These oil shareholders are not for the turning
Plus: Could AI be abrdn's new CEO?
You've got to feel at least a little bit sorry for Amundi this week.
The French asset manager has long been aggressive in its ESG support. In fact, by some objective measures it's been the most proactive in pushing companies to adopt more demanding climate targets:
A Morningstar analysis published this week looked at the voting record of 25 asset managers on say-on-climate resolutions, which are proposed by company boards. These are a fairly new type of resolution, so there were only 87 to analyse, but still: on average, managers' support fell from 92% in 2021 to around 70% in 2022 and 2023. And guess who least supported these resolutions? That's right:
"Amundi, which “considers it essential that shareholders be able to comment on the company’s decarbonization strategy,” chose to signal its higher ambitions on climate by withholding support for most of the say-on-climate resolutions it voted on in 2022 and 2023." (highlight mine)
So imagine Amundi’s surprise when, of all managers, its building was stormed by protesters this week. I don't wish to make light of it, because people were genuinely hurt:
"Police said they detained 173 people among hundreds who gathered outside the Paris headquarters of Amundi, one of the world's biggest investment managers and a major TotalEnergies shareholder.
A few dozen protesters forced their way into Amundi's tower block, daubing graffiti on the walls and smashing some windows, police said. Amundi said eight of its security staff were injured."
All this was happening because Amundi holds about 9% of TotalEnergies, the French oil major, with whom protestors were even more cross. Total was holding its annual shareholder meeting. Had you asked me to guess how many security staff this kind of meeting requires, my bet would have been a lot less than the 200 that Total actually stationed. It kept Total's building safe but, alas:
"Greenpeace activists climbed a building near the company's western Paris headquarters early on Friday and unfurled a banner printed with a large photo of Pouyanne under a 'Wanted' heading."
The whole week has been like this. Total, Shell, Amazon, and also Woodside, Australia's largest energy company:
In every case, companies put forth their climate proposals, arguing they are trying to balance current demand with climate priorities.
In every case protestors menacingly lined up.
In every case investors submitted their own resolutions. And...
In every case the proposal put forth by management won by a significant majority.
This is key. Ahead of the Shell meeting this week, a survey by PensionBee showed pension savers saying they want aggressive greenhouse gas reduction targets for big polluters. Nearly 60% said they favored Shell taking action by 2030.
Whereas what actually happened on the day at the Shell AGM was that the investor climate resolution gets 18.6% shareholder support (including Amundi's), while the management-proposed climate resolution got 78.2% support.
So, what's going on here?
One way to try and explain this dynamic is that those vocally protesting are not the ones doing the voting. But this argument quickly falls apart. Recall how, despite efforts from NYC Comptroller Brad Lander, BlackRock shareholders voted overwhelmingly to keep Aramco CEO Amin Nasser on the board. (He even got more votes than CEO Larry Fink! All 16 board members were re-elected with significant support.)
A better way to explain the increasingly hostile dynamic of shareholder meetings is that you've got four groups:
There are vocal non-investors (like Greenpeace). There are vocal investors (like Amundi and NYC's Comptroller). There's management, which is also vocal. The press — a player here as well — gives most of them a platform.
But then there's the silent majority. It neither wants nor seeks a voice, for the simple reason that it's the majority. When the votes are cast, its voice is plenty loud.
Treasure corner: Nudges are no golden ticket
Let's dwell a little longer on that silent majority. After all, our world is constantly changing, and people's ideas rarely stay fixed in time. Any kind of activism is about exerting pressure to cause change. Over the years, behavioral psychology has developed its own speak around actions that prompt change, which we now call nudging.
Well, this week the Wall Street Journal published a story about re-thinking nudging. It's worth noting that the two researchers who wrote it are marketing professors. Because they revisit what we think we know as "effective nudging" and ask: did it actually deliver?
And their answer is No.
We already knew (and they showed again) that nudges can certainly influence initial choices. But, through three different studies, they showed that people who are nudged into decisions are less likely to follow through compared to those who make choices independently.
Sometimes, the results may actually be worse compared to the no-nudge situation. When people were offered a plant, one group was steered towards a choice, while the other was just given the plant. Those who were nudged to choose the plant as a compromise let it die 16% sooner than those who chose without a compromise option.
Even when nudges are better than no nudges, the researchers report:
"We have found that nudges don’t provide nearly as much benefit as initial results indicate—or as much as many nudge proponents are counting on."
Also Happening
Nearly half of top executives surveyed believe the role of a CEO could be automated or taken over by A.I. According to Anant Agarwal, former director of M.I.T's computer science and A.I. lab, tech might be able to replicate 80% of a CEO's typical workload:
"That includes writing, synthesizing, exhorting the employees. More subtly, A.I. — if it reaches any of the levels its salespeople are promising — will democratize the job of top management even while scaling it back."
Then again, maybe not. Stephen Bird has made an abrupt exit from abrdn, ahead of his fourth work anniversary. His tenure shows the type of hard decisions a CEO has to face, and the uncertainty involved. His time is marked, of course, by the abrdn rebrand, which the press is still making fun of.
He also pushed to innovate, by acquiring direct investment platform Interactive Investor (for £1.49bn) and investing insights platform Finimize (for £87m). He struggled to contain the unprofitable asset management business, whose cost-to-income ratio was 82% - well above the industry average (which, we recently talked about this, is closer to 70%). Abrdn's share price has fallen by over 40% in the last three years.
If someone's got an AI that can handle these kinds of issues, there's your chance!