Economy

Firing Warren Buffett; plus, the energy firms taking Putin's blackmail deal

By David Callaway, Callaway Climate Insights

In a week filled with shareholder resolution votes on climate change and diversity, the biggest one of them all comes this weekend, with Berkshire Hathaway’s (BRK.A, BRK.B) annual meeting, the “Woodstock for Capitalists” extravaganza returning live to Omaha, Neb. after a two-year Covid hiatus. And its’s not about climate.

Berkshire founder, Chairman and CEO Warren Buffett is used to fending off climate disclosure approaches, but this time someone is gunning for his 91-year-old head; in the form of a resolution to split his two roles. Removing him as chairman would almost certainly be akin to firing him, as he would no longer want to stick around. Did I mention he’s 91?

But the shareholder proposal, which got support from the $469 billion California Public Employees Retirement System (CalPERS), the biggest pension fund in the country, is sure to fail. First of all, CalPERS only has a small percentage of Berkshire shares, even though it has more than $2 billion invested in the company. It would take support from larger shareholders such as Vanguard, State Street (STT) and BlackRock (BLK) to really sway anything.

If that’s not enough, Buffett owns 32% of the voting shares himself, making any resolution a long shot. But it’s a testament to the determination of funds like CalPERS to try to make a difference in areas like climate, diversity and corporate governance that it would support an attempt to oust the Oracle, despite his 57 years at the helm of one of the most successful stocks of all time. Unfortunately, these types of resolutions, more for show than anything else, likely hurt the resolution process more than help.

Meanwhile, a small but growing group of energy firms are breaking away from the European Union’s united front against Vladimir Putin and agreeing to pay for their gas in rubles to avoid the fate of Poland, Bulgaria and any other countries he tries to blackmail with Russian gas.

Germany’s Uniper and Austria’s OMV, as well as smaller firms in Hungary and Slovakia, are willing to play ball, according to the Financial Times. Italy’s Eni (IT:ENI) is preparing to as well, according to Bloomberg.

The rollovers will shatter any regional effort to hit Putin in the pocketbook and give cover to large countries, such as Germany, who are against any sort of oil and gas embargo of Russia because of their reliance on its fuel. File under divide and conquer.

More insights below . . . .

The shunned-stock hypothesis and why we should all invest in oil companies

. . . . Investors in some of the biggest banks, who declined this week to support climate initiatives to rein in fossil fuel financing at shareholder meetings, may be on to something, writes Mark Hulbert. A long-held theory on Wall Street that some of the best investments are among companies in scorned industries — called the Shunned-Stock Hypothesis — argues that there are often companies in these industries who are doing things differently. They are just overlooked. In oil and gas, that could be companies who are investing in renewables, for example. It’s a novel way to push the climate agenda but one which so far has been ignored by activists. . . .

Read the full column

Thursday’s subscriber insights: Climate resolutions falling short at banks

. . . . Bank leaders talk the green talk but don’t walk the walk (at least in full). And, unlike with oil companies, activist shareholders are not getting traction in bringing more pressure on bank leaders to end fossil fuel financing. While shareholder support grows each year, it’s still not anywhere near effecting meaningful change in bank lending policies. If not now, can things ever change? Read more here. . . .

. . . . Fill ’er up with a nice single malt? Yup. A biofuel scientist at a decade-old Scottish company has found a way to turn the considerable waste resulting from Scotch whisky production (and that of other bar beverages) into fuel for your car. Raise your glasses and read more here. . . .

. . . . The Ukraine war may have helped save net-metering, the practice where utilities have to pay homeowners with solar panels for the excess energy that goes back into the grid. At least it did in Florida, where Gov. Ron DeSantis surprised just about everyone this week by vetoing a utilities-backed bill to slash their fees and gut the residential solar business. DeSantis vetoed the bill, saying “The state of Florida should not contribute to the financial crunch that our citizens are experiencing.” What will happen in other places facing similar legislation, such as California? Read more here. . . .

. . . . Hey, do you like my new iTable? Yes, a Spanish recycling company is breaking down what is left of electronics after the valuable stuff is taken out and turning the resulting plastic and metal into furniture. And it’s employing disabled workers to do it. Read more here. . . .

Editor’s picks: TPG raises $7 billion for climate fund; plus, award-winning cow masks (yes, really)

TPG raises $7.3 billion for Rise Climate Fund

Global alternative asset management firm TPG announced the $7.3 billion final close of its TPG Rise Climate fund, as the private equity company expands its clean energy investments. TPG Rise Climate was launched in 2021, and is co-run run by former U.S. Treasury Secretary Hank Paulson, of Goldman Sachs fame. The company says it has been rapidly deploying capital through growth-stage investments in innovative climate solutions. In a news release TPG said recent investments include backing the leading solar tracking company Nextracker, creating North America’s largest marketer and originator of carbon and environmental credits via the merger of Bluesource and Element Markets, and forming an innovative partnership with Tata Motors to lead the electrification of passenger mobility in India. Jim Coulter, TPG founding partner and managing partner of TPG Rise Climate, said in a statement, “As technology opens new markets and methods in everything from batteries to biogas and solar to sequestration, we are energized by the decarbonization opportunities ahead. With every investment, we remain committed to Rise’s mission of delivering exceptional returns alongside meaningful impact.”

The masked (cow) hero of net zero

The idea: Cutting-edge wearable tech for methane oxidation and animal welfare, in one device — a sort of face (nose?) mask for burping cows. Callaway Climate Insights first wrote about Zelp in 2020. The U.K. based company is on a mission to reach net zero by transforming the livestock industry. And now, Zelp is one of four winners of the Terra Carta Design Lab award. The inaugural contest is associated with the Royal College of Art in the United Kingdom and is part of the Prince of Wales’ Sustainable Markets Initiative. Bloomberg reports the award was created to showcase innovative solutions to the climate crisis. Each winner receives £50,000 ($63,000) and mentoring from former Apple Inc. design chief Jony Ive, who serves as the chancellor of the Royal College of Art, and other members of the Sustainable Markets Initiative.

Inflation expectations and climate concerns

Using survey data from German households, researchers say individuals with lower climate concern tend to have higher inflation expectations up to five years ahead. This correlation is most pronounced among individuals with extremely high inflation expectations, say the authors of Inflation Expectations and Climate Concern. Evaluating candidate explanations, the authors say, they find that part of the link between climate concern and inflation expectations can be associated with individuals’ perceived exposures to climate-related risks and with their distrust in the central bank. “Overall, our results suggest that climate change perceptions matter for inflation expectations.” Authors: Christoph Meinerding, Deutsche Bundesbank; Andrea Poinelli, European Central Bank; Yves S. Schüler, Deutsche Bundesbank.

Words to live by . . . .

“History is humankind trying to get a grip. Obviously it’s not easy. But it could go better if you would pay a little more attention to certain details, like for instance, your planet.” — Kim Stanley Robinson, author of New York 2140.

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