Vanguard is one of the world’s largest asset managers, handling the retirement savings of millions of Americans. Its mission is to help people save for the future. At the same time, it’s playing a major role directing billions in funding to carbon polluters — companies maintaining and expanding the fossil fuel infrastructure that threatens to make the future uninhabitable.Fossil fuel stock prices are based on oil reserves that will not actually be burnable if we expect to avoid catastrophic effects due to climate change. Countries are already moving to restrict emissions and transition to clean energy alternatives. Money invested in fossil fuel infrastructure is likely to become ‘stranded assets’….Vanguard is behind the curve with only one socially responsible portfolio. That’s the Vanguard FTSE Social Index Fund, and with holdings in ConocoPhillips, Kinder Morgan, and other large oil companies, it’s hardly fossil free. But it’s the only mutual fund Vanguard offers with a responsible investing mandate.
BlackRock Inc., the world’s biggest asset manager, is telling companies that now is the time to start reporting clear information on climate risk to their businesses.
The firm, which oversees almost $6 trillion in assets, sent letters from its corporate-governance team to about 120 companies this week, urging them to report climate dangers in line with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, set up by Bank of England Governor Mark Carney. The letters were sent globally to BlackRock holdings with “material climate risk inherent in their business operations,” such as those in the energy, transportation and industrial sectors, according to a copy seen by Bloomberg. They were signed by Michelle Edkins, the firm’s global head of investment stewardship.
API has gone beyond the lobbying typical of trade associations, helping spawn permanent substructures within the executive branch that ensure its voice is heard. These government entities, which include the petroleum council and an obscure but powerful White House office, have for decades worked in tandem with API to fortify the oil and gas industry, often, its critics say, at the public’s expense.
API’s history on climate issues goes back farther than most realize. As early as 1959, it grappled with global warming, hosting a conference where the looming, manmade catastrophe was discussed. As the environmental movement was blossoming, API – with the government’s support – was working behind the scenes to undermine it by distorting projections of regulatory costs. An enduring false narrative was constructed: the economy or the environment.
For nearly a century, API has enjoyed special access to the executive branch, furtively shaping policy from the inside. Now, under Donald Trump, the industry smells victory on multiple fronts with a White House that openly detests regulation as much as it does. Days before Trump’s inauguration, API president Jack Gerard heralded the “once-in-a-generation opportunity” to reshape energy policy.
Fifty-two environmental rules have since been overturned or are in the process of being rolled back. API has publicly supported at least 23 of these actions. In May, the institute also sent a 25-page wish list to the US Environmental Protection Agency. Among the items it wants reconsidered: tougher standards for ozone – the main ingredient in smog – and regulation of methane, a greenhouse gas that is far more potent than carbon dioxide.
ExxonMobil, the US energy giant, has bowed to shareholder pressure and will publish a report on the impact of climate change on the company’s business.In a regulatory statement made yesterday, Exxon said the board had reconsidered a proposal from the New York State Common Retirement Fund, and will push ahead with a climate change statement.
Exxon said: “Consistent with ExxonMobil’s corporate governance guidelines, the company’s board of directors has reconsidered the proposal requesting a report on impacts of climate change policies (Item 12) that the New York State Common Retirement Fund submitted for the 2017 annual shareholders meeting.
“In reconsidering the proposal, the company sought input from a number of parties, such as the proponents and major shareholders. As such, the board has decided to further enhance the company’s disclosures consistent with the Item 12 proposal and will seek to issue these disclosures in the near future. These enhancements will include energy demand sensitivities, implications of two degree Celsius scenarios, and positioning for a lower-carbon future.”
Another step in corporate statesmanship on climate change — and separation from ALEC:
Exxon Mobil Corp. is coming out against an American Legislative Exchange Council (ALEC) proposal that would push the Trump administration to rescind a federal finding that greenhouse gases are harmful.ExxonMobil is the country’s largest oil and natural gas company and a member of the ALEC task force planning to vote on the resolution Wednesday.
