The holiday season is almost upon us. Here’s the last of my Twelve Days of Christmas rant….it’s been emotional! Thanks to readers who have chipped in, and to those who have commented on the scrooge-like size of my santa hat….it was the only one I could find in the office ;0)
On the eleventh day of Xmas, my true love gave to me: 11 pipers piping
No, not those pipers, Scottish music fans!
We’re talking oil and gas pipers here people. I’ve lost track of the number of times I’ve heard over the years that investors will never toughen up the pressure on oil and gas companies because they are addicted to the hefty dividends; environment be damned!
Well, I think (hope…pray) we may be turning a corner. Royal Dutch Shell’s recent announcement that it would set carbon emissions targets, including Scope 3 emissions – rather than just having “ambitions” – and link the targets to executive pay, is a major step forward. It is the first real output of more muscular investor engagement from a broad number of actors. It will be hard for other majors to resist action. Indeed, Shell and its peers are already signed up to a number of climate commitments, including membership of the Climate Leadership Council which might sound like an oxymoron if it weren’t for the fact that we need oil companies to become energy transition leaders. We require some positive realpolitik in the climate debate. The majors have the money to do it, and the rationale, if regulators start to do their bit and price C02 emissions realistically. Speaking at the RI Americas conference in New York earlier this month, Bob Litterman, the founding partner of Kepos Capital and former Head of Risk Management at Goldman Sachs, said he thought tougher significant pricing hikes was just a couple of years away and that oil majors now realised they could not avoid this and had to be out front in terms of a strategic shift. Certainly, I think the CLC’s goals of gradually rising and revenue-neutral carbon tax with publicly distributed carbon dividend payments is a smart way to avoid the pushback of movements like the French gilets jaunes where climate policy is not pragmatic enough to garner broad support. Litterman’s is an optimistic view. But hey, this is the season of goodwill!
If all that fails, then perhaps the new sitcom on the Norwegian oil fund might make it to netflix and turn on a new wave of retail investor shareholder engagers!On the twelfth day of Xmas my true love gave to me: 12 drummers drumming
Last but not least the sound of the drums, the pounding of the rhythm, millions of hearts beating.
It’s a good time of the year to remember that the collective work of supporters of responsible investment is what has led to the changes we have seen. Sometimes I think we are too reticent in the ESG/responsible investment world in not celebrating the huge difference that has been made. There is an ENORMOUS amount still to be done, and now is the time to re-double efforts. Investors can’t take the place of governments or consumers…it’s not their role, although they have a critical role to play if incentivised or pressured to play it. Investors must, however, realise their self interest in being part of societal solutions, not handwringing harbingers of social disintegration. Changing the vested interests of finance is a mammoth task. The fruits of 20+ years of advocacy are now starting to be felt: institutional investors are finally realising where real value resides in companies (in the medium to long-term) within a more sustainable economy. But the context of unpicking an investment system/model that has existed in its current form, and with crippling self-interest to maintain the status quo, is so powerful that even the global financial crisis (aka as the impending end of capitalism back in 2007) did little to change its tack. We need to keep asking the tough questions, promoting the right partnerships for sustainable growth between institutional investors and public bodies, influencing politicians and mobilising public campaigns. ‘ESG people’ within organisations need to keep doing all they can within their spheres of influence to promote sustainable finance where they can. Enabling people, where possible, is key. Communicating the value of ESG and responsible investment for investment and society is primordial. We should be pragmatically positive!
Happy Christmas and a peaceful new year from all of the team at Responsible Investor. We look forward to seeing you in 2019!