Editor’s note: This commentary is by David Ellenbogen, who is the vice chair of the Sierra Club Vermont Chapter.
[L]ast week in Dallas, Vermont State Treasurer Beth Pearce presented a shareholder proposal at ExxonMobil’s annual shareholder meeting, co-filed by the Vermont Pension Investment Committee (VPIC). The proposal asked the fossil fuel giant to cap greenhouse gas emissions. Unsurprisingly, and as the case has been for over 20 years, the proposal was openly opposed by ExxonMobil and rejected by a majority of shareholders. While Ms. Pearce’s intentions were noble, asking ExxonMobil to implode its business model was again shown to be a waste of time we can no longer afford.
The Vermont Chapter of the Sierra Club and 350 Vermont are organizing a campaign to divest Vermont’s three pension funds of risky and morally bankrupt fossil fuel investments. Divestment is both smart environmental and financial policy in the face of our climate crisis. Scientists now know (McGlade and Ekins, “The Geographical Distribution of Fossil Fuels Unused When Limiting Global Warming to 2 Degrees Celsius,” Nature, 1/7/15) that to avoid the worst effects of climate change, most of the known carbon reserves must stay underground. Due to rising social and regulatory pressure, fossil fuel companies may soon be forced to keep reserves underground. When that happens, stockholders will be left holding stranded assets – trillions of dollars in overvalued reserves of coal, oil and gas that will be rendered valueless when the carbon bubble bursts, according to the World Bank (Stenek, “Carbon Bubbles and Stranded Assets,” Blog, The World Bank, 6/3/14).
Divesting from the largest fossil fuel companies is a win-win scenario for pension-holders: their retirement funds become insulated from the looming carbon bubble, and Vermont ceases to have its efforts to reduce carbon emissions and combat climate change undermined by its own investments. Furthermore, it is morally wrong to profit from the continued pollution of our air.
Divesting from the largest fossil fuel companies is a win-win scenario for pension-holders: their retirement funds become insulated from the looming carbon bubble, and Vermont ceases to have its efforts to reduce carbon emissions and combat climate change undermined by its own investments.
Treasurer Pearce is mistaken in playing nice with the very companies that are poisoning our air and changing our climate. Fossil fuel companies have not responded to decades of shareholder calls to reduce greenhouse gas emissions or invest in renewable energy. Time and again, their forecasts project a future of growing demand for their product that is incompatible with climate stability. Previous, half-hearted investments in renewable energy came and left because they couldn’t yield greater short-term profits than their fossil fuel counterparts. Innovations are now led by renewable energy companies, not the fossil fuel industry.
In April, the Treasurer’s Office released a report outlining several shareholder engagement issues that Ms. Pearce and the VPIC are working on. The coalitions and resolutions discussed are important, but none of the examples listed in the report offer the bold, timely response we need.
Many forms of action are required to neutralize the dangers posed by ExxonMobil and its cohorts, ranging from a carbon pollution tax to the elimination of fossil fuel subsidies. Vermont’s pension funds can play an important role by freeing investment capital from risky carbon investments and reinvesting the money in renewable energy. Politely asking ExxonMobil – the third largest company in the world – to voluntarily change its catastrophic business model is nothing more than a distraction from the real work that needs to be done — a distraction that is not only ineffective, but imposes risk upon the pension beneficiaries the fund is intended to serve.
