Tag: ESG

Why Engine No. 1’s Victory Is a Wake-up Call for ExxonMobil and Others

Mary Pat Campbell
Why Engine No. 1’s Victory Is a Wake-up Call for ExxonMobil and Others

Excerpt:

Over the past two weeks, activist hedge fund investor Engine No. 1 scored a victory for the climate change movement by wresting three board seats at ExxonMobil with the support of the “Big Three” institutional investment firms BlackRock, Vanguard, and State Street. But the episode also marks a failure in ExxonMobil’s “corporate diplomacy” because of its inability to convincingly demonstrate that it is committed to mitigating climate risks and protecting its long-term business value, according to Wharton management professor Witold Henisz.

…

Engine No. 1 has only a 0.02% stake in ExxonMobil, but the climate risk issues it pushed for were sufficient to get the three big investment firms on its side. In explaining its stance, BlackRock stated that the energy major needs “to further assess the company’s strategy and board expertise against the possibility that demand for fossil fuels may decline rapidly in the coming decades.” BlackRock CEO Larry Fink had reiterated his company’s commitment to combating climate change in his 2021 annual letter to CEOs; in his 2020 letter to CEOs, he had said that “climate risk is investment risk.”

Author(s): Witold Henisz

Publication Date: 15 June 2021

Publication Site: Knowledge @ Whatron

Illinois targets coal plant closures before all bonds retire

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202106071513SM______BNDBUYER_00000179-e7af-dd1a-ab7d-efefe4190001_110.1

Excerpt:

A proposed mandate to shutter the $5 billion Prairie State coal energy campus and a Springfield, Illinois? plant by 2035 would hit local ratepayers with the double burden of funding new energy sources while still paying down project bonds, a bipartisan group of state lawmakers warn.

Gov. J.B. Pritzker backs a state mandate to end coal generation by 2035 to meet de-carbonation targets included in pending energy legislation. The package stalled during the General Assembly?s spring session that ended last week, but Pritzker said he expects lawmakers will return in the coming weeks for a vote.

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Retiring Prairie State early would mark the latest headache for some of the nine public utilities in Illinois, Indiana, Kentucky, Missouri, and Ohio that issued $4.5 billion of debt, some it under the federal Build America Bond program, to finance their ownership in project.

Peabody Energy Inc. initially sponsored the project in Washington County promoting it as an affordable source of energy with an adjacent mine and a cleaner one given its state-of-the-art technology at the time. Bechtel Power Corp. built it. It initially carried a $2 billion price tag that rose to a $4 billion fixed cost under the 2010 contract with utilities but cost overruns drove the price tag up to $5 billion.

Author(s): Yvette Shields

Publication Date: 7 June 2021

Publication Site: Fidelity Fixed Income

The Exxon Vote: Pension Supporters Stay Onboard to Advance Change

Mary Pat Campbell

https://www.ai-cio.com/news/the-exxon-vote-pension-supporters-stay-onboard-to-advance-change/

Excerpt:

Sticking around and backing dissident board candidates worked. Instead of divesting from Exxon Mobil, the US’s biggest oil company, the nation’s three largest public pension funds pursued a successful strategy of advocating for change, and they just helped elect a pair of outside directors. Expect more of this tack against fossil fuel outfits.  

Running counter to the trend of pension programs dumping fossil fuel stocks, these giant retirement systems—the California Public Employees’ Retirement System (CalPERS), the California State Teachers’ Retirement System (CalSTRS), and the New York State Common Retirement Fund—believe that, in most cases, working from within is the better way to promote change.

They were key players in electing the two outside directors (a third is still up in the air as proxy ballots are counted), along with huge asset managers BlackRock and Vanguard, plus other pension entities such as the Church of England’s program.

Author(s): Larry Light

Publication Date: 1 June 2021

Publication Site: ai-CIO

UPDATE 2-Canada Pension Plan Investment Board eyes assets in shift to clean energy

Mary Pat Campbell

Link: https://www.reuters.com/article/cppib-results/update-2-canada-pension-plan-investment-board-eyes-assets-in-shift-to-clean-energy-idUSL2N2N70WU

Excerpt:

The Canada Pension Plan Investment Board (CPPIB) is hunting for investments in the world’s transition to renewable energy as it aspires to be a global leader in sustainability, the head of the company told Reuters on Thursday.

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The pension manager last month announced it was creating a new investment group that would generate investment opportunities in renewables, conventional energy and new technology and service solutions.

