Has oil activism peaked?
The annual shareholder meetings of Exxon Mobil and Chevron, scheduled for Wednesday, are set to be largely sedate, as they will be held virtually. But their European rivals had raucous meetings last week, with environmental protesters storming the stage at Shell’s gathering and clashing with tear-gas-wielding police outside Total’s.
Despite the drama, however, climate-focused shareholder activists are being forced to rethink their approach, two years after the tiny hedge fund Engine No. 1 won a stunning victory over Exxon, Vivienne Walt writes for DealBook.
Activists have failed to win more than 50 percent in many key proxy votes since then. That string of disappointing results is forcing a reckoning at some of the sector’s biggest players: “In June, we’re going to revisit our strategy, and think about what’s next for the coming years,” Mark van Baal, the founder of the shareholder activist group Follow This, told DealBook.
And it comes despite major investors backing shareholder activists’ efforts: Norway’s $1.4 trillion sovereign wealth fund, for instance, has pledged to side with them on climate issues on the ballot at Exxon and Chevron.
The conundrum: how to convince investors to prioritize long-term climate risks over booming oil profits. Last year was “the year the empire struck back,” according to Mr. van Baal, as oil giants successfully argued that energy crises during a time of inflation, war and a post-pandemic travel boom trumped the climate crisis.
So far, many demands from climate groups for the industry to decarbonize have only garnered about 20 percent approval from shareholders.
Activists are weighing changes to their playbook. Mr. Van Baal outlined the following strategy:
Stay invested in the oil giants, to keep voting for climate resolutions.
Widen impact by putting pressure on investment banks and insurers that enable oil and gas projects.
Take more legal actions, building on a landmark 2021 ruling in the Netherlands, where a judge instructed Shell to accelerate its energy transition, and include tougher emissions standards in its targets. (That has drawbacks: The strategy is expensive and could take years to play out in the courts. It’s also less likely to succeed in the United States, where conservatives are pushing back against so-called environmental, social and corporate governance measures.)
Frustrations are boiling over in the activist camp, and many say change is needed. “I’ve been in the climate movement for 15 years, and I get a sense of desperation,” said Mark Raven of 350.org, an international climate activist group, some of whose members participated in last week’s protests. In particular, he added, “Younger activists are unhappy with things that have gone before.”
On Wednesday, DealBook will examine why activists have felt so dejected since Engine No. 1’s victory.
HERE’S WHAT’S HAPPENING
Elizabeth Holmes is expected to report to prison on Tuesday. The disgraced founder of the blood-testing start-up Theranos is scheduled to begin a 135-month sentence for defrauding investors. She is expected to report to a minimum-security prison in Texas that accommodates family visits.
Tech leaders plan to warn of artificial intelligence’s “existential” threat to humanity. More than 350 executives, researchers and engineers working in A.I. signed onto a one-sentence statement set for release on Tuesday calling for mitigating the risks of A.I., which they say are on par with nuclear war and pandemics. Signatories include Sam Altman of OpenAI and Demis Hassabis of Google DeepMind.
Turkey’s currency falls after Recep Tayyip Erdogan wins re-election. The lira hit a record low after the incumbent president prevailed in a runoff, extending his rule into a third decade. Among investors’ worries is that Turkey will maintain a monetary policy that focuses on growth and exports instead of reducing inflation, with Erdogan arguing that raising interest rates increases inflation.
British grocery chains reportedly weigh capping prices. Retailers are in talks with government ministers on voluntary limits for staple items, according to The Guardian, in response to the soaring inflation in food prices that has plagued Europe. Meanwhile, here’s an argument for why a lack of competition in the grocery industry is behind rising prices in the United States.
Markets cheer a debt deal
The debt-ceiling deal reached over the holiday weekend must still survive a gauntlet of congressional votes. But investors are already declaring “mission accomplished” as S&P 500 futures and Treasury bills advance on Tuesday.
The House could vote on the agreement as soon as Wednesday, though it must first get through the chamber’s powerful Rules Committee.
Here’s what’s in the deal, which economists gave a decent grade:
Two years of federal spending limits in exchange for pushing future debt-ceiling discussions beyond the 2024 elections.
An end to the Biden administration’s freeze on student loan payments.
Stricter work requirements for public assistance programs, including food stamps, though Medicaid won’t be affected. (The requirements drew opposition from both sides of the aisle.)
A streamlined approval process for energy projects — known as permitting — through the creation of a single agency to oversee the matter. The deal also includes approval for a multibillion-dollar natural gas pipeline through West Virginia, a win for Senator Joe Manchin.
Not included in the bill are any major commitments to reduce the $31.4 trillion national debt. But The Times calculates that nondiscretionary spending cuts could save $860 billion over the next decade, and the reductions aren’t expected to inflict much pain on the economy.
The House could vote on the deal as soon as Wednesday. But some Republican members of the Rules Committee have already come out against the bill. (One, Representative Chip Roy of Texas, has argued that all nine of the committee’s Republicans must sign off on all legislation before the panel.)
There are hurdles in the Senate as well, with Republicans including Lindsey Graham of South Carolina and Mike Lee of Utah objecting to the bill and threatening delays.
