAIN: Do you think other investors will follow your lead?

Heintz: Yes, we are very confident others will join this effort. Globally, we need greenhouse gas emissions reductions of at least 80 percent by 2050. We can only get there by leaving the bulk of coal, oil and gasin the ground and by transitioning to clean energy without delay.

Yet the stock price of a fossil fuel company is linked to its reserves. These are stranded and unburnable assets whose economic value is diminished — a reality that investors now understand and are starting to consider in their investment decisions.

Clear evidence of the increasing number of investors recognizing the urgency of this issue and acting on it can be seen in the growing numbers of institutions and individuals who have signed onto the Divest/Invest Philanthropy pledge.

IFC SUSTAIN: How do you think this pressure from investors will affect extractive companies?

Heintz: The pressure from this movement of investors is, we feel, adding weight to the critical conversation about policy — national, international and corporate — on addressing climate change with an urgency that is proportionate to the challenge.

Capital market and regulatory conditions are uniquely material to the viability of extractive businesses. Investor pressure on companies is a part of a larger discussion that will increasingly influence commodity prices, the cost of capital, and global regulatory agendas, which will have an impact on the operations of these companies.

By putting our money where our mouth is, we have been part of an effort that has taken the question of stranded assets from a hypothesis of activists to a mainstream consideration within capital markets and even central banks (see, for example, recent Bank of England statement).

IFC SUSTAIN: What specific changes can extractive companies reasonably make to address climate change and continue to attract investors?

Heintz: Concretely, companies can look at how to be good stewards of shareholder capital and commit to a candid assessment of how to best use their resources. Borrowing to invest in long-term risky projects that require $140 per barrel of oil to break even is difficult to justify.

Responsive companies will focus on returning capital to shareholders instead and migrate from a growth-at-all-costs (regardless of future profits) mindset. Extractive companies can begin to redeploy CAPEX from searching for more reserves to diversifying their businesses by investing more aggressively in renewable energy.

IFC SUSTAIN: Looking into the future, how do you think your energy investment portfolio will evolve?

Heintz: The window of opportunity to avoid catastrophic climate change narrows with each day.

Clean energy technologies and other business strategies that advance energy efficiency, decrease dependence on fossil fuels, and mitigate the effects of climate change are the way forward. Our investments in these sectors will continue to grow as more and more economically attractive opportunities open up.

This article first appeared at SUSTAIN, a magazine produced by the International Finance Corporation, a member of the World Bank Group.