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human activity and the destruction of the planet


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Paris Agreement is leading to changes in investment strategies

According to John Plender, writing for the Financial Times on December 15th 2017, there are rapid changes underway to support greener economies, triggered by the Paris Agreement.  Details of this can be found in his article, “Rapid Changes in the climate for carbon-heavy investments”:

https://www.ft.com/content/c4a6f996-e003-11e7-a8a4-0a1e63a52f9c?accessToken=zwAAAWBuKbfgkdPEpvmW4AMR59OopAoeY6UvnA.MEYCIQDtLsT_sdkXbW-Q5_nxhSF07nxX_8QZZMFRbs4c5hSMmwIhAKpQ8GLevHy1q_NZ5P6CgpgOQqoNSgBhxE6AeupwMejP&sharetype=gift

According to Plender, this is even affecting the notorious ExxonMobil, the world’s biggest oil and gas group, which is bowing to investor pressure to increase disclosure on climate risks to its business.  At it’s May AGM, there was a 62% vote against the board on a shareholders’ proposal calling for a yearly assessment of the long-term portfolio impact of climate change policies.  The company has now agreed to demonstrate how it would be affected by the Paris Agreement, as well as explaining its positioning on a lower carbon future.  This is a considerable climb down from previous resistance to similar proposals in earlier years.

In addition, in a separate initiative, 225 global institutional investors are putting pressure on 100 of the world’s more carbon intensive companies, to increase their actions to reduce climate change.  These investors control assets worth $26.3 tn.  This initiative is known as Climate Action 100+ and is the biggest shareholder action plan ever launched.

According to Plender, it is Mark Carney, Governor of the Bank of England, who has been influential in outlining the financial risks in continuing to burn fossil fuels, as well as the risks to the future of the planet. Many companies are not properly positioned for a low carbon economy and much capital is currently being misallocated.

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If these changes in investment strategies are happening, then it is a huge step forward.  However, to meet the 2015 Paris commitments, most companies will need to reduce their carbon emissions by up to 80%.