The flaw in CA100+

BlackRock, the world’s biggest investor, has joined the Climate Action 100+ alliance of investors in the world’s most polluting corporates. The move, in January 2020, was welcomed by asset managers and activists, including Australia’s BlackRock’s Big Problem campaign and London-based Carbon Tracker.

BlackRock is the world’s biggest investor in fossil fuels – estimated at some $87 billion, and a key influence on Big Oil and the energy incumbency responsible for a large shaare of global carbon emissions. “In joining CA100+, BlackRock is responding to the demands of its asset-owner clients and other groups globally that they take meaningful action to address climate change,” said Fiona Reynolds, director of the United Nations-backed Principles for Responsible Investment and member of the CA 100+ steering group.

A spokesman for BlackRock described the decision to join CA 100+ as “a natural progression of the work our Investment Stewardship team has done to date. We believe evidence of the impact of climate risk on investment portfolios is building rapidly and we are accelerating our engagement with companies on this critical issue.”

This, of course, is not the whole story.

Like it or not, we depend on Big Oil to drive the energy transition. Economics and climate science agree: the future of energy is in renewables. But only incumbents have the scale, financial muscle and market-making opportunities to drive that transition before it’s too late to curb emissions. The small but persistent band of activist shareholders in Big Oil have made this case, with some success, in a series of shareholder resolutions to the AGMs of Shell, BP, Equinor, Exxon Mobil and others.

The most useful reference in my view is Follow This, a Dutch movement of green shareholders founded in 2015. Their resolutions to Shell can be read – in hindsight – as a tested theory of change:

1. Ask oil and gas companies for specific, measurable emissions targets (Scope 1, 2 and 3) – vague “ambitions” are no substitute.
2. Build support from institutional investors seeking to align their portfolios to the Paris climate goals.
3. Monitor the carbon footprint and capital spending plans of investee companies.

Follow This and CA100+ share the same vision, but the larger alliance obscures the recent gains in transparency which make change possible. The method pioneered by Follow This, initially through shareholder resolutions to the AGM of Shell, diverges from the tactics of CA 100+, a broad church formed in 2017 whose members manage almost $50 trillion in assets.

CA 100+ can claim some important gains in lobbying polluting companies outside the oil and gas sector to improve their footprint. But a grouping of this nature is, necessarily, comprised of incumbents – the established owners of Big Oil. For oil industry CEOs, the preference of CA 100+ for general ambitions and a reluctance to set binding targets has proved a welcome diversion from the more challenging shareholder resolutions of groups such as Follow This. Oil companies have cited support from CA 100+ as a fig leaf to obscure the underlying pattern of rising investment in more hydrocarbons.

In this opinion piece from January 2021,   Climate Action 100+ is bigger than Big Oil?, Follow This founder #MarkvanBaal and I warn that even good intentions have unintended consequences.

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