Reinvest Dividends for Climate
What if major shareholders of oil and gas companies invested dividends in emissions reduction and carbon capture instead of reinvesting dividends back into the company?
Stripe is paying to capture and permanently store 2,000 tons of carbon dioxide. At $750 per ton, this is a $1.5 million project. But global annual carbon dioxide emissions are something like six billion tons. Someone has to lead the way but 2,000 / 6,000,000,000 is not likely to keep global temperature increases to 1.5C.
So who will join Stripe? How about the major shareholders of the biggest oil and gas companies?
The top twenty shareholders of ExxonMobil hold 2.3 billion shares outstanding — 55% of the company. Many of the shares are held by investment firms that manage the mutual funds and ETFs that comprise the portfolios of many passive investors looking to invest in the entire market. Think Vanguard Total Stock Market Index and BlackRock iShares Core S&P 500. These two companies hold nearly one billion shares of $XOM.
BlackRock controls more assets under management than anyone. The firm declared “sustainability” to be its new standard for investing and is committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner. And they are “asking companies to disclose a business plan aligned with the goal of limiting global warming to well below 2ºC, consistent with achieving net zero global greenhouse gas emissions by 2050.”
What would happen if BlackRock decided to stop reinvesting its $XOM dividends? The annual $XOM dividend is currently $3.48 per share. The various BlackRock funds collect more than $1.5 billion in annual dividends at this rate. That’s more than two million tons of CO2 at $750 per ton. The top twenty $XOM shareholders collect more than $8 billion in annual dividends. That’s more than ten million tons of CO2.
Is this possible? Do the terms of the investment permit this? Is reinvesting oil and gas dividends in direct air capture the most effective climate-aligned investment? Does investing oil and gas dividends in renewables and emissions reduction and carbon generate better economic and social returns than reinvestment in oil and gas?
At least one oil and gas CEO is comfortable with the idea.
