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

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

#111

Post by sigstoat »

fkdo wrote: post #107
hinkley wrote: post #98

Earlier quoted context omitted.

If I own shares in a retailer and I decide that, say, soda is bad, I can try to use my shareholder rights to talk to them about how prominently they display soda and possibly reducing their shelf real estate for soda. But what if I own shares of a soda company? What exactly should I do in that case? Try to convince them to exit their primary market and become an entirely different company? Why would I waste my time a…

Theoretically if 51% of ownership of an oil company wants to seal all oil wells isn't that what the company should do?

certainly they could elect board members who'll hire CEOs to execute that plan.

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

#112

Post by solveit »

olau wrote: post #30
graeme wrote: post #19

Earlier quoted context omitted.

Does this work in liquid markets though? Demand could obviously drive up price beyond fundamental value in a bubble, or below fundamental value in a panic. But in the ordinary course of things, we would expect the price of a security to match its value in the long run. If you are a rational, amoral investor, and you see a security worth $100, you would be prepared to pay up to $100 for it, and to buy it in as large a…

> Does this work in liquid markets though? Well, I think the idea is to try to the make the market for these stocks less liquid. And it might work, because the long run you're talking about isn't actually looking too bright due to the technological developments with renewables and electric vehicles. These stocks are not retirement stocks, unless you're retiring in a couple of years.

The point is that it takes near universal coordination to actually hurt liquidity. Otherwise, you're just funneling money to amoral investors.

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

#114

Post by emckay »

TheGallopedHigh wrote: post #24
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…

Could you talk a bit more about your company?

We're creating an S&P 500 index fund that aggressively uses shareholder engagement to get companies to reduce emissions through their supply chains.

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

#115

Post by ggm »

agar wrote: post #102
ggm wrote: post #88

Value of shares is based both on revenues from holding the share and increase in value as growth. If the superannuation and sovereign wealth and trust funds worldwide (Trillion-dollar investment vehicles) stop investing in something it functionally loses 'gold plated' status and cannot be held to be less-speculative (in reality all shares are speculative but there are differences of degree and the holdings in the lon…

Gates says divestment will not lower carbon emissions. This is very different from saying it will not lower valuation. Has the reduction in tobacco companies' stock prices materially affected smoking rates? I don't think so.

I'm less sure. Juul would say that redirecting nicotine addicts to vaping over smoking has probably altered rates of uptake of smoking, and the market backs Juul and vaping which has led big tobacco to diversify and invest.

Oil and Coal ventures who own the underground asset have the choice of converting from gasoline production to feedstock for plastics and pharma and fertilizer, or just leaving it in the ground for future valuation. If they don't get capital raising its more expensive for them to develop new fields. I guess in some sense the de-carbonisation probably doesn't sheet home solely to investment decisions in coal and oil but I doubt its un-connected.

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

#116

Post by dunstad »

Diggsey wrote: post #84
colanderman wrote: post #77

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.

Whose voice carries more weight when campaigning to reduce fossil fuel usage: the person who profits off fossil fuels and will suffer as a direct result, or the person who has divested themselves completely? If you have a moral objection to receiving those funds, then just give them to a charity that might actually help. The way economics works, if you choose to divest yourself in this way, you are betting against th…

Choosing not to profit off of fossil fuels may be a 'poor decision' from a financial perspective, but it's a good moral decision. The fact that our financial systems incentivize poor moral behavior makes them poor systems.

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

#117

Post by emckay »

jdhn wrote: post #71
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?

Resolutions like this one are non-binding. The real power held by shareholders is to fire directors, so if a company's board doesn't comply with the shareholder resolution the shareholders can vote against the directors at the next annual meeting.

In practice, companies "mostly meet" or "completely met" their commitments in response to shareholder engagement 89% of the time according to a 2015 report by Ceres [0].

[0] https://www.ceres.org/sites/default/files/reports/2017-03/Ce...

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

#118

Post by emckay »

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…

Here are the promised citations:

1. $10 trillion divested: https://gofossilfree.org/divestment/commitments/

2. Chevron's shareholder proposal: https://www.asyousow.org/resolutions/2017/12/31/chevron-corp...

3. Chevron makes up about 1% of the S&P 500. 1% * 10% * $10 trillion = $100 million = 78 million shares of CVX at price during 2018 shareholder meeting

4. If 78 million shares voted YES on proposal instead of NO, vote would have passed with 52% in favor (as opposed to 54% in original post)

---

Also, for those interested in other arguments against divestment:

1. Economics Nobel Laureate Oliver Hart wrote a paper calling on companies to maximize shareholder "welfare" (including environmental concerns) not just financial value. In this paper he explicitly calls for a fund that uses engagement rather than divestment. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3004794

2. Luigi Zingales (co-author of above paper) calls on UChicago graduates not to divest, but to engage in his 2019 convocation address: https://promarket.org/dear-graduates-heres-what-you-can-do-t...

3. In the New Yorker, philosopher William MacAskill goes into more detail than Bill Gates on why divestment is ineffective: https://www.newyorker.com/business/currency/does-divestment-...

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

#119

Post by emckay »

mushufasa wrote: post #31
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…

We are also working on this problem. At yourstake.org, we're trying to help anyone create change by making use of your shareholder rights. We're try to simplify the process to be as easy as an online petition. You can sync your portfolio just like with other personal finance sites (e.g. Mint.com) and leverage your rights in whatever funds you already have. If you have a 401k, you have rights. Also happy to talk to yo…

Awesome projects! I'd love to hear your thoughts. I'll shoot you an email tomorrow.

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

#120

Post by loeg »

WhatIsDukkha wrote: post #94

So where does the dollar to invest in climate innovation come from if you don't take the dollar out of the fossil fuel stock? What he said was nonsensical and innumerate. Perhaps its because he has effectively infinite money? His comment don't really hold up even under basic charity. The dollar in fossil fuels is a dollar not in another industry with a better story for the environment. The rest of us have a limited p…

Markets are flush with cash and there is a huge amount of spending and growth in "green" energy sources like solar and windmills. Not sure anyone is really without sufficient capital to create green technologies, except perhaps lack of funding for nuclear.
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