Our Purpose
Preventable Surprises is a global ‘think-do’ tank that bridges the many players trying to accelerate movement toward a sustainable economic system. We believe institutional investors must be part of the solution, not enablers of dysfunctional corporate behaviour. We work with asset owners, portfolio managers, securities analysts, ENGOs, legal experts, scientists, and investment consultants. We seek to design solutions that are fit for purpose as the time remaining for meaningful action is slipping away. Preventable Surprises makes a unique contribution because we are: Connectors: We link 180 positive mavericks across the world and across disciplines in regular online dialogues and conferences. Accelerators: We push stakeholders to do more, faster. We are free from the constraints of membership or consultancy income that can cause conflicts of interest and inhibit boldness. Insiders: We come from the investment industry and use our credibility to push our peers past incremental approaches that ignore the urgency of global warming. What is a Preventable Surprise? Investors have experienced rapid declines in shares of banks, retailers, automakers, and fossil fuel companies as scandals were uncovered at each or as environmental disasters unfolded. Each time experts expressed surprise—yet there are patterns. Having watched these and many other preventable corporate surprises unfold, we see six drivers, which make up our diagnostic framework—drivers that are all too apparent in relation to climate change. These drivers are:
Financial Markets and Climate Risk Since the Industrial Revolution, financial markets have depended on access to infinite carbon resources and on the ability to externalise the cost of environmental damage. Climate change has exposed the folly of this system. When asset managers reward behaviours that treat the planet as an infinitely exploitable resource, they are exposing their beneficiaries to climate-driven systemic risk. To protect the end client—and the planet—asset managers must lead the transition to a low-carbon economy. Institutional investors control trillions of assets, giving them access to the boardrooms of virtually every significant publicly traded company in the world. If a board is unwilling to pursue a low-carbon strategy, BlackRock, The Vanguard Group, BNY Mellon and others must decide how they will use their leverage as major shareholders—how they will vote the proxies that have been entrusted to them by the owners of the assets they manage. Will they support company management that resists a low-carbon strategy? Or will they use their pole position to demand change? We strongly encourage institutional investors to vote in favour of AGM resolutions asking that companies produce plans for transitioning to a <2°C warming world, resolutions which we have persuaded the most sympathetic investors to co-file. We call this forceful stewardship, and we believe this is the most effective way to achieve the goal of reducing company emissions. Owners of large asset pools—pension funds, universities, charitable foundations—must hold their investment firms to account. If the firms vote against 2°C transition plans, asset owners must take control of their own proxies to combat business as usual. What we propose is complementary to and different from the approach taken by campaigners (who largely focus on the supply side of the problem—fossil fuels) and investors (who generally advocate an incrementalist approach). We favour bringing campaigners and investors together to pursue an approach that is both systemic and disruptive to business as usual. |