CPPIB’s exposure to renewable energy producers rose to C$7.7 billion at March 31 2021, from C$6.6 billion at March 31, 2020, according to a spokesman for the firm.

Author(s): Maiya Keidan

Publication Date: 20 May 2021

Publication Site: Reuters

DiNapoli Moves State Pension Fund Toward Net Zero Target, Restricts Investments in Oil Sands Companies

Mary Pat Campbell

Link: https://www.osc.state.ny.us/press/releases/2021/04/dinapoli-moves-state-pension-fund-toward-net-zero-target-restricts-investments-oil-sands-companies

Excerpt:

The New York State Common Retirement Fund (Fund) will restrict investments in oil sands companies that have not demonstrated that they are prepared for the transition to a low-carbon economy, New York State Comptroller Thomas P. DiNapoli, trustee of the third largest public pension plan in the country, announced today.

This action is tied to DiNapoli’s comprehensive Climate Action Plan to lower investment risks from climate change and transition the Fund’s investment portfolio to net zero greenhouse gas emissions by 2040.

“As nations around the world become increasingly serious about addressing the threat of climate change and as market forces drive a low-carbon economic transition, we need to make sure our investments line up with this reality,” said DiNapoli. “We have carefully reviewed companies in the oil sands industry and are restricting investments in those that do not have viable plans to adapt to the low-carbon future. Companies responsible for large greenhouse gas emissions like those in this industry, pose significant risks for investors.”

Publication Date: 12 April 2021

Publication Site: Office of the NY State Comptroller

DiNapoli: NYS Pension Fund Announces $400 Million in Sustainable Investments

Mary Pat Campbell

Link: https://www.osc.state.ny.us/press/releases/2021/04/dinapoli-nys-pension-fund-announces-400-million-sustainable-investments

Excerpt:

The Fund committed approximately $300 million to Copenhagen Infrastructure Partners IV, a European investment fund that will focus on investments in renewable assets including onshore and offshore wind and solar, as well as climate infrastructure assets that support renewable power.

Additionally, the Fund committed $100 million to Excelsior Renewable Energy Investment Fund I, a North American-focused investment fund that will target investments in renewable power assets such as solar and wind.

Publication Date: 20 April 2021

Publication Site: Office of the NY State Comptroller

Who Really Pays for ESG Investing?

Mary Pat Campbell

Link: https://www.wsj.com/articles/who-really-pays-for-esg-investing-11620858462

Excerpt:

A recent analysis by Scientific Beta disputes “claims that ESG funds have tended to outperform the wider market.” Sony Kapoor, managing director of the Nordic Institute for Finance, Technology and Sustainability, a think tank, told the Financial Times that the research “puts in black and white what is only whispered in the corridors of finance — most ESG investing is a ruse to launder reputations, maximize fees and assuage guilt.”

BlackRock’s former chief investment officer for sustainable investing, Tariq Fancy, appears to understand this. He recently wrote in USA Today that he was concerned about portfolio managers exploiting the “E” of ESG investing because “claiming to be environmentally responsible is profitable” but advancing “real change in the environment simply doesn’t yield the same return.” Mr. Fancy criticized “stalling and greenwashing” in “the name of profits.”

This is a tacit admission that ESG investing upends the fiduciary duties portfolio managers owe their clients. As Mr. Fancy acknowledged, “no matter what they tout as green investing, portfolio managers are legally bound” to “do nothing that compromises profits.” As former Labor Secretary Eugene Scalia wrote on these pages last year, under the federal law that protects retirement assets, known as Erisa, “one ‘social’ goal trumps all others — retirement security for American workers.”

Author(s): Andy Puzder, Diane Black

Publication Date: 12 May 2021

Publication Site: Wall Street Journal

Mass. sanctions against Iran could be tested

Mary Pat Campbell
Mass. sanctions against Iran could be tested

Excerpt:

On August 4, 2010, Massachusetts passed “An Act Relative to Pension Divestment from Certain Companies that Invest in the Republic of Iran.”  The act directs the Massachusetts public pension funds to divest from certain companies “providing goods or services deployed to develop petroleum resources in Iran.”

In an effort to avoid conflict with federal policy, the Massachusetts act has two features.  First, it exempts from state divestment “any company” that the US “affirmatively declares to be excluded from” federal sanctions.  Second, the act has a sunset provision.  The act expires if (1) the US “remov[es] Iran from its list of state sponsors of terrorism and certify[ies] that Iran is no longer pursuing a nuclear capability in violation of its international commitments and obligations,” or (2) the president “declar[es] that [the Massachusetts act] interferes with the conduct of the United States foreign policy.”

