Oil: Why shareholder activism doesn't work and divestment does
Credit: Noah Scalin In the news This week the UK's biggest investment fund - the National Employment Savings Trust - has decided to divest from fossil fuels . Their chief investment officer Mark Fawcett said "Just like coronavirus, climate change poses serious risks to both our savers and their investments, [...] It has the potential to cause catastrophic damage and completely disrupt our way of life. No one wants to save throughout their life to retire into a world devastated by climate change." This is in contrast to what the pensions minister Guy Opperman has said. He thinks we should "nudge , cajole or vote" companies into becoming sustainable and that holding shares is the right thing to do. They can't both be right, and they're not. Mark Fawcett is right and Guy Opperman is wrong. Here's why: How are oil companies valued? It is fairly easy to show that the market valuation of an oil company is simply the price of the oil they have in res...