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Money Talks: Shareholders Must Show Willingness On BP and Shell Remuneration

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Investors at BP and Shell are being encouraged to use binding votes on pay in 2017 to hold the oil corporations responsible on their transition for commercial resilience in a lower carbon world.

In a report released today, ShareAction urges investors not to support executive compensation structures that incentivise the pursuit of high-carbon strategies. Doing so would put shareholder value at risk under low-carbon future scenarios, including the ‘below two degrees’ goal agreed at the Paris climate summit last year.

Catherine Howarth, Chief Executive at ShareAction said: Responsible investors who are serious about climate risk have a crucial opportunity to ‘walk the talk’ at BP and Shell next year, by pushing for remuneration policies designed make these major companies commercially resilient in a low carbon world – and voting down policies which fail that test.”

The votes on pay policy in 2017 are binding ‘say on pay’ votes, introduced by the UK coalition government in 2013. They are the first pay votes to be put to shareholders in BP and Shell since the Paris Agreement on global emissions. If approved by shareholders, the structures will be applicable until 2020 and will be used to determine executive reward each year at the companies.

The issue of high pay dominated BP’s AGM in April this year, with 60% of shareholders voting against CEO Bob Dudley’s £14m pay packet in an advisory vote. The forthcoming binding votes mean the issue is likely to dominate again in 2017, and represents a key test of the investment community at a time when executive pay is top of the political agenda.

Remuneration at both companies is currently linked to a high carbon strategy, which rewards senior executives for replenishing fossil fuel reserves. This fails to acknowledge the scale of the changes required from the companies to achieve long-term commercial resilience and sustainable returns for the millions of British pension savers holding these companies in their retirement funds.

“While incentives in and of themselves will not drive the transition, getting them wrong at this critical point will reaffirm a business model that is unsustainable and damaging to the companies’ long-term viability,” says the report. “The golden thread between strategy and remuneration make it an important ground for setting expectations of low carbon resilience.”

Concerns about incentive structures at oil and gas companies are being echoed around the world. A report released today by Australian finance activist group Market Forces shows how fossil fuel companies in Australia are linking executive pay explicitly to the expansion of new oil, gas and coal reserves. Seven companies in the Australian Securities Index, as well as Chevron, BP and Exxon, have an ‘expansion’ bonus which incentivises risky projects such as drilling for oil in the Great Australian Bight. The group’s research shows that not a single Australian superannuation fund has voted down a remuneration packages on climate change grounds. This is despite the fact that the vast majority of Australian funds have publicly pledged support for keeping the world under two degrees of global warming. The research also found that frequently, funds fail to disclose how they vote, meaning investors can’t even find out what their money is supporting.

Pablo Berrutti, Head of Responsible Investment for Asia Pacific at First State Investments said:

Climate change is an issue that affects us all.

“We believe that companies should be incentivised to reduce carbon emissions and improve energy efficiency. Linking this with remuneration is a logical step for emissions intensive sectors.”

Daniel Godfrey, independent Director and Consultant said:

“The binding votes on pay at BP and Shell pay next spring are a crucial opportunity for shareholders, many of whom want to see evidence of the companies’ ability to adapt to a low carbon economy. Realigning incentives is central to that. ShareAction’s report provides practical recommendations for engagement, to help investors shape remuneration policies that reward long-term, sustainable strategies.”

Juliet Phillips, Campaigns Manager at ShareAction and author of the report said:

“In the context of a decarbonising economy, the pursuit of high-carbon pathways puts significant value at risk for long-term investors in fossil fuel companies. In their engagements with BP and Shell, shareholders must reinforce the need for a climate-smart strategy, reflected in remuneration policies that signal and reward the steps required to achieve low carbon resilience.”

Energy

7 New Technologies That Could Radically Change Our Energy Consumption

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Energy Consumption
Shutterstock Licensed Photo - By Syda Productions | https://www.shutterstock.com/g/dolgachov

Most of our focus on technological development to lessen our environmental impact has been focused on cleaner, more efficient methods of generating electricity. The cost of solar energy production, for example, is slated to fall more than 75 percent between 2010 and 2020.

This is a massive step forward, and it’s good that engineers and researchers are working for even more advancements in this area. But what about technologies that reduce the amount of energy we demand in the first place?

Though it doesn’t get as much attention in the press, we’re making tremendous progress in this area, too.

