Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

ft.com

Post reply on HN
Print view View original

221–230 of 253 posts

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

#221

Post by MertsA »

dragonwriter wrote: post #166
simonh wrote: post #130

Earlier quoted context omitted.

Then minority’s shareholders will sue because their share value declined and the board’s legal obligation is to pursue shareholder value, not do what the majority owners of company want them to do. I’m torn on that, but minority’s shareholders have a legitimate expectation their rights should be protected.

> the board’s legal obligation is to pursue shareholder value No, its not. > not do what the majority owners of company want them to do. Actually, the purpose laid out in most corporate charters is, within the law, to do exactly that. > I’m torn on that, but minority’s shareholders have a legitimate expectation their rights should be protected. They have a legitimate expectation that their rights should be protected,…

I agree that it's not quite as simple as what he was suggesting but it's also not just majority rule, even if the majority want to screw over the rest of the shareholders. That's old established case law, at least in the US. See Dodge v. Ford Motor Co.

https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

They can largely do whatever they want, so long as there is some rational argument that it's for the benefit of the company. If 51% of shareholders in some fossil fuel giant publicly stated that their only goals were to drive the company out of business and screw over the other 49% of shareholders, that wouldn't fly. However it's totally fine for them to push a radical new investment strategy of "buy high, sell low" and drive the business into the ground that way.

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

#222

Post by Kye »

scrooched_moose wrote: post #54

> However, Mr Gates questioned the divestment movement’s “theory of change”, arguing that investors who want to use their money to promote progress will have better results by funding innovative businesses such as Beyond Meat and Impossible Foods, two alternative protein companies he has backed. I must be missing something, but isn't that exactly what "divestment" is? You sell off shares in fossil fuels and reinvest…

The article does seem to operate on the premise that they aren't doing this. Until now, I assumed the point was to divest from fossil fuels and reinvest in growth industries: renewables and sustainable production. But maybe they aren't. The article might have a flawed premise, or maybe it's a call to action for organizations that are divesting to invest in the future.

I only skimmed the article, so I don't know if they explored this. At a glance, I see no mention of where the money went after they pulled it out of fossil fuels.

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

#223

Post by kerkeslager »

sideshowb wrote: post #210
kerkeslager wrote: post #36

Earlier quoted context omitted.

But the managers' actions aren't leading to a drop in share price, it's divestors' actions that are leading to the drop in share price, and this would be obvious with any divestment effort large enough to create an effect.

The managers bear ultimate responsibility for continuing the actions which investors dislike.

But divestors aren't investors any more.

I really find it hard to believe that someone would be fired for doing fossil fuel company things at a fossil fuel company because of divestment.

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

#224

Post by bigYahnz »

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…

Where else can I get a 6-10% tax deferred growing dividend?

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

#225

Post by snowwrestler »

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…

Shareholder activism rests on shaky legal ground, which is actively being eroded by the current administration.

Generally speaking, shareholders are not considered legal owners of the companies in which they invest and they have little legal right to influence those companies. Shareholder powers, as enshrined in court decisions, basically come down to the decision to buy/sell the security, and voting for directors.

But even directors have little legal authority to direct the operations of a corporation--that's the job of management. The job of directors is to hire the CEO and provide oversight, which is itself a limited role.

Fundamentally, securitization of the public corporation is not constructed to enable democratic control of corporate operations. Corporations are set up to respond to democratic action (i.e. the collective will of the populace) in two ways: purchase decisions from their customers, and the legal duties placed upon them by governments.

Therefore, IMO public activism is best pointed at boycotts and government policy, to affect the decisions of corporations. EDIT to add: divestment is a form of boycott.

If human society is going to reduce its production of greenhouse gases, clean technologies will have to displace greenhouse-gas-producing technologies in the economy. That takes innovation and investment. I slightly disagree with Gates in that every dollar that is divested from fossil fuel companies has to go somewhere else. Even if it is not specifically redirected at cleaner technologies, money is fungible and it will result in the relative growth of the overall pool of investment that is available for cleaner technologies.

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

#226

Post by gruez »

ClumsyPilot wrote: post #203
gruez wrote: post #28

Earlier quoted context omitted.

>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. ...only if the company actually needs more capital and can't raise it any other way (eg. bonds). If there's any sort of leak, then you're giving the holdouts outsized returns.

What do you mean by the leak? What mechanism would drive outside returns?

>What do you mean by the leak?

non-divesters who are willing to invest or extend credit to the company.

>What mechanism would drive outside returns?

It's been explained by other comments in this thread. Basically divesting worked, it would suppress demand, allowing non-divestors to purchase the company (and thus the future earnings) at a cheaper price.

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

#227

Post by maest »

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…

This is a really intresting idea and definitely a big, worthwhile problem.

One thing I'm curious about is how do you expect the economics of a green-fund to work? There's a handful of issues I see with this model:

1. ETFs/trackers are commoditized at the moment and, in a lot of cases, the broad, market-tracking funds are subsidised by more niche products offered by the same provider. 2. From a voting perspective, this only really makes sense at a truly massive scale. Even to get something like 0.1% of each company in S&P500, you need 24 billion AUM - and I doubt a 10bps shareholder can hold much sway, even when actively campaining around AUMs.

So, you need to be really big to have impact (assuming you follow S&P weightings), but you're competing in a highly comoditized space.

I'm sorry if I sound negative, I do hope this works out! I'm really curious to see how you plan on working around the issues I see in the space.

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

#228

Post by MiroF »

snowwrestler wrote: post #225
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…

Shareholder activism rests on shaky legal ground, which is actively being eroded by the current administration. Generally speaking, shareholders are not considered legal owners of the companies in which they invest and they have little legal right to influence those companies. Shareholder powers, as enshrined in court decisions, basically come down to the decision to buy/sell the security, and voting for directors. B…

Management in this society needs to be brought to heel

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

#229

Post by MiroF »

jpttsn wrote: post #186
gbrown wrote: post #108

Earlier quoted context omitted.

Perhaps, though most people don't buy stock. If you can get institutional investors to divest, that limits most people's direct exposure. Do I expect it to necessarily make a big difference (especially in the short term, without becoming a broader movement)? No. I do believe, however, that it's not nothing , and that we need to pursue everything . There's also a personal aspect - I want nothing to do fossil fuel stoc…

We need to pursue _everything_? Your time is surely scarce. Wouldn’t you want to pursue only the most effective things? Every minute you spend arguing for divestment is a minute you don’t spend arguing for nuclear.

Yes but if everyone is vested in fossil fuels nuclear won't happen, don't you see?

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

#230

Post by MiroF »

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…

> But that's non-investment, not divestment. Divestment is about selling existing stock.

I'm not sure this distinction makes sense when you're talking about things like sector funds

Post reply on HN