Latest selected extracts from my Triple Crunch log
Page last updated: 2 February 2010
Two big US companies decide to boycott suppliers sourcing fuel from Canada’s oil sands.
10 February 2010: Whole Foods Market, an organic grocery chain, and Bed, Bath and Beyond a household goods company, are responding to ForestEthics, a non-governmental organisation campaigning to lead the US corporate sector away from oil sands fuel because of its higher carbon content. “Companies are moving with lightning speed,” says Todd Paglia, ForestEthics’ executive director. “It’s a core issue they know they need to move on. The failure of Copenhagen makes companies more willing to do this; leadership must come from somewhere.”
Norway’s oil and gas wealth fund, £259bn and growing, plans a more activist role.
20 September 2009: The third biggest sovereign wealth fund in the world (behind Saudi Arabia and Abu Dhabi), set up in 1990, now controls 1% of all shares. It plans more intervention on social and environmental agendas with the energy companies where it holds stakes, notably on climate change, professing to have a 30 year investment horizon.
My view: There need to be many more funds following this lead. What is the point of a pension if the world has gone to hell in a handcart when you retire to use it?
Trust in business seems to have partly recovered, but opinion is building against the status quo
29 July 2009: A mid-year survey by Edelman’s in the US, UK, France, Germany, China and India shows 52 % of respondents saying they trust business, up from 46% in the depths of the crisis of confidence at the time of the World Economic Summit, and only 2% behind the 2008 position. Only in Britain is there a downturn in trust in business. Richard Edelman, the group’s chief executive, says: “We used to believe there was an inverse correlation between trust in business and trust in government. Now we believe that trust in business relies on trust in government. It’s looking like the world is following more of a China and India model.” However, of the 6 major economies, only in China do people say that government and business are doing enough. The survey suggests widespread acceptance that a stakeholder society is best, Edelman’s concludes. Shareholders come third behind customers and employees in the public’s order of priorities. Neil Flieger, Edelman’s general manager of public affairs, says: “One interesting thing I saw is that people ascribe a higher level of trust to those actions that appear to be against the norm and game-changing…. This is not about re-tooling and getting back to basics.”
My view: It is interesting to consider the elasticity of opinion here. If trust takes another hammering, as it would if there is a great global energy crisis just as the global economy starts to recover, the elastic might prove much less able to absorb the shock.
High Court action launched to force RBS to invest bailout funds in socially responsible vehicles
30 June: The World Development Movement, Platform and People and Planet have gone to court, hoping to force RBS (majority government owned) to invest taxpayers’ money in companies meeting minimum green and human rights standards. RBS once marketed itself as “the oil and gas bank,” and has long been one of the top lenders to the traditional energy business. The litigants contend that the Treasury is in breach of its own policies in supporting it in current policies.
My view: The courts are likely to have a big say in how the climate-change drama plays out. Pension fund investors, for example, have what is called “fiduciary responsibility” to pension holders. Right now that duty is generally interpreted as the duty to maximise profits, even if involves investment in energy companies who believe they do not have any responsibility for the fuels they produce and their global-warming potential. But what if maximising profits in the short term fuels global warming in the longer term to such an extent that when the pension holder retires, she does not have a viable society to retire into because of the ravages of climate change? Is that fiduciary responsibility fulfilled?
Campaigners for responsible investing report a boost as a result of the financial crisis
22 June 2009: Signatories to the UN Principles for Responsible Investment – six principles promoting a longer term perspective and pursuit of sustainable policies – have risen fast. When the initiative was launched in 2006, 34 asset owners (mostly pension funds) and 27 investment managers were signed up. Now there are 177 asset owners and 254 investment managers.
My view: The more people worry about climate change and other social issues, the more likely we are to see a megatrend in responsible investing. The day investors start to fear that investments in carbon-intensive activities like the tar sands will end up as “stranded assets” is could well be the day we begin to win the battle to abate global warming.
