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

Joseph Mariathasan: The wealth of nations and its ESG underpinnings

first_imgHuman capital in terms of the total earnings over a person’s lifetime is, as the World Bank states, clearly the most important component of wealth globally. The World Bank analysis finds that human wealth on a per capita basis is typically increasing in low and middle-income countries. But in some upper-middle and high income countries, stagnant wages are reducing the share of human capital. This has hollowed out middle classes and lies behind the rise of populist parties in Europe and Trump’s rise to power in the US.Women, meanwhile, account for less than 40% of human capital wealth, according to the report, because of lower earnings, lower labour force participation and fewer average hours of work.Whilst the report states that achieving higher gender parity in earnings could generate an 18 per cent increase in human capital wealth, such a statement is misrepresentative. It assumes firstly that women who choose to stay at home to raise families have no value, and secondly that increasing their participation in the labour force would not be at the expense of reducing male participation.The report concludes that growth is about more efficient use of natural capital and through investing the earnings from it into infrastructure and educationBoth assumptions probably merit further thought. For example, a simple thought experiment would consist of two mothers who each employ the other to look after their children. If they pay each other the same amount, there would be no net change in the economic circumstances of each family. However, the World Bank analysis would suggest that each has now accumulated human capital that they otherwise would not have had! This thought experiment suggests that work that contributes to society that is unpaid should still be regarded as contributing to human capital.For low income countries, natural capital accounts for the largest component of wealth. But the World Bank argues that getting rich is not about liquidating natural capital to build other assets – natural capital per person in OECD countries was three times that in low income countries even though the share of natural capital for OECD countries was only 3%.Understanding the drivers of wealthThe report concludes that growth is about more efficient use of natural capital and through investing the earnings from it into infrastructure and education.Sustainably managed, renewable resources in the form of agriculture or forestry can produce benefits in perpetuity. In contrast, non-renewables such as fossil fuels and minerals can offer a one-off opportunity to finance development. But, as the report points out, nearly two thirds of countries that have remained in the low income category since 1995 are resource rich, or fragile and conflict states or both.What is clear is that resources alone cannot guarantee development – strong institutions and governance are needed. Clearly the private sector can play a critical role, particularly if a strong stance is taken on ESG issues.Assessing the value of natural resources raises many philosophical challenges, but the debate needs to be had. By doing so the methodology can only improve, while losing biodiversity and the services it underpins is irreversible. Moreover, Europe faces the challenge of coping with refugees and migrants dying in their thousands attempting to gain entry to its shores.Understanding and encouraging the drivers of wealth outside its borders is a matter of self-interest as well as morality. No single metric is ever ideal for assessing progress.For countries, it is very clear that GDP is a poor metric to use for determining long term policies. GDP is a measure of activity rather than wealth creation. That means that it can give very misleading signals about the health of an economy. An obvious case is where natural resources are depleted which may give rise to a boost to GDP but could result in a long-term degradation of wealth and hence future income for that country.Incorporating the value of natural resources as well as human capital is a key requirement for assessing the health of a nation. At the end of January the World Bank released a fascinating analysis of the changing wealth of nations. Promoting an analysis of changing wealth both in absolute terms and on a per capita basis, as the World Bank argues for, provides a forward-looking analysis of the health of nations. It also emphasises the need for sustainability in the exploitation of natural resources. For investors, it is worth noting that environmental, social and governance (ESG) issues underpin many of the conclusions.How the wealth of a nation should be assessed is both controversial and subject to many assumptions. But just because measurement is difficult does not mean that it should not be attempted. The World Bank’s approach measures wealth in the form of four types of assets: Produced capital and urban land : machinery, buildings, equipment and urban land, measured at market prices;Natural capital : natural resources of all types including energy, minerals, agricultural land and forests;Human capital : measured as the discounted value of earnings over a person’s lifetime; andNet foreign assets : the sum of a country’s external assets and liabilitiesThe key findings are perhaps as would be expected, although the value is very much in the detailed figures for each country.Global wealth grew significantly between 1995 and 2014. Rapid growth in Asia that has enabled middle-income countries to catch up, but inequality persists.Per capita wealth changes show a significantly different picture. Low income countries showed a deterioration primarily driven by population growth outstripping investment, especially in sub-Saharan Africa.last_img read more

Saturday almost had it all at Shawano

first_imgJoey Taycher won for the first time in his IMCA Modified career Saturday at Shawano Speedway. (Photo by A and H Photos)By Scott OwenSHAWANO, Wis. (June 10) — One night removed from a full moon, the Shawano Speedway al­most had it all … a nasty wreck, a first-time winner, sweet redemption following a nasty wreck and drivers coming from deep in the field.Joey Taycher got soaked in victory lane after his first career IMCA Modified victory. Travis Van Straten won his fourth local IMCA Sunoco Stock Car feature of the season and Jason Ebert won his first Karl Chevrolet Northern SportMod feature of the season.The IMCA Modified feature got off to a scary start as more than half the field was involved in a wreck at the end of the back straight away. Lance Arneson rolled multiple times before his car came to rest on its side. All drivers were okay though numerous cars were eliminated from action.Once the race got going again, Taycher and Matt McDermid raced side-by-side for the top spot before Taycher pulled ahead. Taycher led the rest of the race for his first career win in the divi­sion. McDermid held on to finish a strong second in only his third night back after a seven-year hiatus. Seventy-six-year young Jerry Muenster continues to amaze after a third place finish.Luke Uttecht led early in the IMCA Stock Car feature as Van Straten quickly raced to se­cond. Van Straten and Justin Jacobsen passed Uttecht to begin a battle for the lead. As the laps clicked away, Jacobsen made numerous attempts to find a way around Van Straten. Jacobsen tried the high line right on the wall and the low line right on the barrels, but to no avail. Van Straten held on to win the race, his fourth in a row. Dan Michonski came from 15th to finish third.The Northern SportMod feature was led early by Tyler Thiex but Ebert quickly moved to the front. Ebert led the rest of the way fending off a late charge by Lucas Lamberies for the win. For Ebert, it was sweet redemption after a nasty wreck a few weeks back. Lamberies, fresh off a big win in Davenport, Iowa the previous night, came from 18th to finish second. Jordan Barkholtz took third.last_img read more