arren Buffett faces a showdown this weekend with more than 1.6 million ordinary savers over his company’s failure to provide even basic information about its environmental impact and the risks it faces from the climate crisis.
The world’s most famous investor has amassed a $102bn fortune while espousing the benefits of thinking long-term. Yet, on the biggest issue facing the planet, Buffett appears to be uniquely short-sighted.
Over six decades Buffett – who is now 90 years old – has built Berkshire Hathaway into a sprawling conglomerate of companies worth $670bn and selling everything from batteries and energy to insurance. Of 60 different companies in the group, just 15 have published sustainability information.
The parent company refuses to make any climate-related disclosures – considered to be the bare minimum that corporations should be doing on the issue.
Most controversially, Berkshire Hathaway maintains significant investments in coal-fired power, a major contributor to the climate crisis.
Now the company’s shareholders, including the largest public pension fund in the US, are flexing their muscles and taking action in a bid to force Buffett’s hand.
The California Public Employees Retirement System (CalPERS), EOS Federated Hermes, and Caisse de dépôt et placement du Québec (CDPQ) have tabled a resolution to make the company report on climate risks.
It pits ordinary pension savers against one of the richest men in the world. If the resolution gets enough votes from company shareholders, Berkshire will have to take action, in what would be a significant victory for shareholder power.
Even if it doesn’t pass, a big vote in favour by institutional investors would send a strong signal to the market that Berkshire needs to stop ignoring climate change.
Berkshire’s board has flatly rejected the plan, urging shareholders to vote against it and claiming that it would not be practical to implement because the group is “unusually decentralised”.
Tim Youmans, head of engagement at EOS, who tabled the resolution, says Buffett’s company’s approach is “completely insufficient”.
“They have done nothing at the parent company level,” says Youmans.
Berkshire is one of only a handful of companies to score zero out of 10 for its climate disclosures on a benchmark designed by Climate Action 100+, an initiative to hold firms to account on emissions.
On Saturday, at Berkshire’s annual general meeting, Youmans will stand up and make the case for change on behalf of investors.
It will be a tall order to gather the votes needed because Buffett holds almost a third of the voting rights, but Youmans remains confident.
EOS is one of the leading voices talking to company boards and encouraging them to take action on issues like climate change, diversity and governance.
With a staggering $1.2 trillion assets under advice, EOS has serious clout. When Youmans and his colleagues make their point to companies’ boards, they tend to listen.
EOS has had notable successes against some of the biggest carbon emitters on the planet. In 2019 it helped to persuade BP to disclose much more information on climate-related risks.
The company decided to support the proposal which was backed by 99 per cent of shareholders.
“BP has now gone beyond that and changed their whole strategy,” says Youmans, referring to plans laid out by the oil giant last year to slash its investment in fossil fuels over the next decade.
“We believe it’s shareholder power writ large and EOS, in a small way, had something to do with that.”
Buffett has been much less willing to engage, however.
“Unfortunately we’ve been trying to talk to Berkshire Hathaway for three years and we have had no dialogue with the parent company in that time,” Youmans says.
“In fact, most recently Warren Buffett, through his corporate secretary, wrote to tell me he had no interest in talking to me.”
What’s clear is that Buffett is becoming an increasingly lonely figure in his stance on the climate crisis. Over 1,400 companies have supported a global initiative to disclose information on climate risks.
Climate Action 100+ reports that the initiative, run by the Task Force on Climate-Related Financial Disclosures, is supported by 59 of the 167 companies it identified as the world’s largest greenhouse gas-emitting companies.
This public information is important as it enables investors to make informed decisions about where to put their money.
Pressure is growing as the financial risks posed by climate change ramp up alongside the environmental ones.
Pension funds and asset managers have a duty to the people whose money they manage to ensure that companies are doing what they can to halt the climate crisis, particularly because many funds invest for the long-term.
Youmans is positive about the impact that anyone can have through their ownership rights in a company, no matter how small their shareholding.
“I honestly think that shareholders exercising their rights and voting, combined with public opinion, can move the needle,” he says.
“Every shareholder needs to realise that you can buy, sell or hold your shares but you can also vote and every vote matters, it’s just that simple. The democratisation of capitalism is critically important.”
Berkshire Hathaway said in a statement: “The Board recognises the importance of responsibly managing climate-related risks to both shareholders and the future of Berkshire and its operating businesses.
“The Board regularly receives reports on the major risks and opportunities of the operating companies, including those related to climate, and discusses those risks and opportunities ”