The clock is ticking. As of last Thursday, the Treasury Department’s cash balance was at a six-year low of less than $39 billion. Treasury Secretary Janet Yellen now reckons that the government will run out of money on June 5.
Why music stars can’t say no to the “private”
Private gigs — “privates,” in music industry lingo — are seemingly popping up everywhere, from charity galas in Manhattan to luxury hotel openings in the Persian Gulf. Bankrolled by the ultrarich and companies, these intimate star-studded performances are off-limits to the general public.
The private has become a reliable moneymaker for both chart-toppers and performers well past their prime, Evan Osnos writes in an entertaining, f-bomb-filled article in The New Yorker that opens with Flo Rida, the rapper, playing a bar mitzvah in Lincolnshire, an affluent Chicago suburb.
For years, the world of privates was dominated by aging crooners, a category known delicately as “nostalgia performers.” Jacqueline Sabec, an entertainment lawyer in San Francisco, who has negotiated many private-gig contracts, told me, “Artists used to say no to these all the time, because they just weren’t cool.”
But misgivings have receded dramatically. In January, Beyoncé did her first show in more than four years — not in a stadium of screaming fans but at a new hotel in Dubai, earning a reported $24 million for an hourlong set.
Few turn down the money from doing a private nowadays, with Jennifer Lopez, Maroon 5 and Eric Clapton all agreeing to them. Even younger artists don’t fear any stigma from what one agent said is ultimately a situation where “it’s a convention or a party, and you just happen to be making noise at one end of it.”
But some continue to resist, Mr. Osnos writes, including Bruce Springsteen, Taylor Swift and, “for reasons that nobody can quite clarify,” AC/DC.
— The record amount of gambling revenues racked up by Las Vegas casinos last year. Pricier hotel rooms and concert tickets, and smaller winnings at the blackjack table, are part of the new economics of the Las Vegas Strip.
The week ahead
It isn’t just about the debt-ceiling deal: Markets will be looking at jobs, inflation data and corporate earnings. Here’s what to watch.
Wednesday: Consumer price index data for Germany, Italy and France, important gauges for inflation in the European Union, is scheduled for release. Salesforce, Crowdstrike and C3.ai report quarterly results.
Thursday: Earnings from Dollar General, Macy’s and Lululemon will provide a snapshot of consumer buying power.
Friday: It’s jobs day. The Labor Department is set to publish the final nonfarm payrolls report before the Fed’s June rate-setting meeting. Economists polled by Reuters estimate that employers added 193,000 jobs last month.
THE SPEED READ
The investment firms Francisco Partners and TPG have reportedly ended talks to buy New Relic, a business software company. (Reuters)
Richard Branson and the Nikola founder Trevor Milton were among the company insiders and early investors in SPACs who profited from well-timed sales before their companies’ stock prices tumbled. (WSJ)
Inside the legal fight roiling Centerview Partners, one of Wall Street’s most successful independent investment banks. (FT)
“Why Are Markets So Calm? It’s Revenge of the Quant Funds.” (WSJ)
It’s not just gamers: Antitrust regulators considering Microsoft’s merger with Activision are also obsessed with Call of Duty. (WSJ)
The U.S. reached a supply chain agreement with 13 other countries in the Indo-Pacific region in an effort to limit their dependence on China. (NYT)
Pandemic-era policies helped shrink the income gap, but that reduction in inequality now appears in danger as the threat from the coronavirus recedes. (Politico)
“Business leaders search for alternatives to Donald Trump and Ron DeSantis” (FT)
Best of the rest
How to navigate the evolving tipping culture. (WSJ)
The advertising giant WPP has teamed with Nvidia to use generative artificial intelligence to speed up the creation of ad campaigns for its clients. (FT)
Speaking of Nvidia: The chip maker is on the verge of joining the trillion-dollar-valuation club. (Reuters)
We’d like your feedback! Please email thoughts and suggestions to [email protected].
Andrew Ross Sorkin is a columnist and the founder and editor at large of DealBook. He is a co-anchor of CNBC’s “Squawk Box” and the author of “Too Big to Fail.” He is also a co-creator of the Showtime drama series “Billions.” @andrewrsorkin • Facebook
Bernhard Warner joined the The Times in 2022 as a senior editor for DealBook. Previously he was a senior writer and editor at Fortune focusing on business, the economy and the markets. @bernhardwarner
Sarah Kessler is a senior staff editor for DealBook and the author of “Gigged,” a book about workers in the gig economy. @sarahfkessler
Michael de la Merced joined The Times as a reporter in 2006, covering Wall Street and finance. Among his main coverage areas are mergers and acquisitions, bankruptcies and the private equity industry. @m_delamerced • Facebook
Lauren Hirsch joined The Times from CNBC in 2020, covering deals and the biggest stories on Wall Street. @laurenshirsch
Ephrat Livni reports from Washington on the intersection of business and policy for DealBook. Previously, she was a senior reporter at Quartz, covering law and politics, and has practiced law in the public and private sectors. @el72champs
Source: Read Full Article