When the New York state comptroller announced the $226 billion New York State pension funds’ plan to offload its fossil-fuel stocks and divest from companies that contribute to global warming, headlines exploded with commentary on the impact of the decision. In a recent MarketWatch article, Debbie Carlson outlines a hallmark of longtime socially responsible mutual funds: shunning fossil-fuel investment. In the article, she explains a different approach with an even longer history. Divestiture presents a missed opportunity for investors to capitalize on energy companies that are transitioning to green energy and speeding the transition to a low carbon economy. At Praxis Mutual Funds®, our shareholder advocacy efforts allow us to embrace the opportunity to influence energy companies that are spearheading the transition to a cleaner energy future.
“There’s a fundamental mythology in the divestment movement that when you divest, you’re somehow fundamentally hurting that company, and that’s just not how the markets work,” says Mark Regier, Vice President of Stewardship Investing at Praxis.
Many point to moral issues dissuading their investment in the fossil fuel industry, but Praxis holds that advocacy allows investors to encourage companies in their transition to green energy, make an impact on the environment. According to Chris Meyer, Praxis Manager of Stewardship Investing Research and Advocacy, advocacy works in a way that divestiture doesn’t. At Praxis Mutual Funds, our targeted advocacy allows us to engage with specific companies to influence their climate impact. Through our investments in companies such as ConocoPhilips, The Southern Company, and NiSource, we advocate for greenhouse gas reduction and encourage the phasing out of coal-burning power plants.
These actions bring the near-term changes needed for the low-carbon transition that simply walking away from these companies would not. “No company will be starved for capital or shamed out of existence when nine-tenths of the planet is still using their product,” said Regier in a follow-up to the MarketWatch article. “That’s why it is call the ‘low-carbon transition’, not the ‘low-carbon magical transformation’. This is a process that will take time and committed, engaged investors pressing for changes across a wide range of fossil fuel producing and dependent industries.”
The MarketWatch article also highlights Praxis’ successful advocacy efforts with NiSource, which helped lead to the company’s commitment to a complete coal phaseout by 2028, and transition directly to wind and solar energy. Included in the shareholder dialogue, held in partnership with other investor groups, was an emphasis on a just transition which would provide an opportunity for current coal-plant workers to be trained in new energy technology, ensuring community livelihood and job stability.
By remaining invested in forward-thinking energy companies, Praxis capitalizes on the opportunity to influence these companies’ transition to a low-carbon future and encourage a just transition that considers the livelihood of its employees. These actions work to secure the carbon reductions we need now, rather than waiting for magical solutions in the future. Praxis is proud of our ESG-focused advocacy efforts, and the tremendous advancements we have made toward our mission to promote long-term climate sustainability and resilience.
Read the full MarketWatch article here.
As a shareholder in ConocoPhilips, The Southern Company and NiSource through the Praxis Value Index Fund, Praxis engages directly with companies and encourages them to pursue business practices that support positive social change.