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Investors Breach Investment Commitments For Exxon Climate Risk Campaign

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Pension Funds - American Advisors Group via Flickr

Crisis of accountability as 1000 pension and retirement funds ignore member letters on AGM vote.

Many of the world’s biggest investors breached their responsible investment commitments to help ExxonMobil defeat a shareholder campaign for it to assess climate risk to its business, finds the first study of voting at its AGM, carried out by the Asset Owners Disclosure Project.

The report also identifies a “crisis of accountability” between many pension and retirement funds and their members, revealing that more than 1000 ignored letters from members urging them to support climate resolutions at the AGM and asking how their fund intended to vote.

At Exxon’s AGM in May 38% of shareholders defied the board to vote for a resolution asking the world’s biggest publicly traded oil company to disclose how resilient its investments would be if policy measures to restrict global warming to 2C were put in place – a near-record vote for a contested resolution.

At the Paris Climate Summit world leaders pledged to limit climate change to a maximum 2C, putting climate risk firmly on the mainstream financial agenda. Mark Carney, Governor of the Bank of England and chairman of the international Financial Stability Board, has warned that action to tackle climate change could leave fossil fuels and other high-carbon investments as worthless stranded assets.

AODP’s ExxonMobil Investor Engagement Report reveals that many of the world’s biggest investors whose vote is publicly available and who supported the Exxon board by voting against the resolution have signed up to the UN-supported Principles for Responsible Investment (PRI). They include Blackrock and Vanguard, the world’s two largest asset managers who jointly own 11% of the company, JP Morgan, Capital Group and Franklin Templeton.

The global commitment to limit climate change to two degrees poses a clear threat to the business model of fossil fuel companies.

These principles pledge signatories to incorporate environmental, social and governance (ESG) factors into their investment decisions. Principle 3 states: “We will seek appropriate disclosure on ESG issues by the entities in which we invest.”

Julian Poulter, CEO of AODP, said: “The global commitment to limit climate change to two degrees poses a clear threat to the business model of fossil fuel companies. Shareholders have a right to know how Exxon plans to manage climate risk.

“Asset managers and asset owners who helped Exxon defeat this modest climate resolution are not only risking their own money, they are betraying the millions of ordinary people whose pensions are invested in Exxon stock. Our analysis also reveals disturbing hypocrisy, with many investors ignoring responsible investment commitments they have made.”

Blackrock voted with Exxon despite warnings from CEO Larry Fink in a letter to CEOs earlier this year that ESG factors like climate change “have real and quantifiable financial impacts” and “for too long, companies have not considered them core to their business – even when the world’s political leaders are increasingly focused on them, as demonstrated by the Paris Climate Accord.” [1]

Details of funds which supported Exxon against the climate resolution have only just emerged following the August 31 Securities and Exchange Commission deadline for shareholders to disclose votes.

Julian Poulter said: “Having rejected wholesale fossil fuel divestment, these funds now have to prove that engagement can be a credible way to transition these companies into cleaner organisations. By helping Exxon to dig its heels in, many of the same funds that helped bring the house down in the 2008 sub-prime mortgage crisis are now ignoring Mark Carney’s warnings of a “wholesale re-assessment of prospects” and risking another financial crisis.”

1000 pension funds ignore member calls to disclose voting plans on climate resolution

A VoteYourPension campaign ahead of the AGM revealed a basic lack of accountability between pension funds and their members over how they are engaging with Exxon to manage climate risk. A total 1069 pension funds in 52 countries were contacted by members urging them to support climate resolutions at the AGM and asking how they intended to vote. Just 35 funds responded.

The report reveals that 99% of funds in the US failed to respond to their members, 85% in Europe, 83% in Canada and 82% in Asia Pacific.

Funds which failed to respond included 136 PRI signatories, despite a commitment (Principle 6) that: “We will each report on our activities and progress towards implementing the principles.”

Of funds which did respond to members, the most common reason given for not divulging their voting plans at the AGM, given by eight funds, was that they relied on their asset managers to vote. Three said they invested through pooled funds and one said it relied on proxy voting advisers.

Julian Poulter said: “Pension funds and other asset owners have a fiduciary duty to look after their members’ long-term interests and should not simply outsource responsibility to asset managers or advisers who typically take a shorter-term view. Funds should direct their asset managers to vote their shares in line with their responsible investment commitments.”

AODP’s report reveals that asset managers played a critical role in helping Exxon defeat the climate resolution. Because they pool the capital of many asset owners it gives them large shareholdings and much greater voting influence than individual asset owners.

Three asset managers own 16% of Exxon: Vanguard (6.6%) and Blackrock (4.9%) which voted with Exxon and State Street Global Advisors (4.5%) which supported the climate resolution. By contrast only four other investors own more than 1% of the company, and none more than 1.5%.

However, the report points to encouraging signs that shareholder action on climate risk is gathering momentum.