ALEC’s draft resolution goes after the Obama administration’s 2009 endangerment finding at the Environmental Protection Agency (EPA), which requires the EPA to take actions under the Clean Air Act to restrict greenhouse gas emissions. That finding served as a lynchpin for climate regulations under former President Barack Obama.
ALEC’s resolution calls the Obama administration finding “flawed,” specifically taking issue with the science that it cited, and calls upon the EPA to “reopen and review” it.
“As has been previously communicated to ALEC, we are concerned by the language of the resolution, especially relating to climate science, and do not support the resolution,” Kenneth Freeman, ExxonMobil’s manager of United States government relations, wrote in the Monday letter to ALEC’s energy, environment and agriculture task force.
“ExxonMobil will continue to oppose the resolution and will vote against it should it come before the taskforce or the board.
”ExxonMobil’s public dissent is part of a broader rift that the climate resolution is exposing within ALEC, a group funded by organizations like Koch Industries Inc. and coal miner Peabody Energy Corp., which pushes conservative policies in the state and federal governments.
The Intergovernmental Panel on Climate Change (IPCC) will include more information on the impact of climate change on extreme weather risk:
“With flooding, hurricanes and other extreme weather causing devastating impacts on people and ecosystems, an important section of the report will be the science of attributing extreme events to a changing climate. “The reports will look at climate impacts already being felt as well as projections as the climate changes in the future. It is global in scope, covering land and ocean from the equator to the Poles. It importantly recognizes nature including looking impacts of climate change on species, ecosystems and biodiversity.”
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For nearly 40 years ExxonMobil publicly raised doubt about the dangers of climate change even as scientists and execs inside the oil giant acknowledged the growing threat internally, according to a Harvard University study.
“We conclude that ExxonMobil misled the public,” the researchers wrote in the peer-reviewed study that was published on Wednesday.
The Harvard study could add to the controversy and legal scrutiny surrounding Exxon’s (XOM) handling of climate change.
Exxon dismissed the Harvard study as “inaccurate and preposterous,” saying in a statement that the research was “paid for, written and published by activists.”
The Harvard researchers examined 187 public and private communications from Exxon about climate change between 1977 and 2014, ranging from internal documents and peer-reviewed studies to company pamphlets and editorial-style advertisements in The New York Times known as “advertorials.”
The study found that the more public-facing the Exxon communication, the more doubt it expressed about climate change.
Exxon’s advertorials “overwhelmingly emphasized only the uncertainties, promoting a narrative inconsistent with the views of most climate scientists, including ExxonMobil’s own,” the Harvard study concluded.
Vanguard Group on Monday said it has urged companies to disclose how climate change could affect their business and asset valuations, reflecting how the environment has become a priority for the investment industry.
Under pressure from investors, Vanguard and other fund companies have pushed to pass several high-profile shareholder resolutions on climate risk at big energy firms like Exxon Mobil Corp and Occidental Petroleum Corp during the spring proxy season.Vanguard manages about $4 trillion and is often the top shareholder in big U.S. corporations through its massive index funds – giving it a major voice in setting corporate agendas.
Vanguard, the biggest U.S. mutual fund firm by assets, had not supported climate activists on similar measures. But Glenn Booraem, Vanguard’s investment stewardship officer, said in a telephone interview on Monday the issue as well as shareholder proposals have evolved.
Guardians of the New Zealand Superannuation Fund announced the $14 billion global passive equity portfolio will employ a low-carbon methodology, exiting active investment in companies including Genesis Energy and NZ Oil and Gas.This, according to fund chief executive Adrian Orr, makes the fund more resilient to climate change investment risks such as stranded assets, and brings its focus on addressing climate change risk in line with current global best practice by institutional investors.
“There is a global consensus that climate change presents material risks for long term investors,” Orr said.
“Leading investors around the world are adjusting their portfolios to address climate change risk and capture opportunities stemming from the transition to a low-carbon economy.”
Fund chief investment officer Matt Whineray said financial markets were under-pricing climate change risk over the fund’s long investment timeframe.