How To Buy An Oil Company

Leveraging pensions to shut down fossil fuels

Last week I interviewed Ian Edwards about fiduciary duty and the $30-50 trillion leverage of annual pension plans which could be used to finance a just transition. Ian explains that fiduciary duty, the concept that someone stewards money in order to maximise the benefits for the beneficiary, must now include wellbeing, a stable ecological environment, and a guarantee of a fair future. He’s now working to get that implication which historically underlied pension investment into law in Massachusetts, with Bill 1644 now before the Senate. 

Fascinatingly, during the episode he lays out how this vast sum of pension money, a huge percentage of the global GDP, $112.6 trillion, can be used to buy dangerous assets and retire them, using the example of fossil fuel companies. Ian explains how the top 20 fossil fuel producers in the world are worth a total of $4.5 trillion, merely 10-20% of the total wealth of government pensions, saying an alliance of pension funds could takeover these fossil fuel companies and create a business plan to retire their extractive, high-carbon activities and transition them into renewable energy. Under this kind of business plan, in which a pension fund only needs a 6-8% return, these companies would have a much greater chance of transitioning given they would no longer be beholden to the irascibility of the stock market nor quarterly profit reports. Pension funds should not, Ian says, be about maximising profits, but be about minimum financial returns and maximum social and environmental returns.

This is a fascinating argument, a truly imaginative one, which seems to be a financial metaphor for the power of people. It’s a way of bringing corporations in line with the vision of the majority who hope for a liveable world, and reveals the power still held by the masses. In a world of financialisation, capital begets power, and great majority of the people on the planet are deliberately disempowered by a capitalist economy which floods wealth to the top. Individually, we have very little power to wield. Together, though, we hold a huge piece of the financial pie. Together, we could exit the profit-maximisation system and create a new market of “stewardship money”. 

There is a big and important focus on fossil fuel divestment right now, with groups like Extinction Rebellion turning the heat up on dirty investments. We’re seeing banks, universities and institutions divest from the fossil fuel industry with increasing urgency. This is a critical action. However, it doesn’t yet solve the problem of those industries being backed into the corner they have created—whilst trapped within a growth-oriented, for-profit system, and beholden to shareholders, these companies will continue to double down on extracting fossil fuels to meet quarterly targets and to not create stranded assets, the result of which would ripple through the financial system. Yes, they need to stop for ecological reasons. Yes, they need to invest far more into research and development, and renewable energy. But they also need a viable business model within our current understanding of what business and finance achieves. At least, those who run those companies think they do. Therefore, could a hostile takeover with the intention of retirement and stewardship be the answer?

Thinking along these lines is disappointing, of course. The deaths from pollution, from warming temperatures, from devastated rivers and deforested lands are unforgivable. Ideally, we would flick a switch tomorrow and halt everything. That seems unlikely to happen (and would have its own devastating consequences). No, it seems more likely now that fossil fuel companies will continue to extract, grow and pollute until a climate disaster impacts the global north to the extent emergency regulations are put into place. But whilst our leaders labour under the mania that business as usual can continue—decarbonised—then we need particularly creative ideas that worm into the system and find a loophole to exploit and usher in a new world.

What if we took the immense sum of pensions off of the stock market? What would happen to Wall Street and the City? What if we bought the fossil fuel infrastructure and dismantled it? What if we, the people, made the energy transition happen? What if rather than waiting for political leaders of the global north to haggle over loans and debts and grants, we invested in the rights of the majority world? 

What if we put money to good use, and let everything else unravel?

© Rachel Donald