Why SWIFT Sanctions on Russia Might Not be Enough

Link: https://www.rstreet.org/2022/03/01/why-swift-sanctions-on-russia-might-not-be-enough/

Excerpt:

The news immediately following the removal of some Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network has been a moment of victory for the international community in condemning Russia’s invasion of Ukraine. Soon after the sanctions took effect, the ruble sunk 21 percent compared to the U.S. Dollar (USD). Russia’s central bank is in damage control mode, raising interest rates to 20 percent. At a glance it might seem like these punishing sanctions could force Russia to change course, but any optimistic takes should be tempered by a review of the effect of sanctions after Russia’s annexation of Crimea in 2014.

….

Unlike the United States and other western nations where oil and gas production are controlled by private companies, Russia’s oil and gas production is managed by state-owned enterprises. Oil and gas production in Russia directly finances Russia’s budget, including its military budget, and in 2019 oil and gas exports accounted for 39 percent of Russia’s federal budget revenue. Part of the reason oil and gas is such a lifeline to the Russian budget can be attributed to the effect of the sanctions. In January of 2014, the ruble was $0.03 USD, and by December 2014 it fell to $0.019 USD. In that same year, Russia was the largest producer of crude oil and exported 4.7 million barrels per day. The price of oil in January 2014 was $108/barrel, and by December had fallen to $62/barrel—thanks to high U.S. production. The value of Russian oil exports went from 16.9 billion rubles per day in January to 15.4 billion rubles per day in December, as the sharp decline of oil prices was counteracted by the rising ruble value of oil from the sanctions. If oil prices had remained constant, then the effect of the sanctions would have been to increase Russian export value in the local currency to 26.7 billion rubles per day. In plain English, the harder the sanctions hit, the more valuable Russian energy exports become and the better they are able to sustain the Russian budget.

Author(s): Philip Rossetti

Publication Date: 1 Mar 2022

Publication Site: R Street

Influential fund manager Green Century tells insurers to drop Big Oil

Link: https://www.marketwatch.com/amp/story/influential-fund-manager-green-century-tells-big-insurers-to-drop-big-oil-11645049047?twclid=11498308136175906819

Excerpt:

Green Century Capital Management tried to use shareholder muscle to persuade at least a trio of insurance companies to drop fossil-fuel clients.

So far, the insurance firms aren’t biting; all three have filed no-action requests with the Securities and Exchange Commission.

The resolutions, in advance of proxy season this spring, call on Chubb CB Travelers TRV and The Hartford HIG to take this bold step as private-sector efforts to curb global warming from the burning of coal, oil CL00 and gas NG00 pick up, alongside global government action.

The insurance resolutions represent the first time that shareholders have laid down this sizable challenge to this industry for what the activists say are its contributions to the climate crisis

Author(s): Rachel Koning Beals

Publication Date: 17 Feb 2022

Publication Site: MarketWatch

City Of Chicago Shunning Fossil Fuel Investments. Who Benefits? Russia. – Wirepoints

Link: https://wirepoints.org/chicago-shunning-fossil-fuel-investments-as-nation-struggles-with-higher-energy-costs-wirepoints/

Graphic:

Excerpt:

The timing on Wednesday was impeccable. I was looking at the price of oil, which was up four percent that day and about to pass $100/barrel. Energy stocks were up over one percent despite a horrible day for the rest of the market.

That’s when an email popped up with a story in Crain’s headlined “Chicago moving to divest from fossil fuels.”

….

So, with inflation raging, gasoline moving towards $4.00/gallon and Russia murdering Ukrainians with the help of American oil purchases, Chicagoans can take comfort knowing that the city will refuse to invest in oil and other fossil fuel production and thereby “will be sending a message that Chicago is permanently leaving dirty energy in the past and welcoming a clean energy future for generations to come.”

That’s from Chicago Treasurer Melissa Conyears-Ervin. She and members of the City Council, with Mayor Lori Lightfoot’s support, are pushing for an ordinance to mandate that the city divest its funds from fossil fuel companies, as Crain’s reported.

In fact Conyears-Ervin had already made oil and gas divestment office policy. The new ordinance would make the change permanent going forward. Her office has already removed $70 million in fossil fuel-associated bonds from the city’s portfolio, she says.

How wise has it been lately to be shunning fossil fuel investments? Here’s a chart comparing performance year-to-date of the S&P 500 to XLE, an ETF basket of mostly oil and gas companies. While the market in general is down some 10% the oil and gas stocks are up over 21%.

Author(s): Mark Glennon

Publication Date: 25 Feb 2022

Publication Site: Wirepoints

Mapped: Visualizing U.S. Oil Production by State

Link:https://www.visualcapitalist.com/mapped-u-s-oil-production-by-state/

Graphic:

Excerpt:

A total of 32 of the 50 U.S. states produce oil. They are divided among five regional divisions for oil production in the U.S., known as the Petroleum Administration for Defense Districts (PADD).

