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

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

#31

Post by mushufasa » Tue, Sep 17, 2019, 9:18 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…

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 you offline about shareholder engagement. There are actually a number of funds that prioritize shareholder engagement -- you can see some rankings at another project I've been involved with: www.realimpacttracker.com.

I'm (patrick) @ yourstake.org

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

#32

Post by sideshowb » Tue, Sep 17, 2019, 9:19 PM 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…

I think Ha Joon Chang suggested that managers will likely receive reduced bonus, or in extreme cases fear losing their jobs, if their actions lead to drop in share price?

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

#33

Post by mushufasa » Tue, Sep 17, 2019, 9:20 PM UTC

If you agree that the real solution is for investors to engage with your portfolio -- to own what you own -- we've built www.yourstake.org to help you do so.

If you take action (or decide not to), I'd love to hear your feedback : (patrick) @ yourstake.org.

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

#34

Post by amalcon » Tue, Sep 17, 2019, 9:22 PM UTC

kelnos wrote: post #7

triceratops wrote: post #5

Earlier quoted context omitted.

Or it reduces the stock price of those firms giving better returns to those who are not so morally-driven in their investing decisions.

Not sure I understand. If large-scale divestment of fossil fuel investments lowers their stock prices, how will that give the non-morally-driven investors higher returns? (Assuming we both agree that "morally-driven" investors will tend to invest in renewables.)

You should definitely read the take linked by a sibling comment, it's a very good explanation. There's another angle from which to look at it, however, that I tend to prefer. It amounts to the same thing, just a different perspective.

There are basically three ways to make money in the stock market: gambling (attempting to predict what other market participants will do, or other events that affect the market), exploiting liquidity issues (market making / arbitrage / other HFT activity), and value investing (finding investments that should to directly give money back on some time horizon, usually through dividend or stock buyback).

When an external force (like principled noninvestment) forces the stock price down, not much changes for most of these. HFTs will generally find ways to make money either direction that the stock moves. Gamblers can also either make or lose money either way the stock moves, depending on whether they are long or short.

Value investors, however, are the ones who will ultimately end up owning that asset you've just sold. They want this asset because it will give them money down the line; they don't care about the short-term stock price. The share of future dividend or buyback that the asset represents hasn't changed, but the price of that asset has. The asset costs less, but returns the same -- exactly the sort of thing that a value investor wants.

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

#35

Post by kulkarnic » Tue, Sep 17, 2019, 9:29 PM 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…

Possibly -- you sell stock in fossil fuel companies, and reinvest in some other, hopefully more sustainable, company. It's not the divestment part that helps, it is the reinvestment.

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

#36

Post by kerkeslager » Tue, Sep 17, 2019, 9:30 PM UTC

sideshowb wrote: post #32

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…

I think Ha Joon Chang suggested that managers will likely receive reduced bonus, or in extreme cases fear losing their jobs, if their actions lead to drop in share price?

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.

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

#37

Post by omegaworks » Tue, Sep 17, 2019, 9:31 PM UTC

Fossil fuel divestment has zero climate impact, says a billionaire with capital invested in the fossil fuel economy.

>Those who want to change the world would do better to put their money and energy behind the disruptive technologies that slow carbon emissions and help people adapt to a warming world, Mr Gates told the Financial Times.

Divesting from the fossil fuel industry doesn't prevent people from investing in alternative, disruptive technologies.

In fact, it frees up more money to be invested in those technologies!

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

#38

Post by kerkeslager » Tue, Sep 17, 2019, 9:34 PM UTC

kulkarnic wrote: post #35

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…

Possibly -- you sell stock in fossil fuel companies, and reinvest in some other, hopefully more sustainable, company. It's not the divestment part that helps, it is the reinvestment.

Okay, if that's the case, then say "investing in sustainable companies" rather than "divesting from fossil fuel companies" because doing the latter does not imply that you are also doing the former.

And by the same logic I mentioned, you'd still have to be buying the stock from the company itself, not from someone else, to ensure that you're actually helping them. If a company isn't selling their stock, it's not at all clear that buying their stock from someone else helps the company.

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

#39

Post by Angostura » Tue, Sep 17, 2019, 9:36 PM UTC

So divest from fossil fuels and reinvest in disruptive technologies that slow carbon emissions.

Got it.

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

#40

Post by nullc » Tue, Sep 17, 2019, 9:41 PM UTC

For a while I've wondered if the math might work out such that the most cost effective way to fight greenhouse gas emissions is simply to buy up and horde oil on the open market.

The oil has carbon already trapped in an efficiently storable form, it's absurdly dense, it's quite inexpensive... and buying it up would have a secondary effect of driving up the price, which would incentivize efficiencies and alternatives.

Bonus, as a government program it would be more appealing to climate change deniers than alternatives because at the end of the day you'd have oil, which could later be used if we figure out some better solution (or that the problem didn't exist in the first place).