{"id":78983,"date":"2023-12-04T12:00:15","date_gmt":"2023-12-04T20:00:15","guid":{"rendered":"https:\/\/covestreetcapital.com\/?p=78983"},"modified":"2023-12-04T10:02:27","modified_gmt":"2023-12-04T18:02:27","slug":"green-fees","status":"publish","type":"post","link":"https:\/\/covestreetcapital.com\/green-fees\/","title":{"rendered":"Green Fees"},"content":{"rendered":"

I would be interested to see the management fees generated by a classic top-of-the-theme fundraising exercise and the list of clients who fell for it.<\/p>\n

\n
\n

Hedge Fund Veteran Slams Green \u2018Echo Chamber\u2019 After Closing Firm<\/a><\/h3>\n

By Natasha White<\/p>\n

(Bloomberg<\/a>) Jeff Ubben, the veteran hedge fund manager who\u2019s just closed his sustainable investing firm, is calling out what he\u2019s dubbed the \u201cecho chamber\u201d of traditional climate summitry.<\/p>\n

The 62-year-old, whose Inclusive Capital Partners told clients last week it was selling investments and returning their money after not being \u201crewarded\u201d by markets, said he\u2019s worried about what he describes as entrenched points of view preventing progress in climate talks.<\/p>\n

The tone has historically has been \u201cso divisive,\u201d Ubben said in an interview. \u201cWe all need to work together.\u201d Ubben has long been an advocate of bringing big oil to the table. He joined Exxon Mobil Corp.\u2019s board in 2021, the same year as activist fund Engine No. 1 secured three seats. He\u2019s now on the advisory committee of COP28 in Dubai, which is hosting more oil executives than any other United Nations climate summit.<\/p>\n

The setting of this year\u2019s Conference of the Parties has drawn warnings from climate activists that the event risks becoming a deal-making venue for oil majors and the finance industry, with such vested interests compromising a strong final climate agreement. This year\u2019s COP will likely be the best-attended ever, with more than 100,000 delegates, according to a provisional list compiled by the UN Framework Convention on Climate Change. That\u2019s roughly twice as many as attended last year\u2019s COP in Egypt.<\/p>\n

Sultan Al Jaber, president of the COP28 summit and head of the Abu Dhabi national oil company, Adnoc, has denied reports that he\u2019s using his position at the talks to strike oil and gas deals. He also says he wants as many interests as possible represented to ensure a \u201csuccessful\u201d outcome.<\/p>\n

Microsoft Corp. co-founder Bill Gates said that meetings on the sidelines of COP28 are crucial for startups to get exposure to large players in industries that need to decarbonize. Speaking on Bloomberg Television, he also said the goal is to \u201coutcompete fossil fuels.\u201d<\/p>\n

Oil Majors<\/strong><\/p>\n

On Saturday, Exxon was one of 50 oil and gas producers at COP28 to pledge to cut emissions from their own operations.
\nDarren Woods, the first Exxon chief executive ever to attend a COP summit since the gatherings began in the early 1990s, said
\nin an interview that there\u2019s \u201ca much more diverse group of people recognizing\u201d that climate change is a \u201chard problem\u201d to solve.
\nWoods also said there\u2019s now a greater recognition that the energy transition will require a breadth of technologies, which \u201copens the door for us.\u201d<\/p>\n

The deal struck by oil and gas producers will be controversial given none of the companies is actually agreeing to reduce production. \u201cThe pledge doesn\u2019t cover a drop of the fuel they sell, which accounts for up to 95% of the oil and gas industry\u2019s contribution to the climate crisis,\u201d said Melanie Robinson, global climate program director at the World Resources Institute.
\nBut signatories will pledge to stem releases of methane, one of the most dangerous greenhouse gases, to near zero by 2030 to stop routine flaring of natural gas.<\/p>\n

Ubben said getting \u201ccompanies like Exxon invited\u201d was a clear goal because carbon-emitting companies \u201chaven\u2019t been part of the conversation\u201d thus far.<\/p>\n

Instead, \u201cit\u2019s been this echo chamber of diplomats going to these conferences and putting out flowery language and goals, but it doesn\u2019t have traction,\u201d Ubben said. \u201cThere\u2019s no money behind it, which is why company balance sheets are so important.\u201d<\/p>\n

Ubben launched Inclusive Capital three years ago during a boom in green investing, and after two decades of running activist hedge fund ValueAct Capital. At the time, he told investors his new venture would back companies focused on tackling problems ranging from environmental damage to food scarcity, and his goal was to raise $8 billion for that purpose.<\/p>\n

Inclusive Capital had $2.6 billion of assets, including borrowed money, at the end of last year, a March regulatory filing shows. Its closure coincides with one of the worst years for climate investing, as higher borrowing costs and supply-chain bottlenecks batter capital-intensive green companies.<\/p>\n

Despite historic subsidies into climate technologies in the US, China and Europe, the S&P Global Clean Energy Index is down about 30% this year, while the S&P Global Oil Index is broadly unchanged over the period. When Ubben created Inclusive Capital, the plan was to \u201ccollaborate with companies whose core businesses address essential societal needs with a focus on reducing negative externalities,\u201d according to the memo handed to clients informing them of its closure. But it\u2019s a strategy that \u201cunfortunately hasn\u2019t been rewarded in the public markets,\u201d the memo read.<\/p>\n

In reality, over the past three years, the \u201cexact opposite\u201d has played out, it continued. \u201cShares of companies pursuing capital-intensive projects needed to drive lower greenhouse gas emissions have been \u2018sold off\u2019 in the public markets as being too risky or too far out in terms of any potential reward.\u201d For now, there\u2019s little to indicate that markets are about to shift tack. In fact, Bloomberg\u2019s recent Markets Live Pulse survey shows that the slump that\u2019s dragged down green stocks is expected to continue into 2024.<\/p>\n

Oil companies like Exxon, meanwhile, are also seeing their share prices decline as the spike in demand fanned by the energy crisis fades. Exxon\u2019s share price is down roughly 14% from a September high. Chevron Corp. is down 15% in the same period. A key goal of the COP28 talks is to get governments to agree to a tripling of global renewable energy capacity by 2030.
\nThat would require investments equivalent to around a 10th of the world\u2019s 2022 gross domestic product, according to BloombergNEF.<\/p>\n

For investors trying to calibrate their climate strategies, the outlook remains challenging. \u201cEnergy use is going to grow,\u201d Ubben said. \u201cAnd we need to keep energy affordable for those people that want the right to develop.\u201d<\/p>\n

Bloomberg Philanthropies regularly partners with the COP Presidency to promote climate action. Michael R. Bloomberg, the founder and majority owner of Bloomberg LP, parent company of Bloomberg News, is the UN secretary general\u2019s special envoy for climate ambition and solutions.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Hedge Fund Veteran Slams Green \u2018Echo Chamber\u2019 After Closing Firm<\/p>\n","protected":false},"author":3,"featured_media":9542,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[101,100,31],"tags":[],"class_list":["post-78983","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics-at-large","category-markets-rationality-decision-making","category-thoughts"],"yoast_head":"\nGreen Fees — Cove Street Capital<\/title>\n<meta name=\"description\" content=\"Cove Street Capital — Green Fees — Hedge Fund Veteran Slams Green \u2018Echo Chamber\u2019 After Closing Firm\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/covestreetcapital.com\/green-fees\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta 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