·       A record 82 funds worth around $10 trillion announced their support for the climate resolution in advance, setting a new precedent for building shareholder coalitions.

·       Two major proxy voting advisers, ISS and Glass Lewis, recommended voting for the resolution, support believed to have had a significant impact on the vote count.

·       State Street’s support for the climate resolution represents a significant shift in fund manager voting patterns.

Julian Poulter said: “A massive 38% of Exxon shareholders defied the board and voted for a two degree stress test of its business model. A growing number of the world’s biggest investors now see climate risk as a material issue. Exxon and other high-carbon companies should act now to align their activities with the two degree global climate commitment.”

A list of Exxon’s top 50 shareholders and how they voted is available on pages 21-22 of the report.

Economy

A Good Look At How Homes Will Become More Energy Efficient Soon

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energy efficient homes

Everyone always talks about ways they can save energy at home, but the tactics are old school. They’re only tweaking the way they do things at the moment. Sealing holes in your home isn’t exactly the next scientific breakthrough we’ve been waiting for.

There is some good news because technology is progressing quickly. Some tactics might not be brand new, but they’re becoming more popular. Here are a few things you should expect to see in homes all around the country within a few years.

1. The Rise Of Smart Windows

When you look at a window right now it’s just a pane of glass. In the future they’ll be controlled by microprocessors and sensors. They’ll change depending on the specific weather conditions directly outside.

If the sun disappears the shade will automatically adjust to let in more light. The exact opposite will happen when it’s sunny. These energy efficient windows will save everyone a huge amount of money.

2. A Better Way To Cool Roofs

If you wanted to cool a roof down today you would coat it with a material full of specialized pigments. This would allow roofs to deflect the sun and they’d absorb less heat in the process too.

Soon we’ll see the same thing being done, but it will be four times more effective. Roofs will never get too hot again. Anyone with a large roof is going to see a sharp decrease in their energy bills.

3. Low-E Windows Taking Over

It’s a mystery why these aren’t already extremely popular, but things are starting to change. Read low-E window replacement reviews and you’ll see everyone loves them because they’re extremely effective.

They’ll keep heat outside in summer or inside in winter. People don’t even have to buy new windows to enjoy the technology. All they’ll need is a low-E film to place over their current ones.

4. Magnets Will Cool Fridges

Refrigerators haven’t changed much in a very long time. They’re still using a vapor compression process that wastes energy while harming the environment. It won’t be long until they’ll be cooled using magnets instead.

The magnetocaloric effect is going to revolutionize cold food storage. The fluid these fridges are going to use will be water-based, which means the environment can rest easy and energy bills will drop.

5. Improving Our Current LEDs

Everyone who spent a lot of money on energy must have been very happy when LEDs became mainstream. Incandescent light bulbs belong in museums today because the new tech cut costs by up to 85 percent.

That doesn’t mean someone isn’t always trying to improve on an already great invention. The amount of lumens LEDs produce per watt isn’t great, but we’ve already found a way to increase it by 25 percent.

Maybe Homes Will Look Different Too

Do you think we’ll come up with new styles of homes that will take off? Surely it’s not out of the question. Everything inside homes seems to be changing for the better with each passing year. It’s going to continue doing so thanks to amazing inventors.

ShutterStock – Stock photo ID: 613912244

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Economy

IEMA Urge Government’s Industrial Strategy Skills Overhaul To Adopt A “Long View Approach”

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IEMA, in response to the launch of the Government’s Industrial Strategy Green Paper, have welcomed the focus on technical skills and education to boost “competence and capability” of tomorrow’s workforce.

Policy experts at the world’s leading professional association of Environment and Sustainability professionals has today welcomed Prime Minister Teresa May’s confirmation that an overhaul of technical education and skills will form a central part of the Plan for Britain – but warns the strategy must be one for the long term.

Martin Baxter, Chief Policy Advisor at IEMA said this morning that the approach and predicted investment in building a stronger technical skills portfolio to boost the UK’s productivity and economic resilience is positive, and presents an opportunity to drive the UK’s skills profile and commitment to sustainability outside of the EU.

Commenting on the launch of the Government’s Industrial Strategy Green Paper, Baxter said today:

“Government must use the Industrial Strategy as an opportunity to accelerate the UK’s transition to a low-carbon, resource efficient economy – one that is flexible and agile and which gives a progressive outlook for the UK’s future outside the EU.

We welcome the focus on skills and education, as it is vital that tomorrow’s workforce has the competence and capability to innovate and compete globally in high-value manufacturing and leading technology.

There is a real opportunity with the Industrial Strategy, and forthcoming 25 year Environment Plan and Carbon Emissions Reduction Plan, to set long-term economic and environmental outcomes which set the conditions to unlock investment, enhance natural capital and provide employment and export opportunities for UK business.

We will ensure that the Environment and Sustainability profession makes a positive contribution in responding to the Green Paper.”

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