Public Shareholder Power
We help stakeholders and community groups develop and leverage their community power so that public officials will use the shareholder power they have to push companies to make change to address climate risk.
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Public
With over $5 trillion invested, public pension funds are among the largest investors in many companies, including the largest emitters, producers, and consumers of fossil fuels. These public funds are tax dollars set aside to support the retirement of public servants. The funds must be carefully managed to mitigate risk and generate returns. Among other risks, climate related risks must be managed.
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Shareholder
Publicly traded companies have certain obligations, among them are annual general meetings and annual votes on boards of directors. Votes at these meetings are proportional to investments; as pension funds are some of the largest pools of assets, they have huge shareholder voting power over resolutions and boards of director votes. Many public pension funds just rubber stamp current boards of director votes irrespective of the behavior of the company.
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Power
Given the size of their investments, pension funds have the power to influence the direction of shareholder resolutions and, crucially, annual board of director votes at the companies that are the most significant drivers of climate change.
Related to that power, they also have an ability to influence the biggest investors in the world: asset managers like BlackRock, Vanguard, and State Street.
Climate Finance Action works state by state to build power among local community groups, workers and their unions, and state governments to ensure capital strategies recognize the economic impacts and risks of climate change and the opportunities in a clean energy future. We provide critical education and execute a planning process that analyzes the landscapes, brings stakeholders together to co-create a strategy to drive change.
FAQs
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For as long as there has been a fossil fuel industry, it has always always always been deeply bound up with the finance sector.
Despite the growing urgency of the climate crisis, the finance industry continues to expand its investments in and financing for fossil fuels and deforestation companies. They keep investing in fossil fuels (and companies that extract, emit, and use fossil fuels), and shareholders keep voting for boards of directors who want to keep business as usual.
That’s got to change.
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Public pension funds are large pools (often in the tens of billions of dollars in each state) that represent the retirement savings of public sector workers such as teachers, public works employees, public health employees, etc.
These funds are often managed by trustees and often overseen by elected officials such as treasurers and/or comptrollers. Each state is a little different. These pension funds represent some of the largest funds in the country. Given that annual director votes allow voting based on the number of shares held, these funds have outsized influence on these votes – if they use their shareholder power.
Pension funds often hire large asset managers such as Blackrock or State Street to manage a portion of their pension fund investments. These large asset managers have even more voting shares and more voting power, and pension funds are some of their biggest, most important clients.
In these two ways, pension funds have inordinate (and largely unused) power to push for changes of corporate directors in cases where companies refuse to align with a 1.5 degree policy.
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Currently, public officials (including elected public officials such as State Treasurers) have a way to influence the very companies that are the key drivers of the climate crisis. And most of these public officials are leaving that power on the table and rubber-stamping the annual elections of the leaders of these companies.
The largest drivers of the climate crisis are corporations and they need to be held accountable for change by those who invest in them.
In order to avoid the worst of the climate crisis (including the financial risks it poses), warming needs to be limited to 1.5 degrees. That will not happen if investors keep rubber-stamping corporate behavior when they have an ability to hold these companies and their leaders accountable.
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Divestment and Shareholder power are different and complementary strategies to address the climate crisis.
Shareholder power strategies seek to leverage investors (including public pension funds and the public officials who oversee them) to demand that ALL companies they invest in align their businesses with 1.5 C degrees of warming. This includes those that drill, emit, and use fossil fuels, those financial institutions that finance and invest in such fossil fuel activities, consumer goods companies that cause deforestation, and insurers that provide policies to fossil fuel companies and projects.
Divestment campaigns are efforts to liquidate shares of fossil fuel companies as a way to pull investment dollars out of those activities.