Guest essay by Eric Worrall
Prominent climate activist Bill McKibben is unhappy that fund managers seem to be putting profits ahead of action to curb climate change.
Let’s give up the climate change charade: Exxon won’t change its stripes
Every year at the shareholders’ annual meeting, there is an attempt to push the company on reducing emissions. It’s time to stop trying and divest instead.
In 1990, a small group of investors offered a resolution at Exxon’s annual shareholder’s meeting asking that it “develop a company-wide plan to reduce carbon dioxide emissions.” The company opposed the motion, which won 6% of the vote, on the grounds that “the facts today and the projection of future effects are very unclear.”
Here’s what happened since 1990: we’ve had all 25 of the hottest years ever measured on our planet. We’ve lost half of Arctic sea ice. The ocean has become markedly more acidic.
In 1997, Father Michael Crosby, a Catholic shareholder activist from Milwaukee, offered a less taxing resolution: perhaps Exxon could merely report on the impact that climate change would have on the company’s business? Exxon refused, arguing that there was “great uncertainty” about climate change. The resolution eventually took 4.5% of the vote.
And others – the comptroller of the state of New York, for instance – are going through this charade because they’ve been pressured to divest their shares: to join everyone from the University of Hawaii to the city of Copenhagen to the Rockefeller family in a huge campaign that’s helped change the dynamic around energy investing. Instead of saying yes and joining in, these officials are trying to greenwash their way out of real action.
Even if somehow one of the handfuls of climate-related resolutions were to win a majority of the shareholders’ votes, the resolutions are non-binding; those with the most support merely request annual reports. What more information do shareholders need? Exxon has spent millions on climate policy obstruction, and – scientist’s pleas to the contrary – plans to burn all of its reserves and keep hunting for more.
If this meeting ends with the same dismal failure as the past 25, it’s time to admit the obvious: the Exxons of the world are not going to change their stripes, not voluntarily. It will be time for state treasurers and religious groups to join those students and frontline communities and climate scientists who are saying “No more.” It will be time – past time – to get serious, divest and break free of fossil fuels once and for all.
In my opinion this ridiculous demand is nothing short of an unhinged exercise in personal ego.
As Bill McKibben must be aware, politically motivated divestment is an act of financial self destruction. If the deep green manager of a major fund were to divest from a profitable business, the act of divestment, driving down the share price of the divested asset, would make the divested asset even more attractive for other investors. Everyone else would jump in, to cash in on the financial opportunity created by green stupidity.
By the time the dust settled, the share price of the “divested” asset would be back to normal, and what was left of the major fund would fire the idiot who divested their profits. They would find a new manager, someone who was a little more committed to doing their job.
So Bill suggests that governments, schools and religious groups, organisations managed by people whose jobs might not be so closely aligned to the profitability of their investments, should abrogate their responsibility to the people whose money they manage, throw away potential income, to make what would almost certainly be a meaningless political gesture.
Bill doesn’t seem to pause to consider the harm this would do – the hospitals and schools which would receive less funding, the poor people who would receive less benefits, the increased taxation, the church charities which would be starved of cash. Bill is no fool – surely he knows that the companies he wants to target would not be significantly affected – there are more than enough investors who don’t care about green issues, to snap up the bargain priced assets created by divestment. But inspiring a gigantic exercise in public wealth immolation would sure look great on his next blog post.