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

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

#141

Post by dannypgh » Wed, Sep 18, 2019, 2:36 AM UTC

shkkmo wrote: post #73

dannypgh wrote: post #42

Earlier quoted context omitted.

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…

It is true that stocks are assigned some value based on expected future dividends, but this only one component of the value of a share, and for any company undergoing a divestment campaign, this will shift.

A publicly traded Ponzi scheme can maintain a 10% yield for 10 years with only an IPO.

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

#142

Post by akiselev » Wed, Sep 18, 2019, 2:39 AM UTC

strainer wrote: post #137

patrickthebold wrote: post #132

Earlier quoted context omitted.

I think it's important to note that when you buy shares on the secondary market the company doesn't get any capital. You are just trading ownership for cash with the current owners. There's a somewhat subtle and pervasive assumption that all owners will seek only to maximize returns (or similar) but that notion really needs to go. Even with that assumption, it doesn't matter if you own shares in fossil fuel companies…

It might be rather intangible, but I expect there must be a strong tendency for businesses to benefit overall when their shares are bought or kept rather than sold.

It's not as intangible as most people think. Executive compensation very often has bonuses and incentives tied to share price so the incentives don't even have to be business wide, they just have to be set up for the people ultimately in charge.

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

#143

Post by windexh8er » Wed, Sep 18, 2019, 2:49 AM UTC

ineedasername wrote: post #134

mochris wrote: post #69

Earlier quoted context omitted.

I've divested from oil companies, not because I think it will change corporate governance at XOM or BP, but because I like to buy things that I can hold for a decade or three, without thinking too hard about them. I don't want to spend my time thinking about when, precisely, XOM and BP will have peaked. I'd rather just get rid of them and free up that mental space to concentrate on what's next in the world of energy…

Sure, that makes a lot of sense, but what companies can you invest in that you wouldn't have to worry about for that long?

For most people that's the wrong question. If you have capital that can be applied to long term resolute ideals you likely don't have to worry about capital in general. We all know fossil fuels have have an expiration date. We can easily state that money invested in building next generation power acquisition, delivery and storage will displace them. But again, you need a stack of chips to play.

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

#144

Post by throwaway_oil » Wed, Sep 18, 2019, 2:56 AM 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…

Divestment or investment due to ESG score goals is effective. Internal decisions at F500 oil & gas companies are being made with ESG in mind due to the amount of capital increased scores open up.

Source: work for an oil & gas company

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

#145

Post by triggercut » Wed, Sep 18, 2019, 3:24 AM UTC

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.

precursory note: Not an analyst - just read a lot of tobacco industry reports

Over the better part of the last decade, many tobacco stocks are down (BAT, PMI, RT, JT etc,) however most dividends on their common stock are still increasing YoY. Not certain if it's generally above the market average but seems to be more than not.

If you look at long term production rates (sticks shipped) cigarette manufacturing has been dropping YoY for years. But this is because there is a general drop in demand from higher socioeconomic countries generally and as consumers switch to "smokeless" "next-gen" alternatives. My observation is that single sticks are usually sold at a much higher price in those markets (sometimes due to tax and regulation, but mostly due to local market value), whereas they are sold closer to cost of production in lower socioeconomic countries where they target larger volumes per consumer.

It's difficult to paint a picture from the data released in annual reports and market updates around what the transition (sticks -> e-cig consumable units) looks like and is perhaps purposefully obfuscated and will probably remain that way until forced otherwise. As such, relative points of comparison make their day to day activities harder to judge over the last few years but what everyone IS doing is huge amounts of M&A, Research and Capital Expenditure to meet this strategy whilst not raising capital from equity as their share price drops yet maintaining higher dividends. Why? Because they are cash rich.

Much more generally, from a business perspective, what's happening in the tobacco industry is fascinating (and equal parts horrifying depending on your point of view) as these paragons of global supply chain pivot to become consumer electronics companies.

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

#146

Post by JohnJamesRambo » Wed, Sep 18, 2019, 3:32 AM UTC

momokoko wrote: post #140

emckay wrote: post #117

Earlier quoted context omitted.

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…

Just be honest. It's bullshit. That vote and any vote like it means absolutely nothing. You know it, and anyone with any knowledge of this knows it. We really really need to stop these fake feel good energy sinks. What you said was at best disingenuous, and at worst just lying. I want to remove fossil fuels as much as anyone, but I will not do it by tricking people. You should try and work on some ethics. There are t…

I like most of your message but how do I get to work if I don’t drive and don’t have public transit and live 30 minutes away?

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

#147

Post by runarberg » Wed, Sep 18, 2019, 3:55 AM 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…

It seems like regulating emissions should be the job of a government but not shareholders.

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

#148

Post by yellow_postit » Wed, Sep 18, 2019, 4:07 AM UTC

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.

I’d say Gates is making the more utilitarian or effective altruism argument that besides just “warm and fuzzies” you can look for investment approaches that also have a real world impact.

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

#149

Post by toomuchtodo » Wed, Sep 18, 2019, 4:10 AM UTC

JohnJamesRambo wrote: post #146

momokoko wrote: post #140

Earlier quoted context omitted.

Just be honest. It's bullshit. That vote and any vote like it means absolutely nothing. You know it, and anyone with any knowledge of this knows it. We really really need to stop these fake feel good energy sinks. What you said was at best disingenuous, and at worst just lying. I want to remove fossil fuels as much as anyone, but I will not do it by tricking people. You should try and work on some ethics. There are t…

I like most of your message but how do I get to work if I don’t drive and don’t have public transit and live 30 minutes away?

Walk, ride a bike/e-bike/electric scooter, or drive an electric vehicle (to not include the last option is unreasonable IMHO). A Nissan Leaf or Chevy Bolt are options, or a Tesla if you want to splurge.

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

#150

Post by BurningFrog » Wed, Sep 18, 2019, 4:11 AM UTC

kerkeslager wrote: post #10

I'm pretty unclear on how anyone even thinks divestment works, actually. When a company sells stock in an IPO, buying stock from them allows them to raise capital, so it seems clear to me that you shouldn't buy stock from a fossil fuel company. But that's non-investment, not divestment. Divestment is about selling existing stock. It's true that divestment drives down the stock price. This could mean that if a company…

> It's true that divestment drives down the stock price.

I find that hard to believe.

Stock prices are set by the profitability of the company. This doesn't change by investors divesting. Only if you manage to get a 100% boycott could that happen, but then it would be insanely profitable to break the boycott and cash in.

To me divestment just looks like a form of shunning. People think some companies are disgusting, and our tribal instincts are to throw them out of the tribe. In 2019, this urge can be satisfied by selling stock, which shows what a flexible, yet primitive, primate species we are :)