Following up on their public criticism of President Gertler’s decision in The Varsity, eight out of eleven members of the ad hoc committee published a letter in The Globe and Mail:
Quoting from our report: “The committee recognizes that fossil fuels will remain indispensable and a contributor to social welfare for many years.” We did not recommend universal divestment.
Instead, we called upon the university to lead an effort to, in The Globe’s language, “gradually ratchet down fossil-fuel use worldwide,” beginning with the worst offenders, whose behaviour we should not tolerate. Much like the apartheid regime, the worst offenders need to be identified and isolated. These fossil fuel companies are the ones blatantly disregarding the international effort to limit the rise in average global temperatures to not more than 1.5 C, thereby greatly increasing the likelihood of catastrophic global consequences. These are the companies that are properly the focus of divestment and such a targeted strategy is an application of what has become known as the Toronto Principle.
We tried to get an op-ed, but the G&M was unwilling.
On Thursday, a member of the campaign will be addressing the Governing Council. Before their meeting begins, we will be holding a rally outside.
IT’S not easy being green, especially if you’re a fund manager. A decade or so ago, when mainstream politicians such as Britain’s David Cameron were petting huskies and embracing environmental issues, the stocks of renewable-energy producers were in vogue. But as in the dotcom boom a few years earlier, share prices ran way ahead of the potential for profits. An exchange-traded fund in global clean-energy stocks, set up by iShares in 2008, has lost investors 79% since its launch. Over the longer term, an analysis by Gbenga Ibikunle and Tom Steffen in the Journal of Business Ethics found that European green mutual funds had significantly underperformed their conventional rivals between 1991 and 2014.
The rise in shale-oil and -gas production, and the accompanying decline in energy prices, have spelled double trouble for green investors. On the one hand, they have reduced the incentive for governments to favour renewable-energy producers—and thus dented the prospects of some green stocks. On the other hand, they have also hit the share prices of conventional oil and gas companies, which environmental funds tend to avoid.
That decline has given succour to a campaign joined by a number of investors—mostly from the public and charitable sectors—to boycott the shares of fossil-fuel producers. Such investors cannot be accused, at least in the short term, of breaking the “fiduciary duty” that fund managers owe to their clients to generate the best possible return.
In a new paper, BlackRock, a big fund-management group, argues that there are more sophisticated approaches to greenery than boycotting oil and coal companies, or piling into wind-turbine manufacturers. For example, investors could own a portfolio as close as possible to a given index, but choose the greenest companies within each sector. BlackRock reckons that it is possible to create a portfolio which tracks the MSCI World Index with an annual error of just 0.3% a year, yet comprises companies with carbon emissions 70% lower than the index as a whole.
IT HAS been a grim decade for investors in international oil firms—among them, many of the world’s biggest pension funds. Even before oil prices started to fall in 2014, the supermajors threw money away on grandiose schemes: drilling in the Arctic and building giant gas terminals. Their returns have trailed those of other industry-leading firms by a huge margin since 2009.
In the past 18 months things have gone from bad to worse. The Boston Consulting Group, a consultancy, calls it the industry’s “worst peacetime crisis”. That is evident in first-quarter results released in the past week by Exxon Mobil and Chevron of America, and European rivals, Royal Dutch Shell, BP and Total, which bear the scars of a collapse in oil prices to below $30 a barrel in mid-February (see chart).
The boom reflects soaring demand from investors. Everyone from oil majors to day-traders on WallStreetBets is splurging on climate-friendly projects and securities. Meanwhile the asset-management industry is marketing a style of investing that purports to take into account environmental, social and governance (esg) factors. So far this year, inflows into esg funds accounted for about a quarter of the total, up from a tenth in 2018. On average, two new esg funds are launched every day.
Unfortunately the boom has been accompanied by rampant “greenwashing”. This week The Economist crunches the numbers on the world’s 20 biggest esg funds. On average, each of them holds investments in 17 fossil-fuel producers. Six have invested in ExxonMobil, America’s biggest oil firm. Two own stakes in Saudi Aramco, the world’s biggest oil producer. One fund holds a Chinese coal-mining company. esg investing is hardly a champion of social virtue either. The funds we looked at invest in gambling, booze and tobacco.
https://www.economist.com/leaders/2021/05/22/sustainable-finance-is-rife-with-greenwash-time-for-more-disclosure
To analyse the boom The Economist has constructed a portfolio of companies that stand to benefit from the energy transition, with a total market capitalisation of $3.7trn. Since the start of 2020 the portfolio, weighted by firms’ market capitalisation, has risen by 59%, twice the increase in the s&p 500, America’s main equity index (see chart 1). Even though the boom has deflated in the past few months, perhaps owing to inflation fears in America, green investing is changing profoundly.
Green stocks are no longer the preserve of niche sustainable funds. Conventional funds have piled in; stocks are also touted on online forums for day traders, such as WallStreetBets. Many investors draw comparisons between clean energy today and tech at the turn of the millennium—both in terms of the signs of froth, and the emergence of an industry with big structural effects on the economy.
https://www.economist.com/finance-and-economics/2021/05/17/green-assets-are-on-a-wild-ride
Sustainable” investment funds in the broadest sense managed $35trn of assets in 2020, reckons the Global Sustainable Investment Alliance, an industry group, up from $23trn in 2016.
…
Selecting firms to invest in often involves little more than a box-ticking exercise confirming that the right grade of recycled paper was used to publish the annual report.
…
Kinks around metrics may iron themselves out as the industry matures. But that will not help with the second, deeper critique: that investors chasing virtuousness are, at best, deluding themselves and, at worst, doing more harm than good. That is the argument made by Tariq Fancy, a former sustainable-investing bigwig at BlackRock, in a blog post published on August 20th. esg investing, he says, merely “answers inconvenient truths with convenient fantasies”.
https://www.economist.com/finance-and-economics/2021/09/04/sustainable-investing-faces-the-beginnings-of-a-backlash
Dubious green funds are rampant in America
New research suggests Wall Street is banking on bogus claims
…
When it comes to sustainable investing, Wall Street stalwarts appear to run a fully fledged laundromat of exaggerated sales pitches and bogus claims.
…
To gauge this the authors examined funds that have signed up to the un-sponsored Principles for Responsible Investment (pri), a scheme that investment managers can sign up to certify they take account of environmental, social and governance (esg) principles when making investment decisions. On the face of it, that is a promisingly large sample: 2,000 investors, overseeing $135trn of assets, now say they will obey the pri. The problem is that such pledges can mean little. Looking at the period from 2003 to 2017, researchers found no sign that the portfolios of pri signatories in America had higher esg scores, across a range of metrics, than non-signatories.
Investors focus on climate despite Republican attacks on ESG : NPR
https://www.npr.org/2022/12/29/1141838065/republicans-plan-more-attacks-on-esg-investors-still-plan-to-focus-on-climate-ri