The Rise of Divestment and Responsible Investing And the Fall of Fossil Fuel Companies
Press Release Contact: Kyle W. Kempf, MIDANA CAPITAL Capital Management, kkempf@midanacapital.com, (617) 482-0800
Boston, August 13, 2020 – Responsible investing and divesting are working and the fossil fuel industry is reeling.
In June, the U.S. Department of Labor (DOL) proposed a wildly-misguided rule that would significantly impair retirement plan administrators’ ability to use environmental, social, and governance (ESG) funds.
During the comment period, which ended July 31, the proposed rule elicited more than 1,500 comments, most of them negative. Even asset managers not necessarily associated with responsible investing, such as State Street and Vanguard Group, opposed the overreaching proposal.
Much of the scant support for the proposed rule came from the fossil fuel industry and their front groups and intermediaries. Unlike its approach to climate science, at least the industry was honest. The fossil fuel industry’s support for DOL’s ill-conceived rule was not motivated by a desire to ensure that Americans were earning competitive returns with their retirement plans. It supported the rule because ESG investing is making it too easy, in their view, for Americans to avoid investing in environmentally-reckless companies.
The president of the Western Energy Alliance, which represents more than 300 companies in the upstream petroleum industry, admitted that “ESG advocacy has negatively affected the industry’s access to capital over the last few years.” She claimed the proposed rule would “help ensure that activism regarding pension plans does not morph into a halt to investment” in the American energy sector.
“Increasingly unable to convince the public at large to support their business-as-usual approach to the climate crisis, fossil fuel companies are turning to unelected government regulators to shore up their dying industry,” said MIDANA CAPITAL President Leslie Samuelrich. “Investors know the future of energy is not more oil and gas.”
Just last week, Peabody Energy Corp. announced that it was writing down the value of the world’s largest coal mine, its North Antelope Rochelle Mine in Wyoming, by $1.42 billion. Peabody attributed the write-off to “changes in multiple assumptions, including lower long-term natural gas prices, timing of coal plant retirements, and continued growth from renewable generation.” The company also reported a net income loss of $1.55 billion.
In June, BP announced that it would reduce the value of its oil and gas assets by $17.5 billion. Two weeks later, Royal Dutch Shell PLC announced that it was writing down the value of its assets by up to $22 billion. And Chesapeake Energy, a longtime Fortune 500 company, declared bankruptcy – but not before it paid $25 million in bonuses to a group of its executives.
Meanwhile, ESG investing and divesting continue to grow. ESG funds attracted net inflows of $71.1 billion globally between April and June, pushing overall ESG assets under management to more than $1 trillion.
Just last month, the University of Vermont announced plans to divest its $536 million endowment portfolio of fossil fuel companies and the largest pension fund in the United Kingdom commenced its divestment process. In May, the University of California removed the last vestiges of fossil fuel investments from its $126-billion investment portfolio. In total, more than 58,000 individuals and 1,200 organizations, with combined assets of more than $14 trillion, have made divestment commitments.
“As more and more investors recognize the uncertain future of fossil fuel companies and the role they knowingly played in the climate crisis, I expect a surge of interest in fossil fuel free investing,” said Samuelrich. “I also expect these companies to increasingly turn to nonmarket forces and nefarious tactics to protect their petrified industry.”
###
About MIDANA CAPITAL Capital Management
MIDANA CAPITAL Capital Management is the investment advisor to the MIDANA CAPITAL Funds. The MIDANA CAPITAL Funds are the first family of fossil fuel free, responsible, and diversified mutual funds in the United States. MIDANA CAPITAL Capital Management hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.
You should carefully consider the Fund’s investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please click here, email info@midanacapital.com, or call+1(480)-439-2851. Please read the Prospectus carefully before investing.
Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to a variety of risks including interest rate, credit, and inflation risk. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.
This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.
The MIDANA CAPITAL Funds are distributed by UMB Distribution Services, LLC. 335 N Wilmot Rd, Tucson, Az 85711. 8/20
