It seems gradually to be dawning on people, in a world in which you literally cannot give away Bud Light for free, that the preferences of the loud and trendy left may not be those of normal people. Including when it comes to the famous ESG (“Environmental, Social and Governance”) criteria that are meant to elbow aside vulgar shareholder profit in favour of the preferences of wokesters who never invested a dime in your company but want control for higher purposes that may not, regrettably, include you staying afloat financially. From Shell to Warren Buffet’s Berkshire Hathaway, real shareholders and management are fighting back, or at least slinking away, and not a moment too soon, especially given some high-profile bank failures not unrelated to focusing on ESG rather than dollars and cents. But you cannot concede the premises then reject the conclusion, so they need also to stop pretending they agree with motions they are working overtime to defeat.
Reuters “Sustainable Switch” is dismayed, unsurprisingly. It reports that:
“The battle against environmental, social and governance (ESG) policies carries on this week as proxy advisors for oil giant Shell fight for shareholder votes on climate proposals. In a blow for pro-ESG activists, investors at Warren Buffet’s Berkshire Hathaway overwhelmingly rejected climate and diversity initiatives. Shell shareholders should vote against a climate activist resolution seeking faster emissions cuts, proxy advisory firm Institutional Shareholder Services (ISS) said, while acknowledging the merits of the proposal.”
As noted, if you acknowledge the merits of the proposal it seems a bit odd to beg people not to support it. As “Sustainable Switch” goes on:
“Shell investors will vote at an annual general meeting on May 23 on a resolution filed by the Follow This activist shareholder group which asks the energy giant to align with the 2015 Paris climate deal. Scientists say the world needs to cut greenhouse gas emissions by around 43% by 2030, from 2019 levels, to have any hope of meeting the Paris Agreement goal of keeping global warming well below 2C above pre-industrial levels.”
Do investors believe it? Well do they? Because if so they should divest from Shell or, better yet, vote to shut it down or turn it into a wind farm. Instead:
“Shell has recommended its shareholders vote against the Follow This proposal. ISS, whose recommendations steer many investors’ voting, said Follow This’s ‘argument that intensity metrics are not a substitute for absolute metrics is entirely valid’ and is echoed by ISS analysis.”
So maybe they need T-shirts saying “Yes, capitalists are greedy planet-trashing hypocrites.” Or just “I’m not with stupid, I am him.”
Heatmap seems to think so, writing that:
“ESG stands for ‘environmental, social, and governance’ and refers to a mainstream financial investing philosophy that considers factors beyond pure earnings numbers, such as a company’s diverse board, which has been shown to improve performance, or the momentum behind the transition to renewable energy, which might make investing in an oil company a bad long-term bet.”
So if “a company’s diverse board… has been shown to improve performance,” possibly because experts say or scientists do or something, you’d have to be a dolt not to do it and not to boast of it. If. Whereas this famous “momentum behind the transition to renewable energy” that “might make investing in an oil company a bad long-term bet” (gosh, ya think?) would be a fairly silly thing for an oil company to endorse in principle if it didn’t intend to stop being an oil company one way or another.
Even Canadian banks are feeling the heat from shareholders, unusual in this sheltered and complacent sector. Though the Canadian government has ways to make them ESG whether they want to or not. Meanwhile over at Berkshire Hathaway, which is an investment company, “Sustainable Switch” complains:
“By margins of at least 3-to-1, shareholders voted against three proposals that Berkshire disclose more about its climate-related risks or greenhouse gas emissions and efforts to address them, and its efforts to promote diversity. One of the climate disclosure proposals was co-sponsored by the California Public Employees Retirement System (CalPERS), the largest U.S. public pension fund, and was rejected for a third straight year.”
On what grounds? If Berkshire knows about climate-related risks, and is trying to address greenhouse gas emissions and promote diversity, except of ideas, why not admit it? Indeed why not boast of it?
As for CalPERS, public sector unions‘ pension plans are in the blessed position for wokesters of having access not merely to vast amounts of other people’s money, but also an implicit government backstop if their investment strategy turns out to be sanctimonious nonsense. Taxpayers should be so lucky, especially when central banks get the ESG bug too. (Curiously, the Canada Pension Plan’s hyperactive investment strategy includes at one and the same time risky plays on profitless green firms and also massive investments in China including coal, which they defended in singularly unconvincing manner when challenged.)
“Sustainable Switch” further complains that:
“the fight for pro-climate policies is not just limited to the United States as Australia’s 30 biggest pension funds increased their investments in key coal, oil and gas producers by 50% in 2022 despite the funds’ long-term commitments to net zero carbon emissions, environmental activist group Market Forces said.”
Now “long-term commitments” may not mean the same thing to the PR department as they do to Extinction Rebellion. But again there is danger, practical as well as moral, in being too clever by half on such things.
Naturally “Sustainable Switch” smells a plot by you-know-who, big bad Republican mean white men. It also warns that:
“After months of build-up, Florida governor Ron DeSantis has signed into law a bill barring state officials from investing public money to promote environmental, social and governance (ESG) goals. Scroll on for how DeSantis’ anti-ESG rhetoric targets climate change and diversity initiatives. And find out how sheep at an energy farm in Kosovo have helped workers deal with mowing grass in today’s ESG Spotlight. The bill is one of the farthest-reaching efforts yet by the U.S. Republicans against sustainable investing efforts, and a clear political message from DeSantis, a likely presidential candidate.”
Frankly we’d rather hear about the sheep in Kosovo than the ones in a shareholder’s meeting. But in yet another piece “Sustainable Switch” complains that:
“Another day, another attempt by United States Republicans to contest environmental, social and governance (ESG) policies in financial institutions. This time, Republicans set their sights on BlackRock Inc’s ownership of utilities companies, stating that the firm is ‘an environmental activist’.”
Well, is it? And if so why not be proud of it? Would you really do it on the sly?
As we’ve noted before, BlackRock is very big on Net Zero except when it comes to its own investments in China where it’s very big on making money regardless of the moral downside. Or at least it was until it suddenly pivoted to voting against shareholder “green activism” while still claiming to believe and then its CEO, Larry Fink, opted to skip COP27 last November to attend, of all tawdry mundane things, a BlackRock board meeting. Seems if you want to stay the world’s biggest asset manager you have to manage assets, and with an eye to shareholder value not stakeholder activism. Who knew?
P.S. One of the groups supporting the Follow This proposal at Shell’s upcoming AGM is the “Church of England Pension Board” which, we suggest acidly, might want to think more about attracting parishioners to its churches and less about being holier than thou lest it be rebuked as a whited sepulchre or some such.
Several examples shown here of investment firms saying "do as I say,not as I do" regarding ESG.I'm in contact with my financial advisor about the possibility of divesting from
Mackenzie Investments due to this very subject.Only 45% of their shareholders are interested in being "greener",which is not a majority.