Welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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Insurance hypocrisy
Legislators launched an investigation into seven insurance companies that continue to invest in and insure various fossil fuel projects. Lawmakers question why insurers like Chubb collect up to $800 million in annual premiums from the fossil fuel industry while clinging to net-zero commitments and also leaving some markets due to climate change risks.
In a similar move last week, over 140 climate justice, consumer rights, and conservation groups are fed up with insurance companies that bankroll LNG export terminals. In a letter sent on the anniversary of the Freeport LNG explosion, the signatories note the hypocrisy of State Farm and Allstate citing “growing catastrophe exposure” as the reason for departing California while continuing to insure the projects fueling catastrophes. More than 20 LNG facilities are proposed in Gulf Coast communities already overburdened by the fossil fuel industry.
As shareholder season winds down, it’s clear that ESG proposals hit a slump, with votes of support slipping from last year. But there's a silver lining – proposals at Bank of America, Wells Fargo, Goldman Sachs, and JPMorgan calling on banks to detail how they’ll meet emissions targets managed to secure a decent level of support, registering in the high 20s and low 30s percentages. However, support for proposals to push these banks away from fossil-fuel financing barely scratched 10%. This diminished enthusiasm is likely due to the rise of anti-ESG sentiment, political backing of fossil fuels, and an acute focus on immediate energy needs in the shadow of the Ukraine conflict.
Another silver lining – anti-ESG proposals, even as they multiplied, averaged only 3% support. This was true even at the oil and gas majors, where you might expect them to find favor.
ESG’s identity crisis
Fortune recently interviewed 40 ESG executives, and the overwhelming conclusion was that no one wants to say ESG. Recognizing that the term has little meaning for the general public and that it’s been highly politicized by the far right, most executives think it’s best to ditch the term itself and rather focus on what the metrics are trying to accomplish, be it measuring pollution, board oversight, etc. They are also wary of engaging with “trip wires” like cultural issues around sexual orientation, or activists “harnessing the ESG apparatus to advance their cause.”
Alt-right economy tanking
For all the airtime Vivek Ramaswammy and his ilk are getting, the alternative economy they’re trying to build isn’t doing so hot. One prominent “anti-woke” fund, the American Conservative Values ETF, is lagging the S&P 500 by 2 percent, while share prices at several companies targeted by the anti-woke mob are up 10 to 60 percent. Ramaswamy’s own flagship fund has lost over 25% of its assets under management, while several alt-right start-ups – from the conservative dating site The Right Stuff to Donald Trump’s alternative reality media firm – are faltering.
Paris summit resources
We prepared a short explainer detailing the role of the World Bank and the International Monetary Fund since their formation, and a rundown of the proposed reforms set to be discussed at the Summit for a New Global Financing Pact in Paris next week. Another international institution considering reform? The International Maritime Organization has the opportunity to implement a global shipping levy that could bring in up to $100 billion a year – a proposal also likely to be discussed at the summit.
On Wednesday at 10 am ET, do tune into a press briefing that explores the vision and milestones that need to be set during the summit. Panelists include Avinash Persaud, Special Envoy to the Prime Minister of Barbados; Ali Mohamed, Climate Change Envoy at the Executive Office of the President, Kenya; Laurence Tubiana, CEO of the European Climate Foundation; and Steve Waygood, Chief Responsible Investment Officer, Aviva Investors. Click here to register.
June 14: House Oversight Committee hearing Death by a Thousand Regulations: The Biden Administration’s Campaign to Bury America in Red Tape.
June 14: Caterpillar AGM, where there are votes on corporate climate lobbying and lobbying disclosure.
June 14: Toyota AGM, where there is a key vote on lobbying disclosure, calling on the company to strengthen reporting on how its lobbying activities impact its climate-related risks and impacts.
June 15: Three Breakthroughs to Transform Climate Finance, from World Resources Institute and Systems Change Lab. Register here.
June 27: Ceres Beyond Oversight and Disclosure: The Growing Need for Board ESG Education Webinar. Register here.
June 29: PWYP-US Publish Your Plans Webinar. Register here.
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– Tan Copsey, Katharine Poole, Steve Hargreaves, Jayson O'Neill & Shravya Jain-Conti
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