oikos LondonEventsClimate Damage, Portfolio Risk and Forceful Stewardship

Climate Damage, Portfolio Risk and Forceful Stewardship

Mar

12

new screen shotJoin us at the LSE on the 12th of March (5:30pm CLM 5.02) to hear Howard Covington and Raj Thamotheram speak on their recently publicised concept of ‘Forceful Stewardship’. They offer the reasoning that the continued promotion of fossil fuels and an above 2 degrees of warming of the planet carries significant risks for investors’ portfolios. Leading from this is their assertion that it is in the interest of these investors with potentially harmed assets, or those with diversified portfolios, to use their voting rights within publicly listed fossil fuel companies to demand business plans that are consistent with limiting global warming to 2 degrees.

“Since the potentially severe economic damage that may be caused by promoting the use of fossil fuels puts at risk a significant portion of the value of a diversified portfolio, there is a conflict of interest between investors in, and directors of, fossil fuel companies on the one hand and diversified investors on the other. This conflict could be significantly reduced if investors used their voting rights to require publicly listed fossil fuel (and other) companies to move towards adopting business plans that not only enhance shareholder value but are also consistent with only 2° warming. To achieve this, investors would need collectively to vote in favour of changes to corporate behaviour. We call this ‘Forceful Stewardship’ to contrast it with the rather less urgent form of engagement that has been tried over several decades”. (Forceful Stewardship Synopsis, 2015).

 Read a synopsis of their paper

Hear the recording of this event