Minnesota Divestment Coalition
APRIL 2022 BRIEFING TO THE SBI
This Briefing will look at (1) the Securities and Exchange Commission’s draft proposal; and (2) The problem with fossil fuel companies and carbon capture.
- The SBI should weigh in on the Securities and Exchange Commission’s (SEC) proposed rule (S7-13-22).
A draft proposal by the Securities and Exchange Commission (SEC) is out for public comment. If adopted, companies will be required to disclose audited greenhouse gas emissions in much the same way they are required to disclose audited financials.
The SBI should support the proposed rule requiring disclosure of climate-related risks, and metrics reflecting those risks. Climate-related risks have reached historic and catastrophic levels. Voluntary guidance is inadequate. Existing disclosures do not adequately protect investors and shareholders who want to monitor the extent to which a company’s behavior is consistent with its public statements. The current disclosures make it difficult for investors and shareholders to make investment or voting decisions aligned with their risk tolerances or ESG concerns. Many companies publish sustainability reports but few include emissions data in their SEC filings. Consistent, comparable and reliable disclosures on material climate-related risks will serve both investors and capital markets. We support requiring reporting of Scopes 1, 2, and 3 emissions, with a safe harbor from liability for reporting on Scope 3 emissions for one year.
Not surprisingly, the fossil fuel industry is actively fighting this proposed rule change. We urge the SBI to submit a comment to the SEC before May 31, communicating the Minnesota State Board of Investment’s support for the proposed rule. Comments can be sent by email to rule-comments@sec.gov. Please include File Number S7-13-22 on the subject line.
2. Carbon Capture: Another reason to divest from fossil fuel companies.
The original intent of carbon capture was to remove carbon dioxide from the earth’s atmosphere in order to bring CO2 levels back below 350 parts per million, the level needed for a stable climate and to prevent the climate destruction we face. Unfortunately, the fossil fuel industry has corrupted the original intent of this potential solution by seeking government subsidies for elaborate systems that would allow them to continue burning their product – coal, gas and oil – while ostensibly capturing the CO2 that is released from the plants’ smokestacks. The problem is that this technology doesn’t work. It has proved to be energy intensive and much more expensive than simply using renewable energy to produce the energy we need. Research has shown that carbon capture equipment captured the equivalent of only 10-11 percent of the emissions that natural gas power plants produce.*
The Institute for Energy Economics and Financial Analysis (IEEFA) has shown similar results at Exxon’s Shute Creek Carbon Capture, Utilization and Storage (CCUS) facility.
Despite these findings, fossil fuel industries continue to use carbon capture as the centerpiece of their green-washing efforts – going so far as to request large subsidies under the President’s Build Back Better program. Such carbon capture programs should be seen as a subsidy-harvesting scheme to prolong the life of the oil and gas industry that is fueling global warming, NOT an emission reduction investment.
As ethical custodians of Minnesota’s public resources, the SBI should divest now from fossil fuel companies. They have demonstrated time after time that they are incapable of acting as responsible and reliable partners in addressing the climate crisis.
*For more information about Mark Jacobson’s research over the last 20 years, see this article on reducing carbon emissions.