These five regional divisions of the allocation of fuels were established in the U.S. during the Second World War and are still used today for data collection purposes.

Given that Texas is the largest U.S. oil-producing state, PADD 3 (Gulf Coast) is also the largest oil-producing PADD. PADD 3 also includes the federal offshore region in the Gulf of Mexico. There are around 400 operational oil and gas rigs in the country.

Author(s): Anshool Deshmukh

Publication Date: 10 Aug 2021

Publication Site: Visual Capitalist

California Public Pensions Are Major Fossil Fuel Investors

Link:https://www.rigzone.com/news/wire/california_public_pensions_are_major_fossil_fuel_investors-09-dec-2021-167254-article/

Excerpt:

California’s climate-conscious policies aren’t matched by the investment choices of its largest public pension funds, according to a report from two environmental groups. 

Of the 14 top U.S. pension funds analyzed by Stand.earth and Climate Safe Pensions Network, California Public Employees’ Retirement System, known as Calpers, and California State Teachers’ Retirement System, known as CalSTRS, were the largest investors in fossil fuel companies, with $27.1 billion and $15.7 billion, respectively, according to findings published Wednesday. 

The two combined hold about half the fossil fuel assets for the entire group, according to the study. Calpers also came first in fossil fuel holdings as a proportion of its total assets under management, at 6.9%.  

….

The New York State Teachers’ Retirement System had the second-largest share of its portfolio invested in fossil fuels, at 6.6%. 

Author(s): Robert Tuttle

Publication Date: 9 Dec 2021

Publication Site: Rigzone

15 States Threaten To Pull $600 Billion From Banks That Won’t Give Equal Service To Energy Industry

Link:https://thefederalist.com/2021/11/30/15-states-threaten-to-pull-600-billion-from-banks-that-wont-give-equal-service-to-energy-industry/

Excerpt:

Fifteen state financial officers sent a letter to U.S. banks last week noting $600 billion in assets they pledge to take elsewhere if the financial institutions embrace corporate wokeism and prohibit financing to the fossil fuel industry.

Led by West Virginia Republican Treasurer Riley Moore, the group promised “collective action” in the form of an “economic boycott.”

…..

Signatories to the letter putting banks on notice include chief financial officers from Arizona, Arkansas, Idaho, Louisiana, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Utah, Wyoming, Alabama, Texas and Kentucky, in addition to West Virginia.

Author(s): Tristan Justice

Publication Date: 30 Nov 2021

Publication Site: The Federalist

Finance Group Fails To Deliver at COP26

Link:https://www.nakedcapitalism.com/2021/11/finance-group-fails-to-deliver-at-cop26.html

Excerpt:

Not One of 60 Major Commercial Banks Has ‘Leadership Position on Decarbonizing’

Yet the trend line of bank finance for fossil fuels is rising not declining, and not a single big commercial bank has released a plan to stop financing new fossil fuels.

It’s striking that unlike any of other sectors implicated in speeding global warming, not a single one of the 60 major commercial banks has staked out a leadership position on decarbonizing.

On the other labelled days of COP, there were all kinds of interesting mash-ups of governments, private sector actors, and think tanks offering a web of creative announcements about their determination to set ambition on one thing or another. By contrast, on Private Finance Day, the one and only announcement was relating to GFANZ. Banks and investors didn’t even try to push out additional good ideas. Everyone covered themselves in the GFANZ penumbra and then went quiet.

Author(s): Michael Northrop

Publication Date: 30 Nov 2021

Publication Site: naked capitalism

Why Engine No. 1’s Victory Is a Wake-up Call for ExxonMobil and Others

Excerpt:

Over the past two weeks, activist hedge fund investor Engine No. 1 scored a victory for the climate change movement by wresting three board seats at ExxonMobil with the support of the “Big Three” institutional investment firms BlackRock, Vanguard, and State Street. But the episode also marks a failure in ExxonMobil’s “corporate diplomacy” because of its inability to convincingly demonstrate that it is committed to mitigating climate risks and protecting its long-term business value, according to Wharton management professor Witold Henisz.

Engine No. 1 has only a 0.02% stake in ExxonMobil, but the climate risk issues it pushed for were sufficient to get the three big investment firms on its side. In explaining its stance, BlackRock stated that the energy major needs “to further assess the company’s strategy and board expertise against the possibility that demand for fossil fuels may decline rapidly in the coming decades.” BlackRock CEO Larry Fink had reiterated his company’s commitment to combating climate change in his 2021 annual letter to CEOs; in his 2020 letter to CEOs, he had said that “climate risk is investment risk.”

