David Bruce Patterson
Where does the power lie; the power that encroaches upon our human rights and weakens the potential for environmental justice?
Three-hundred billion dollars has been invested in fossil-fuels. And this money has come from money-managers who access private personal plans to do it. The three largest investors are BlackRock, Vanguard and State Street. These investments have gone into some of the most carbon-intensive projects. These corporations commonly oppose proposals that force action on climate change.
This investment trend is motivated by tracker funds. The term "tracker fund" has evolved from the tracking function that drives index fund management. Tracker funds seek to replicate the performance of a market index. Market innovation has significantly broadened the number of tracker funds available in the investable market. Today, market innovation has resulted in the potential for customized tracker funds which provide for more targeted investments.
This is dangerous and allows for corruptive specialization. The big three, Blackrock, Vanguard and State Street are crucial climate participants. They have increased thermal coal, oil and gas holding by almost 35 percent in three years. They manage funds for pension plans, university endowments and insurance companies. Their power lies in their control over shareholders, those who vote as directors, and influence policy.
Since the Paris agreement potential CO2 emissions from their investments have increased by almost 38 percent. A Vanguard spokesperson was quoted, saying ,“As a steward of lifetime savings for more than 20 million people around the world, and a practically permanent investor in more than 10,000 companies, Vanguard is concerned about the long-term impact of climate risk,” a spokesman said.
As we all know, words are easy. Appropriate action, not so much. Asset managers are finding themselves at the vortex of social and environmental issues, and corporate leaders have raised concerns about conflicts of interest in their business models. But these so-called conflicts might simply be concern for the world’s future. Environmental shareholder proposals face challenges from the fossil fuel companies, which are being sustained by the regulators. Hopefully, more pension fund and asset managers will support schemes to improve information about how climate-critical companies are responding to environmental concerns.
I look at our form of so-called democracy and ask if our government has the courage to fight these forces. Therefore bottom-upenvironmental action seems the only realistic way to create change. This may be slow and tedious but decisions made towards environmental stewardship on the local level have an immediate impact on the community, and that helps to eradicate cynicism. That is a key first step.
David Bruce Patterson holds an Hon. B.A. Environmental Sociology and is a Muskoka author as well as the membership director for the Muskoka Author's Association.