Cold carbon feet

One of the most enduring arguments in favour of wind and solar power as replacements for fossil fuels has been that the costs of both technologies have been falling consistently. This argument has been refuted repeatedly by commodity markets in the past year, yet it is still being made by wind and solar proponents.

There appeared to be a similar sense of an inexorable move in a single direction in the investment world with regard to activist investor pressure on big corporations to make commitments to reduce their carbon footprints.

Organisations such as Follow This and Engine No. 1 rose to prominence because of their success with Big Oil majors who were forced by shareholder votes to make emission commitments. Yet the tide appears to be turning, suggesting the move was not as inexorable as perceived.

The Financial Times reported last week that “A record-breaking US proxy season for shareholder proposals brought disappointment to environmental activists, as some investors shied away from backing climate proposals they saw as too prescriptive.”

Activists had a strong petition season, the report noted, with a record 389 petitions on environmental and social issue with members of the Russell 3000 Index but support for these fell from 37% last year to 33% this AGM season. And of the 389 petitions, only 30 were approved by company boards without the need for a shareholder vote.