January 2014 CR Magazine | R. Paul Herman and Zhaoqi Fu
Neo-Divestitures
As a chief executive, board member, or manager, you are intensely focused on your shareholders and their needs. You seek growth in profits, cash flow, and the resulting shareholder value. But what is your shareholder loyalty and retention? For firms with unsustainable business models, long-time marriages with shareholders are becoming a rocky relationship—and risking a speedy divorce.
Last summer, Bill McKibben’s feature in The Rolling Stone magazine spurred an energized multi-city bus tour of cities and college campuses across the United States that has led to a divestment campaign focused on opposing the fossil fuel industry. (Visit http://math.350.org/). And the campaign is growing. College students in more than 190 universities are calling for removing fossil fuel companies from their university’s endowment funds. And two schools’ endowments, with the help of Responsible Endowment Coalition, have already taken action. Meanwhile, the Mayor of Seattle sent a letter to the city’s two chief pension funds at the end of 2012, formally requesting them to begin the process of divesting its pension portfolio from fossil fuel companies. Similar to economic blockades against South Africa to fight racial apartheid in the 1980s, fossil fuel companies are confronting an investor relations (IR) crisis. What’s the impact of the divestment campaign on carbon-intensive companies? And, what should 21st-century firms do to ease these new highly-informed, intensely engaged shareholders?
Read the full article HERE.
