Dec 17, 2019

The coming Wall Street battles over climate change

Extinction Rebellion climate activists protest on Wall Street in October. Photo: Erik McGregor/LightRocket via Getty Images

A pair of events over the past few days offers a preview of upcoming investor efforts to push some of the world's largest companies to get more active on global warming.

Why it matters: Shareholder pressure is becoming an increasingly important driver of corporate decision-making at a time when national governments' political will on climate is uneven at best.

Driving the news, part 1: As we wrote yesterday, banking giant Goldman Sachs says it won't directly finance Arctic oil exploration or new coal-fired power plants anywhere, among other revisions to its climate policies.

  • Environmentalists say Goldman should go further, but nonetheless say this is at least more aggressive than any other U.S. bank.
  • What's next: Look for activist shareholders and environmentalists to use Goldman's move as a way to enhance pressure on other big U.S.-based banks. That's the word I got when I touched base yesterday with two groups active in this space: Ceres and As You Sow.
  • Ceres' Dan Saccardi points out that banks pay close attention to their peers. "We'll continue to use leading peer action, such as Goldman's most recent policy, along with investor and other stakeholder input, to help them align with the level of ambition needed to meet the Paris Agreement."
  • As You Sow's Danielle Fugere notes that while Goldman's action is one "important indicator" of progress, they will be looking for all U.S. banks"to measure, monitor, set targets for, and to begin reducing their financed carbon emissions in line with Paris goals."

Driving the news, part 2: Shareholder efforts to push Big Oil to significantly bolster its climate commitments to align with the Paris climate agreement in 2020 are coming into focus.

  • Follow This, a European shareholder group, is expanding its climate-focused resolution effort to include U.S.-based major ExxonMobil and Chevron, in addition to BP, Shell and Equinor.
  • The resolutions announced this week include a push for targets for so-called Scope 3 emissions, that is, CO2 emitted from use of the companies' products in the economy. Reuters has more.
  • Separately, a coalition of As You Sow, the Church of England's investment managers and others yesterday announced shareholder resolutions targeting Exxon and Chevron.

What we're watching: It'll be interesting to see which of these might up for a vote, given the ability of U.S. companies to petition to the Securities and Exchange Commission to thwart them.

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