New Technologies to Watch

These are some of the top emerging technologies that have the power to reduce our energy demands:

  1. Self-driving cars. Self-driving cars are still in development, but they’re already being hailed as potential ways to eliminate a number of problems on the road, including the epidemic of distracted driving ironically driven by other new technologies. However, even autonomous vehicle proponents often miss the tremendous energy savings that self-driving cars could have on the world. With a fleet of autonomous vehicles at our beck and call, consumers will spend less time driving themselves and more time carpooling, dramatically reducing overall fuel consumption once it’s fully adopted.
  2. Magnetocaloric tech. The magnetocaloric effect isn’t exactly new—it was actually discovered in 1881—but it’s only recently being studied and applied to commercial appliances. Essentially, this technology relies on changing magnetic fields to produce a cooling effect, which could be used in refrigerators and air conditioners to significantly reduce the amount of electricity required.
  3. New types of insulation. Insulation is the best asset we have to keep our homes thermoregulated; they keep cold or warm air in (depending on the season) and keep warm or cold air out (again, depending on the season). New insulation technology has the power to improve this efficiency many times over, decreasing our need for heating and cooling entirely. For example, some new automated sealing technologies can seal gaps between 0.5 inches wide and the width of a human hair.
  4. Better lights. Fluorescent bulbs were a dramatic improvement over incandescent bulbs, and LEDs were a dramatic improvement over fluorescent bulbs—but the improvements may not end there. Scientists are currently researching even better types of light bulbs, and more efficient applications of LEDs while they’re at it.
  5. Better heat pumps. Heat pumps are built to transfer heat from one location to another, and can be used to efficiently manage temperatures—keeping homes warm while requiring less energy expenditure. For example, some heat pumps are built for residential heating and cooling, while others are being used to make more efficient appliances, like dryers.
  6. The internet of things. The internet of things and “smart” devices is another development that can significantly reduce our energy demands. For example, “smart” windows may be able to respond dynamically to changing light conditions to heat or cool the house more efficiently, and “smart” refrigerators may be able to respond dynamically to new conditions. There are several reasons for this improvement. First, smart devices automate things, so it’s easier to control your energy consumption. Second, they track your consumption patterns, so it’s easier to conceptualize your impact. Third, they’re often designed with efficiency in mind from the beginning, reducing energy demands, even without the high-tech interfaces.
  7. Machine learning. Machine learning and artificial intelligence (AI) technologies have the power to improve almost every other item on this list. By studying consumer patterns and recommending new strategies, or automatically controlling certain features, machine learning algorithms have the power to fundamentally change how we use energy in our homes and businesses.

Making the Investment

All technologies need time, money, and consumer acceptance to be developed. Fortunately, a growing number of consumers are becoming enthusiastic about finding new ways to reduce their energy consumption and overall environmental impact. As long as we keep making the investment, our tools to create cleaner energy and demand less energy in the first place should have a massive positive effect on our environment—and even our daily lives.

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Energy

Responsible Energy Investments Could Solve Retirement Funding Crisis

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Energy Investments
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Retiring baby-boomers are facing a retirement cliff, at the same time as mother nature unleashes her fury with devastating storms tied to the impact of global warming. There could be a unique solution to the challenges associated with climate change – investments in clean energy from retirement funds.

Financial savings play a very important role in everyone’s life and one must start planning for it as soon as possible. It’s shocking how quickly seniors can burn through their nest egg – leaving many wondering, “How long your retirement savings will last?

Let’s take a closer look at how seniors can take baby steps on the path to retiring with dignity, while helping to clean up our environment.

Tip #1: Focus & Determination

Like in other work, it is very important to focus and be determined. If retirement is around the corner, then make sure to start putting some money away for retirement. No one can ever achieve anything without dedication and focus – whether it’s saving the planet, or saving for retirement.

Tip #2: Minimize Spending

One of the most important things that you need to do is to minimize your expenditures. Reducing consumption is good for the planet too!

Tip #3: Visualize Your Goal

You can achieve more if you have a clearly defined goal in life. This about how your money can be used to better the planet – imagine cleaner air, water and a healthier environment to leave to your grandchildren.

Investing in Clean Energy

One of the hottest and most popular industries for investment today is the energy market – the trading of energy commodities. Clean energy commodities are traded alongside dirty energy supplies. You might be surprised to learn that clean energy is becoming much more competitive.

With green biz becoming more popular, it is quickly becoming a powerful tool for diversified retirement investing.

The Future of Green Biz

As far as the future is concerned, energy businesses are going to continue getting bigger and better. There are many leading energy companies in the market that already have very high stock prices, yet people are continuing to investing in them.

Green initiatives are impacting every industry. Go Green campaigns are a PR staple of every modern brand. For the energy-sector in the US, solar energy investments are considered to be the most accessible form of clean energy investment. Though investing in any energy business comes with some risks, the demand for energy isn’t going anywhere.

In conclusion, if you want to start saving for your retirement, then clean energy stocks and commodity trading are some of the best options for wallets and the planet. Investing in clean energy products, like solar power, is a more long-term investment. It’s quite stable and comes with a significant profit margin. And it’s amazing for the planet!

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