Climate disruption

In an extraordinary show of consensus, 194 countries signed the Paris Agreement in 2015, limiting global warming to “well below” 2°C. Yet business as usual is leading to global warming of 4°C to 5.5°C by the end of this century, rendering entire regions of the planet uninhabitable. A rapid reduction in greenhouse gas emissions is the only way to arrest our fate.

Political and business leaders have failed to tackle the problem at scale. Preventable Surprises believes institutional investors—which hold significant stakes in the world’s largest companies—must use their leverage to put pressure on the largest GHG emitters. These include U.S. electric utility companies, which are the country’s largest consumers of fossil fuels. To achieve the 2°C target, utility companies must supply 95% clean energy by 2050—a feat that will require external pressure from their investors.

Our distinctive contribution is to get investors to be forceful stewards—to actively engage with investee companies to accelerate change. Our focus is on electric utility companies, which are the low-hanging fruit among carbon emitters. To make the 2°C target, utility companies need to supply 95% clean energy by 2050—a feat that will require external pressure from the providers of capital.

We persuade investors to ask the utility companies they own to produce transition plans with short and long-term targets. We give investors technical guidance on what such a plan should look like and we also build coalitions to get advocate adoption of transition plans.

In Australia, UK and the USA, we focus on shareholder resolutions at company AGMs. Large votes in favour of climate-related resolutions send a clear public signal regarding the outlook for fossil fuels. Votes at AGMs also force investors to take a stand, making it difficult to free ride on the leadership of others. In 2016, 60% of the institutional investors who supported 2°C stress test resolutions at European oil majors reversed course in the US, where management was likewise opposed. We highlighted this climate risk inconsistency in our Missing60 campaign.

In continental Europe, Canada and Asian/Latin American countries, AGM resolutions on climate issues are less common. We are looking for other strategies to help investors be forceful stewards in these countries.