Oil and gas industry heeding (some) investor demands on climate risks

first_imgThe oil and gas industry is responding to demands from investors about their climate change management and disclosure, although investors still have concerns and should step up their engagement, a director of Hermes’ stewardship and engagement arm has said.Tim Goodman, director, Hermes Equity Ownership Services, made the comments in connection with a report on the impact of climate-focused investor engagement with 10 large oil and gas companies in North America and Europe. The report was published by the four investor networks in the Global Investor Coalition on Climate Change along with climate research provider CDP.According to those behind the report, investor engagement has had a discernible impact on board and executive decision-making with respect to disclosure and management of climate change risks – but there are still laggards and shortcomings that investors want addressed.One target for investors this proxy season, as it was last year, is ExxonMobil. A shareholder proposal co-filed by The Church Commissioners for England called on the company to carry out and disclose an analysis of how its portfolio would fare in a world where global warming is kept to a maximum of 2°C. Hermes’ Goodman said investors were using the 2017 proxy season to try to have their concerns addressed, but emphasised that they needed to become more ambitious about the direction of their stewardship strategies.“We need to apply significantly more pressure using all the tools available, from private dialogue about portfolio resilience and 2°C transition planning, through to more public comment on our expectations for the oil and gas industry,” he said.Shareholder resolutions requesting more company reporting in line with recommendations of the Financial Stability Board’s Task Force on Climate-related Disclosures (TCFD) could in selected cases strengthen these efforts, he added.Investors should step up engagement with oil and gas companies beyond the North American and European majors, according to Goodman.“We must also acknowledge that the oil and gas industry is responding to demand and we need to ensure that we have similar dialogue with other sectors as well about how they are responding to the recommendations of the TCFD,” he said.Earlier this month, Hermes and Wespath Investment Management withdrew a climate change-related shareholder resolution for Chevron’s 2017 AGM, which will take place on on 31 May, saying that its filing had prompted the company to publish a report on how it is managing climate change risks. Although the report didn’t fully meet the proposal’s requests, Hermes and Wespath said the company should be given time to improve its disclosure.last_img read more

Are Small Loans a Thing of the Past

first_img April 18, 2016 651 Views Urban Institute found that the decline in small loans has been accompanied by an increase in the denial rates for applicants for these loans. Calculations based on Housing Mortgage Disclosure Act data showed that the denial rate for loans under $50,000 is higher than the denial rate on larger loans in the postcrisis years. In 2014, for the conventional channel, the denial rate for sub- $50,000 loans was 22 percent, much higher than the 17 percent rate for loans between $50,000 and $100,000. The gap is even larger in the government loan market: 33 percent compared with 20 percent.”Tight credit and the low profitability of small loans are making it extra hard for those who want to purchase,” the report said. “Moreover, lenders don’t find these loans attractive. Loan origination costs are largely fixed and recovered either through the sale of the loan or, over time, through the financing spread and payment for servicing. Smaller loans generate lower sales prices, spreads, and servicing income, making them less economically attractive to lenders.”The report continued, “Small mortgage loans are important to the vitality of hundreds of urban communities throughout the United States. Bringing them back will be hard, and we don’t have any immediate or easy solutions. We’re eager to work with policymakers and industry leaders to understand the impact of the loss of these loans and develop strategies to encourage their availability.” One task that has never been easy in the housing market is getting a mortgage loan for under $50,000, but small loans are quickly nearing the point of nonexistence which will create barriers of entry for homeownership.A recent report from Urban Institute found that from 2004 to 2011, the national share of these small loans remained between 3 and 4 percent, but by 2014, it had declined to just 2.3 percent.”The absence of small loans may seem insignificant in high-cost markets, but in cities like Kalamazoo, Michigan, and Tampa, Florida, a significant portion of the housing stock sells for $50,000 or less. And if potential buyers can’t get a mortgage for these houses, they’ll miss that important first rung on the homeownership ladder that helps both families and neighborhoods,” Urban Institute said.Urban Institute examined 10 metropolitan statistical areas (MSAs) where a substantial share of the housing stock is worth less than $50,000. In 2014, lower-valued homes accounted for over 8 percent of the stock in each of these MSAs (except in Stockton-Lodi, California). These shares have been on the rise since the housing crisis. In Tampa, the share of lower-priced homes increased from 5 percent in 2007 to 11 percent in 2014.”The number of small mortgages doesn’t match the number of lower-value homes: the share of owner-occupied, purchase mortgages under $50,000 has steadily declined over the same postcrisis period. That share in Tampa has always been less than 3.5 percent but dropped to 2.1 percent in 2014,” the report stated. in Daily Dose, Data, Featured, News, Origination Mortgage Loan Small Loans Urban Institute 2016-04-18 Staff Writer Are Small Loans a Thing of the Past? Sharelast_img read more