The Massachusetts Iran boycott has a long pedigree.  In New England and other colonies, the founding generation considered the boycott of English tea and other products to be a wise alternative to war.  Prior to the Civil War, Massachusetts abolitionists urged private boycotts of Southern goods.  In the 1980s, Massachusetts was one of scores of states and cities to enact divestment and selective purchasing laws regarding South Africa.  In 1996, Massachusetts restricted state purchasing from companies doing business in Burma, though the act was later struck down by the Supreme Court.  Massachusetts today maintains laws restricting state investment or procurement with Sudan, China, and Northern Ireland.

Author(s): Thomas A. Barnico

Publication Date: 24 April 2021

Publication Site: CommonWealth

NY State Pension Commits to $400 Million in Sustainable Investments

Mary Pat Campbell

Link: https://www.ai-cio.com/news/ny-state-pension-commits-400-million-sustainable-investments/

Excerpt:

The $247.7 billion New York State Common Retirement Fund has committed approximately $400 million to two funds as part of its Sustainable Investments and Climate Solutions (SICS) Program.

The commitments are part of New York State Comptroller Thomas DiNapoli’s climate action plan to lower investment risks from climate change and help shift the pension fund to net-zero greenhouse gas emissions within the next 20 years.

Author(s): Michael Katz

Publication Date: 26 April 2021

Publication Site: ai-CIO

NY State Pension Commits to $400 Million in Sustainable Investments

Mary Pat Campbell

Link: https://www.ai-cio.com/news/ny-state-pension-commits-400-million-sustainable-investments/

Excerpt:

The $247.7 billion New York State Common Retirement Fund has committed approximately $400 million to two funds as part of its Sustainable Investments and Climate Solutions (SICS) Program.

The commitments are part of New York State Comptroller Thomas DiNapoli’s climate action plan to lower investment risks from climate change and help shift the pension fund to net-zero greenhouse gas emissions within the next 20 years.

“While climate change poses investment risks, it also creates opportunities for the state pension fund to invest in the companies and funds that are best positioned for the low-carbon future,” DiNapoli said in a statement. “The commitments we announced today aim to take advantage of the growth in climate investing and to strengthen our portfolio for the long-term.”

Author(s): Michael Katz

Publication Date: 26 April 2021

Publication Site: ai-CIO

Financial Institutions Form Global Alliance to Fight Climate Change

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2021/04/21/financial-institutions-form-global-alliance-to-fight-climate-change/

Excerpt:

On the eve of President Joe Biden’s virtual climate change summit with approximately 40 other world leaders and the fifty-first anniversary of Earth Day, a new alliance of 160 financial institutions was formed to achieve net zero by 2050 or sooner.

The Glasgow Financial Alliance for Net Zero (GFANZ) consists of three separate groups representing different sectors of the financial universe — the Net Zero Banking Alliance (NZBA), comprising 43 banks from 23 countries including Bank of America, Citi and Morgan Stanley in the U.S.; the Net Zero Asset Managers Alliance of 87 firms, including BlackRock, Vanguard, Allianz Global Advisors, Invesco and State Street Global Advisors and Trillium Asset Management, which joined Wednesday; and the 37-member UN-Convened Net Zero Owners Alliance, which includes the David Rockefeller Fund and the California Public Employees’ Retirement System (CalPERS).

Author(s): Bernice Napach

Publication Date: 21 April 2021

Publication Site: Think Advisor

Treasury reveals pension fund still holds stake in gunmaker

Mary Pat Campbell
Treasury reveals pension fund still holds stake in gunmaker

Excerpt:

New Jersey’s public-worker pension fund continues to own a small stake in a company that manufacturers firearms, several years after Gov. Phil Murphy and lawmakers first raised concerns about public investments in the gun industry.

As of earlier this month, the pension fund owned shares worth an estimated $28 million in a company that, among other products, specializes in making custom sporting shotguns and rifles, according to the latest information provided by the Department of Treasury.

However, the overall $85 billion worker-pension fund has cut ties in recent years with a manufacturer of firearms ammunition, which had been its only other direct link to the firearms industry, Treasury officials confirmed.

Author(s): John Reitmeyer

Publication Date: 26 April 2021

Publication Site: NJ Spotlight News