Author(s): Witold Henisz

Publication Date: 15 June 2021

Publication Site: Knowledge @ Whatron

Illinois targets coal plant closures before all bonds retire

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202106071513SM______BNDBUYER_00000179-e7af-dd1a-ab7d-efefe4190001_110.1

Excerpt:

A proposed mandate to shutter the $5 billion Prairie State coal energy campus and a Springfield, Illinois? plant by 2035 would hit local ratepayers with the double burden of funding new energy sources while still paying down project bonds, a bipartisan group of state lawmakers warn.

Gov. J.B. Pritzker backs a state mandate to end coal generation by 2035 to meet de-carbonation targets included in pending energy legislation. The package stalled during the General Assembly?s spring session that ended last week, but Pritzker said he expects lawmakers will return in the coming weeks for a vote.

…..

Retiring Prairie State early would mark the latest headache for some of the nine public utilities in Illinois, Indiana, Kentucky, Missouri, and Ohio that issued $4.5 billion of debt, some it under the federal Build America Bond program, to finance their ownership in project.

Peabody Energy Inc. initially sponsored the project in Washington County promoting it as an affordable source of energy with an adjacent mine and a cleaner one given its state-of-the-art technology at the time. Bechtel Power Corp. built it. It initially carried a $2 billion price tag that rose to a $4 billion fixed cost under the 2010 contract with utilities but cost overruns drove the price tag up to $5 billion.

Author(s): Yvette Shields

Publication Date: 7 June 2021

Publication Site: Fidelity Fixed Income

Activist Likely to Gain Third Seat on Exxon Board

Link: https://www.wsj.com/articles/activist-likely-to-gain-third-seat-on-exxon-board-11622664757

Excerpt:

An activist investor is likely to pick up a third seat on the board of Exxon Mobil Corp., giving it additional leverage to press the oil giant to address investor discontent about diminished profits and its fossil-fuel focused strategy amid concerns about climate change.

Exxon said Wednesday that an updated vote count showed shareholders backed a third nominee of Engine No. 1, an upstart hedge fund that had already won two board seats at Exxon’s annual shareholder meeting last week. The final vote hasn’t been certified, Exxon said, and could take days or weeks to be finalized, according to people familiar with the matter.

Engine No. 1, which owns a tiny fraction of Exxon’s stock, had sought four seats on the board and argued the Texas oil giant should commit to carbon neutrality, effectively bringing its emissions to zero—both from the company and its products—by 2050, as some peers have. If the preliminary voting results hold, it will control a quarter of Exxon’s 12-person board.

…..

Shareholders representing nearly 56% of shares that were eligible to vote supported a proposal calling for Exxon to disclose more about direct and indirect lobbying spending and policies, while about 64% voted for Exxon to release a report on how its lobbying aligns with Paris climate accords.

Author(s): Christopher M. Matthews

Publication Date: 2 June 2021

Publication Site: WSJ

The Exxon Vote: Pension Supporters Stay Onboard to Advance Change

https://www.ai-cio.com/news/the-exxon-vote-pension-supporters-stay-onboard-to-advance-change/

Excerpt:

Sticking around and backing dissident board candidates worked. Instead of divesting from Exxon Mobil, the US’s biggest oil company, the nation’s three largest public pension funds pursued a successful strategy of advocating for change, and they just helped elect a pair of outside directors. Expect more of this tack against fossil fuel outfits.  

Running counter to the trend of pension programs dumping fossil fuel stocks, these giant retirement systems—the California Public Employees’ Retirement System (CalPERS), the California State Teachers’ Retirement System (CalSTRS), and the New York State Common Retirement Fund—believe that, in most cases, working from within is the better way to promote change.

They were key players in electing the two outside directors (a third is still up in the air as proxy ballots are counted), along with huge asset managers BlackRock and Vanguard, plus other pension entities such as the Church of England’s program.

Author(s): Larry Light

Publication Date: 1 June 2021

Publication Site: ai-CIO

New York pension fund divests $7 million from Canadian oil sands firms

Link: https://www.reuters.com/article/us-new-york-pension-oil-sands/new-york-pension-fund-divests-7-million-from-canadian-oil-sands-firms-idUSKBN2BZ1UT?il=0

Excerpt:

New York’s state pension fund is restricting investment in six Canadian oil sands companies because they have not shown they are prepared for a transition to a low-carbon future, the fund’s Comptroller Thomas DiNapoli said on Monday.

The New York State Common Retirement Fund will divest more than $7 million in securities already held in the companies, and not make any further investments in them, DiNapoli said in a statement.

Canada’s oil sands hold the world’s third-largest crude reserves and have some of the highest emissions intensity per barrel, due to the carbon-intensive production process of extracting tar-like bitumen from the ground.

Author(s): Nia Williams

Publication Date: 12 April 2021

Publication Site: Reuters