Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates • Hacker News Board

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#71

Post by jdhn » Tue, Sep 17, 2019, 11:10 PM UTC

emckay wrote: post #20

Divestment also results in less shareholder oversight of emission heavy companies because environmentally conscious investors are selling their shares to investors with less scruples. This isn't just theoretical. According to Fossil Free, asset managers with about 10 trillion under management have committed to divesting. If you assume 10% of that is tracking something like the S&P 500, then these investors have sold…

Let's say that it passed. Is Chevron now legally obliged to actually limit their methane emissions, or can they ignore it if they so choose?

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#72

Post by anonuser123456 » Tue, Sep 17, 2019, 11:11 PM UTC

Havoc wrote: post #62

I think he underestimates the wrath of a market that has judged a market sector unpopular

One markets unpopularity is anothers arbitrage.

The underlying value is what drives the asset in the long run.

Oil companies play the long game.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#73

Post by shkkmo » Tue, Sep 17, 2019, 11:11 PM UTC

dannypgh wrote: post #42

nabla9 wrote: post #18

Fossil fuel divestment is basically subsidy for those who don't care. Divestment causes stock price drop and it increases ROI for those who invest into the company.

It's really "threat that more people will want to divest or remain divested when they would have otherwise invested" that can cause change. The board answers to the shareholders, and shareholders generally want to be able to sell their shares at a profit. If shareholders start to believe that the market for the shares is going to continuously decline because of some activity the company engages in, that creates an in…

Rising stock prices is not the only way or even the primary way that companies generate returns for their investors. Many oil companies pay dividends to their stockholders and these can outweigh the gain from increasing stock prices. BP, for example, uses a significant amount of their cashflow to pay dividends and buy back stock. Their current dividend return is ~6% and has varied between ~2% and ~8% over the last 10 years meanwhile their stock price has fluctuated (by a significant amount) in the 30s and hasn't produced any meaningful gains in value for the average "Buy and hold" investor.

Long term holders of BP stock make their money from dividends, not from increases in value in the BP stock. Making that stock cheaper just means that the dividend rate of return goes UP.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#74

Post by rmrfrmrf » Tue, Sep 17, 2019, 11:12 PM UTC

Bill Gates also doesn't support the Green New Deal or government involvement (god forbid his taxes go up) in mitigating climate change. His public prayers for a technocratic solution to climate change are ridiculous and embarrassing for him considering he knows it will never happen.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#75

Post by colanderman » Tue, Sep 17, 2019, 11:14 PM UTC

jes5199 wrote: post #63

Even if this is true, there’s a moral dimension to what you invest in - do you really feel okay about making money off of fossil fuels?

Indeed I thought this was the entire point of divestment. Not to profit off of unethical activities. I'm surprised anyone would think this would impact climate change.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#76

Post by anonuser123456 » Tue, Sep 17, 2019, 11:15 PM UTC

biehl wrote: post #41

Divestment is a practical prerequisite for effective regulation of fossil fuel companies. Right now tough regulations will directly hurt pensioners with pensions invested in fossil fuel companies. After divestment will not hurt those people in the same direct way. So: Step 1) - Divest Step 2) - Regulate to fully compensate for externalities caused by fossil fuel companies without worry of collateral damage

Right and here's the problem. Pension funds are notoriously underfunded and filled with people that don't give one iota of a rip about where it's invested. Pension managers will not leave those yields on the table or they'll fave a revolt.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#77

Post by colanderman » Tue, Sep 17, 2019, 11:18 PM UTC

Maybe I'm weird. I always thought the purpose of divestment was to stop profiting off of unethical companies, and to eliminate conflicts of interest for value-driven entities such as nonprofits. I'm surprised anyone would treat it as a tool to fight climate change.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#78

Post by imtringued » Tue, Sep 17, 2019, 11:19 PM UTC

munk-a wrote: post #23

shkkmo wrote: post #12

Earlier quoted context omitted.

Because investors will be able to own a piece of that company for less. The company hasn't changed, its ability to offer dividends hasn't changed, its longer term prospects haven't changed (due to divestment.) Really, the only impact this might have is a slight reduction in the ability to those companies to raise capital by selling stock (and I don't think that is incredibly common in the oil industry).

If the lack of investment from certain segments of the population was sustained then the stock will be of lower demand in the long term hurting it's price for investment, if this is really well sustained and consistently done then IPOs for such industries will raise less capital because there is less demand available when initial investors want to cash out. However, that's really conditional, I think in actuality we'…

At some point the price drops low enough for the company to just go private and continue with the same level of CO2 emissions. Unless the income flow from fossil fuel products stops the company will never be forced to shut down.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#79

Post by imtringued » Tue, Sep 17, 2019, 11:20 PM UTC

Nasrudith wrote: post #8

Really divestment is something which seems intuitively to be threshold based for its impact. If there is a robust investment pool any leaving will just be auto-filled by those seeking opportunities. However if it gets below a critical mass from enough divestitures they will find new investments hampered and those who are "late to the exit" will find it hard to get value out of it.

The company still earns the same amount of income from selling fossil fuel products.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#80

Post by mxcrossb » Tue, Sep 17, 2019, 11:23 PM UTC

jchw wrote: post #57

> The idea is not to starve companies of capital but to remove their “social licence to operate” Per this description, the basic idea behind divesting seems similar to the concept of creating social stigmas and perhaps even “cancel” culture. I’d argue that this isn’t even very effective as a vehicle for positive change amongst individuals, and seems extremely unlikely to be effective amongst corporations. Honestly, i…

Basically, think of divesting as an advertisement. Every time a major player does it, the public hears a pro environment message, and leaves thinking climate change is something to act on now, and that green energy is the future. And public perception does have an impact on the future.

Let me emphasize the cynicism of this point. As you said, no individual corporation is going to change here (other than running more advertisements to boost their image), because it’s not like they can stop being a fossil fuel company. There’s no carrot to match the stick.