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More than 1,600 universities, pension funds, and governments have sold more than $40.6 trillion in fossil fuel assets to date in response to climate change. Their economic benefits are the same or better than before.
But the California Public Employees’ Retirement System, the nation’s largest pension fund, continues to insist that engagement, not divestment, is the most effective way to address climate change. CalPERS Sustainable Investment Director Peter Cashion announced the retirement plan’s new 2030 Sustainable Investment Plan in November and called the sale “a very unsophisticated solution.”
So how effective and “elegant” has engagement become?
CalPERS’ December 2019 Climate Change Risk Initiative report found that only 9% of the companies CalPERS works with had goals aligned with the goals of the Paris Agreement; Only 8% admitted to lobbying in line with change measures.
The report states that one of the “significant impacts of engagement” is that Shell will announce reduction targets every three to five years towards its goal of cutting net carbon by about half by 2050, and I think it’s the fact that we agreed to include quantity in the total demand and supply. chain. But halving net carbon emissions by 2050 is too little, too late.
To make matters worse, the Financial Times article revealed a disclaimer at the end of the announcement that Shell would not change its strategy or capital deployment plans until the public acted.. Nigeria is therefore moving forward with a new project to produce 30 million tons of liquefied natural gas annually to meet demand expected to double by 2040.
The CalPERS report also praised Chevron’s announced greenhouse gas intensity reduction goals in production. But Chevron also plans to double production in the Permian Basin in west Texas and southeastern New Mexico to 1 million barrels of oil equivalent per day, increasing overall emissions. Probably on the other hand. In the same dual story, ExxonMobil has promised to reduce flaring and methane emissions while planning to triple production in the Permian Basin..
CalPERS claimed that Exxon’s three new “climate-friendly” board members were elected in a shareholder vote in May 2021, but the company has not made any changes to its climate-related policies since then. announced the expansion of greenfield drilling in Guyana.
This is the big picture of engagement. Companies announce misleading targets for reducing the carbon intensity of their production rather than reducing overall greenhouse gases, or set net-zero targets by 2050 without concrete interim measures. . And companies tout these resolutions to maintain investor support while actually investing heavily in hydrocarbon expansion in hopes of increasing demand (and increasing profits) through at least 2040. ing.
Research group Carbon Tracker said that despite net-zero efforts, “no major oil company has actually halted new drilling or other capital investment.”
In December 2022, the House Oversight Committee found that major fossil fuel companies such as Chevron, Exxon, BP, and Shell have no intention of exiting oil and gas production and are instead leveraging false “net zero” promises. released a damning report showing that Misleading the public while doubling down on expansion and production. The committee released an internal memo from the American Petroleum Institute written by CEO Mike Summers that says it all: reducing emissions from natural gas production. Publicizing the industry’s efforts to achieve this goal is an “opportunity to further secure the industry’s license to operate.”
Despite CalPERS’ opposition to divestment, the new 2030 plan allows for “exit” from securities that do not have a credible net-zero plan. However, it does not specify when or how that decision will be made. All the evidence shows that net zero plans are unreliable, and now is the time to divest.
Berkeley resident Sheila Thorne is a former San Jose State University instructor, CalPERS awardee, and member of Fossil Free California.
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