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Hedge Fund TCI Vows To Punish Directors Over Climate Change

What’s happening? Hedge fund TCI will vote against directors of companies that do not improve their emissions disclosure, and says asset owners should sack fund managers that don't require such disclosure, reported Leslie Hook and Gillian Tett in the Financial Times.
Why does this matter? In further literature provided by TCI, it’s made clear fossil fuel producers aren’t the only corporates that should fear equity divestment. It’s suggested any large company refusing to disclose emissions or not having a credible plan to transition to a low-carbon economy could be vulnerable to shareholder activism.
The harsh reality is that complying with such a mandate may be difficult for all but the richest corporates. Already, we’re seeing Big Tech swallow up power purchase agreements for renewables. It could be that very few players gain a stranglehold on wind and solar power, meaning smaller corporates struggle to meet their sustainability goals.
Simply put, there is not enough renewable energy to go around to satisfy corporate needs, as well as growing global energy demands.
According to BP’s Statistical Review of World Energy 2019, renewable electricity consumption rose by 15% in 2018. Despite this, a 2.9% increase in overall global energy consumption during the same period saw carbon emissions rise by the fastest rate since 2011.
Companies can, of course, reduce their emissions output by improving efficiencies, wasting less and doing away with unnecessary production. Reversing the global growth in emissions, however, also likely requires a curb in global consumption, something very few corporates are willing to talk about.
Lateral thought – While the current environmental focus of activist investors’ ire is carbon emissions, how long before corporates are held to account on other factors?
Take the treatment of water, for example. A recent report from Ceres noted the world’s food industry uses 70% of global freshwater. Water scarcity, therefore, potentially puts around $415bn of revenue at risk in addition to other associated environmental risks.

Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.

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