“Painfully slow.”
Edward Mason, speaking of progress at Exxon
The spectacle of the cabal of European leaders haggling over who is to replace Jean-Claude Juncker symbolises all that is wrong about European Union governance, and is in sharp contrast to the election to the European Parliament (widely acknowledged as having very little real influence). So it’s been left to Matteo Salvini, newly empowered with a strong mandate from his Italian electorate, to demand change.
A single currency needs a directly elected president in order to ensure that wealth is shared, and if the Eurozone leaders do not take action to integrate further in order to re-balance wealth, Salvini will bring the whole edifice down.
However, it’s not just in politics that entrenched management becomes stuck in the status quo. It also happens in business, and this week we look at how investors are gradually changing the business models of Oil Majors for the benefit of future generations, through shareholder democracy.
Edward Mason, head of responsible investment at the Church Commissioners, is well known among board members of Big Oil. He’s one of the people who are slowly but surely changing the whole outlook for climate change, using shareholder democracy to insist on compliance with internationally set environmental targets.
I’ve worked with Edward for much of the past twenty years, first on the Church of England’s Ethical Investment Advisory Group, and more recently in his role at the Church Commissioners. He is very different to Matteo Salvini as a change maker: he’s polite and diplomatic in his style, for example. However he also has a steely determination to achieve what’s right, and is not afraid to tell truth to power.
Applying climate change targets to Oil Majors and ensuring compliance with international targets is the most ambitious of responsible investment goals, and it has required long-term and thorough preparation. The key vehicle for change is the Climate Change 100+ group of investors, which has a total of $33 trillion of funds under management, which draws on the Transition Pathway Initiative on which we reported last summer, on 30th July.
Climate Change 100+ has already changed the future for BP by filing Resolution 22 at their annual meeting, which achieved 99% support. As a result of this, BP will now need to set out a business strategy consistent with the agreed goal of restricting warming to well below 2 degrees Celsius.
Exxon is proving a harder nut to crack, as reported last Thursday: but Edward and his colleagues have achieved over 40% backing from shareholders for the appointment of an independent chairman, amid fierce criticism of the company’s stance on climate change.
There is no doubt that the force of the status quo, so often seen to steamroll all opposition calling for change, can be a very daunting prospect for those seeking a new direction. Entrenched support, whether politically or from passive investors, can often leave change makers feeling very like the little child in the fairy tale, who called out: ‘The emperor’s got no clothes’.
But we need the change-makers to keep calling out in order to ensure that people don’t have to suffer a greater calamity in the future: whether that might be an uncontrolled collapse of the Eurozone or an environmental disaster.
We should therefore salute the courage of those prepared to stand for what they believe in, particularly those who do so from the standpoint of politeness and diplomacy. They receive no political dividend, but are the real unsung heroes.
Meanwhile, where does all this leave Salvini and European Commission? The struggle here is just starting, as Ambrose Evans-Pritchard wrote in the Telegraph business section last week: “By some maniacal reflex, the dying Commission of Jean-Claude Juncker has chosen now to draw up the first indictment letter of the revamped debt and deficits regime. Italy faces €3.5 billion (£3.1 billion) of fines for failure to tighten its belt”.
But there are only two potential outcomes for the Eurozone: either it centralises power in the hands of a directly elected president, who will be able to overrule national interests and demand re-balancing wealth from Germany to Italy, or the Italians will start constructing a ‘de facto’ currency - a new lira in waiting. This latter option would be the beginning of the end for the single currency.
These emperors indeed have no clothes.
Gavin Oldham OBE
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