Greetings from a hot and sunny Washington where it is Day Three of the IMF/World Bank spring meetings – and climate finance has leapt to the top of the agenda. As Bo Li, deputy managing director of the IMF told a panel yesterday: “In every aspect of our surveillance and analysis we [at the IMF] are now including climate analysis.”

The IMF’s new “Resilience and Sustainability Facility”, which launched last year, has funded five programmes, with 44 countries waiting for a decision, Li said (including Bangladesh and Egypt).

To 2021, the world was putting $1tn into clean energy. Now we are seeing $1.3tn-$1.4tn a year going into clean fuels and transmissions systems, Tim Gould, chief economist of the IEA, said in Washington. And in the next five years the amount of renewable electricity that is likely to be added is the same as in the past 20 years, he added.

The catch, Gould said, is that this is not enough. Funding “has to be closer to $4tn a year”, he said. And thus far “almost all of the increase in recent years has come from advanced economies”. Hence, there is intense focus at this week’s meetings about how to get more money flowing to emerging markets.

We will have more from Foggy Bottom on Friday. Today, Patrick has an item about endowments looking to align their investments with a sustainability mission. And it is annual meetings season — so how have the conservative shareholder petitions that have drawn so much attention fared at big US companies? — Gillian Tett

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Conservative group fails its check on corporate ‘far-left political agenda’

As China bashing has become an increasingly popular, bipartisan political theme, conservative activists have embraced the issue — to point out where US companies that tout liberal ideals at home have fallen short abroad.

This year, the National Legal and Policy Center, a watchdog group, has ramped up its corporate advocacy by filing shareholder petitions aimed at companies’ policies in China. The non-profit sees its efforts as a check on “far-left political agendas” amid the wave of Republican attacks on ESG investing.

How’s the strategy faring? Not that well. At Disney’s annual shareholder meeting last week, a NLPC petition asking the entertainment company to report more information about its business operations that depend on China won just 7 per cent support from shareholders. And a similar China proposal at Starbucks — filed by the same conservative organisation — registered just 4.5 per cent support from the coffee company’s shareholders.

“[The] voting outcomes don’t make us regret bringing the proposals,” Paul Chesser, a director at NLPC, told me. “This is a critical issue that is only going to become more salient for corporate America” as Congress ramps up its scrutiny of China.

But like company boards, big institutional investors don’t want “to upset chairman Xi [Jinping]”, Chesser said.

NLPC has taken that position that while Disney “squandered” its brand reputation at home by fighting against Florida’s “Don’t Say Gay” law, it caved to China amid human rights allegations.

In 2022, conservative activists lodged a record number of shareholder proposals, but voting results suggest softening support for such proposals.

The NLPC secured almost 35 per cent support at Disney’s annual meeting last year for a proposal challenging the media company to report on its due diligence into human rights risks it faces around the world.

Conservatives have also struggled to get shareholder proposals approved by the Securities and Exchange Commission. On April 3, the SEC said it rejected an appeal from the right-leaning National Center for Public Policy Research, which wanted to file a shareholder proposal at JPMorgan Chase requiring the company to explain how it rejects certain clients. The bank Chase “has a history of cancelling the accounts of those who hold opinions and political views that deviate from hard-left political orthodoxy”, the NCPPR proposal said.

There are a lot of company annual meetings in the months ahead, so the final grade for conservative shareholder proposal won’t be known until this summer. But early indications show conservatives’ enthusiasm for attacking ESG has not translated into better voting results. (Patrick Temple-West)

Attacks on ESG sway endowments from mission-driven investment

Repeated political and legal attacks have cast a pall over environmental, social and governance investing. President Joe Biden in March was forced to use the first veto of his presidency to stop Congress from banning retirement funds from considering ESG factors (a rule change that Biden’s Labor Department approved).

The emphasis on fiduciary duties has made non-profit investment boards dubious about sustainable investing and any deviation from the cut-and-dry focus on performance, according to new research, shared first with Moral Money.

Investment committees for endowments are often hesitant to embrace mission-aligned investing despite firm legal footing from the Internal Revenue Service to make a switch. In 2015, the US tax agency made a subtle change that ensured foundations could use their endowments for mission-driven investing without risking their tax-exempt status.

US private foundations hold more than $1.1tn in assets. Private family offices hold another $182bn. But only a small number of private endowments, notably the Ford Foundation, the McKnight Foundation and the Omidyar Network have publicly said they are investing to advance social and environmental missions.

Also among them was the Builders Initiative Foundation, which last year transitioned 90 per cent of its $1bn endowment to mission investing. The foundation, which contributed to the research, was started in 2017 by Lukas Walton, grandson of Sam Walton, founder of the Walmart retail empire.

Mission investing still means making money, Bruce McNamer, president of Builders Initiative told me. “In its first year [with a mission focus] the portfolio outperformed in a down market,” McNamer said.

Yet cultural and operational barriers are still preventing endowments from switching to mission investing, said Tracy Palandjian, chief executive and co-founder of Social Finance, an advisory non-profit that co-authored the research report.

“The current barriers to mission-related investments aren’t regulatory,” she said.

At many endowments, board members come from a traditional finance background where returns trump considerations regarding impact. More than half of the endowments interviewed for the research said this cultural factor was a key impediment to mission investing.

But there is evidence of a turning tide despite the political attacks. In 2020, Cambridge university’s £3.5bn endowment pledged to divest from fossil fuels. It would not be a stretch for more endowments now to consider mission-aligned investing. (Patrick Temple-West)

Smart reads

• Leading Swedish industrialist Jacob Wallenberg has lashed out at what he sees as an attempt by leading proxy adviser ISS to force a change to a central plank of Swedish law: unequal voting rights. ISS plans to start recommending shareholders vote against boards at companies that have different voting rights for different classes of shares.

• Dutch deputy prime minister Sigrid Kaag said in an interview with the Financial Times that some European politicians are losing interest in the bloc’s climate policies. “[It] is not always easy because the Netherlands, ironically, is more conservative than you would think,” she said.