Opinion
Fossil-Fuel Divestment Is Futile
— May 29, 2018
By Paul H. Tice
In the long run, the effort to starve energy companies of capital will only make the oil and gas sector more attractive to investors.
The fossil-fuel divestment campaign has made its way from the campus quad to Wall Street. Watch for disruptions at Wednesday’s annual meeting of Exxon Mobil shareholders. Climate-change and environmental activist groups have become the ideological driving force behind the environmental-social-governance movement, or ESG, sweeping the investment-management industry.
ESG criteria purport to promote “sustainable investing” by imposing “social responsibilities” on corporations—including the responsibility to prevent global warming—under the guise of fiduciary responsibility, risk management and financial transparency. Because the environmental question relates to what oil and gas companies do, as opposed to how they operate, there is no obvious way for them to comply, apart from getting out of the business.
That means there’s no obvious way for fund managers to comply with ESG activists’ demands other than by divesting themselves of fossil-fuel companies. The activists have succeeded in redirecting investment flows away from the coal and oil-sands industries, with crude oil the next hydrocarbon in the crosshairs.
Read the full article as published by The Wall Street Journal.
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Paul Tice is an Executive in Residence at NYU Stern.
ESG criteria purport to promote “sustainable investing” by imposing “social responsibilities” on corporations—including the responsibility to prevent global warming—under the guise of fiduciary responsibility, risk management and financial transparency. Because the environmental question relates to what oil and gas companies do, as opposed to how they operate, there is no obvious way for them to comply, apart from getting out of the business.
That means there’s no obvious way for fund managers to comply with ESG activists’ demands other than by divesting themselves of fossil-fuel companies. The activists have succeeded in redirecting investment flows away from the coal and oil-sands industries, with crude oil the next hydrocarbon in the crosshairs.
Read the full article as published by The Wall Street Journal.
____
Paul Tice is an Executive in Residence at NYU Stern.