This week in charts
Days working from home
What’s needed to replenish European natural gas storage
Shareholders Stand Up for Profit and Against ESG at Chevron
In 2021 a Dutch climate nonprofit called Follow This submitted a shareholder resolution demanding that Chevron reduce “Scope 3 emissions.” The Environmental Protection Agency’s website defines Scope 3 emissions as those that are “the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain,” including employee commuting, leased assets and downstream use of products by customers.
Follow This expressly said it sought to combat climate change, not advance a business goal. Chevron’s board opposed the proposal. Yet the resolution earned majority shareholder support, including from its three largest shareholders at the time, Vanguard, State Street and BlackRock.
Scope 3 accounting is useless even in theory as a gauge of environmental impact, because it would count the same unit of emissions more than once. A gallon of gasoline used anywhere in Chevron’s value chain would count toward Chevron’s Scope 3 emissions and the Scope 3 emissions of each company involved. But many companies in Chevron’s value chain haven’t adopted such caps. Caterpillar hasn’t, so Chevron effectively bears full responsibility for the emissions of every Caterpillar backhoe that burns its fuel.
Scope 3 emissions reductions are adverse to the growth of any company that adopts them. Microsoft’s Scope 3 emissions ballooned by 23% in 2021 precisely because sales boomed: Each additional Xbox sold takes additional energy to power it. Such measures are particularly hostile to an oil company, whose only meaningful way to cut Scope 3 emissions is to reduce sales of its main product.
Chevron’s board partly stood its ground after the shareholder vote, declining to adopt “absolute Scope 3 targets.” But in September 2021, the company announced a new $10 billion in spending on low-carbon projects—triple its prior commitment. When asked by an investment analyst if these projects were a “value driver or a license to do business,” a Chevron executive responded “a little bit of both.” One month later, the company set specific targets for reducing Scope 3 carbon intensity and said it “supports the Paris Agreement” and a carbon tax. These are curious business decisions. Congress didn’t ratify the Paris Agreement—and it isn’t Chevron’s responsibility to do so. Successful companies seldom lobby for higher taxes on their products.
BlackRock denies Republican claims of climate ‘activism’
The world’s largest money manager has been under concerted attack for its use of environmental, social and governance factors in investing. It has become a target because chief executive Larry Fink has been outspoken about the need to address global warming.
Nineteen state attorneys-general, all of them Republicans, sent a letter to BlackRock last month accusing it of prioritising “activism” over fiduciary duty to their state pension funds.
“Our states will not idly stand for our pensioners’ retirements to be sacrificed for BlackRock’s climate agenda,” they wrote in the letter, which was led by Arizona attorney-general Mark Brnovich.
New York-based BlackRock responded on Wednesday.
“Climate change is testing the resilience of many industries and businesses. As prudent risk managers and stewards of our clients’ assets, it is imperative that we seek to understand and assess how these risks and opportunities will impact the companies in which we invest,” the company wrote to the attorneys-general.
My Dad passed away happy, and I think peaceful and content. He was the first person close to me who has passed away and it stirred up a lot of thoughts about the meaning of life and purpose. My Dad’s life bothered me because it hadn’t worked out in the end financially. He had tried many business ideas, but there was always some reason it didn’t work out. I always hoped there would be a pot of gold at the end of the rainbow for him, but in the end there wasn’t.
Wealthy people when they get close to death switch their energy to how they can improve the world, and how they can immortalise themselves somehow. They start foundations or donate buildings to universities with their name on them. They realise all their years spent building a successful hedge fund and might have made a lot of money, but really in the grander scheme of things the world could care less whether it existed or not. So they search for a way to do some good in the final years. But what if you are dying and there isn’t going to be a library or cancer foundation with your name on it. What are you passing on then? What was the point? As I was flying from Europe to Montana to see him this is what I kept wondering.
In the end I think the libraries and foundations are great and nice if you can make them happen, but for most of us what we pass on and how we improve the world is how we live our lives in all the small day to day interactions. In our own little way we are improving the vibrational frequency of the world. Then if we have kids we also hopefully pass on positive values, which will continue to help the world long after we are gone and then maybe those positive frequencies will be passed on in turn to our kids’ and kids. And maybe you will find as I have with all the people that contacted our family recently, that you have positively impacted more people than you ever realised.
I used to phone my Dad for advice a lot and when I was working at a hedge fund it would often be investment related. I would call him and the conversation would be something like “Hi Dad, sorry to call I’m just really stressed. I have done a lot of work on XYZ stock, I think it is great, but it is down 3 months in a row and I’m afraid if this stock doesn’t go up in the next 2 weeks and I have to put out a fourth newsletter talking about how badly it is performing all my investors will be annoyed with me, think I have no risk control and redeem, but I really like the stock and really we should be buying more, not selling on the lows. But I just don’t know what to do.” He didn’t need to know anything about XYZ stock, but he could tell what I should most likely be doing and his advice would be “To thy own self be true.” In this example, maybe I would try to find some practical middle ground like trimming it a little, or just staying put, but the way I took his advice was to make the very best investment judgement in the best interest of the client and to not be a muppet. If the investors redeem, they redeem, but in the face of uncertainty make the very best choice you can make and one you will be able to live with later.
This week’s fun finds
The most fun find this week comes from Italy, where partner Stefania and her high school-sweetheart Ryan were married in her family’s hometown. Five other EdgePointers made the trip to Il Bel Paese to help them celebrate.
The mountains are nice, but that’s a stunning group!
Where We Find Meaning in the Everyday
The American Time Use Survey asks people to log their activities for a day, and in the most recent release, people also rated the meaningfulness of the activities on a scale from 0 (not meaningful) to 6 (very meaningful). Here’s how activity categories rated, sorted by most meaningful to least meaningful. Bar height represents how relatively common it was for people to engage in an activity.
The 25 club?
Charting Mr. DiCaprio’s partner preferences.
(Note: Chart is out of date as Ms. Morrone turned 25 in June 2022. Coincidentally, they broke up recently.)
