Investor Rebellion

About a century ago, grey wolves were removed from Yellowstone National park as a result of mass extermination. In 1995, the animals were deliberately reintroduced. Nobody really knew what would happen next, but what emerged was a remarkable example of trophic cascade – changes to entire ecosystems that can result from changes at some point in the food chain. Once reestablished, the wolves controlled the dominant elk population, which had overgrazed the park, by reducing them in number and driving them to take refuge away from their favourite grazing grounds. This allowed trees and other animals to return, stabilising the riverbanks and ultimately changing the course of the rivers. Thus, the reintroduction of one species changed not only the flora and fauna but even the geography of the park. Valerie Kapos noted that this is a great example of which is where “small changes can have big and far reaching effects” (, n.d.). The lesson from this is that apparently small and insignificant events can have a big impact – not just on the geography of national parks but also on our lives and on our businesses.

Almost 25 years after the wolves’ return, on 1st April 2019, the United Kingdom Parliament was debating “Brexit”, its exit from the European Union – during what now appear to have been relatively simple times, before Covid-19 changed the face of the world and when Brexit was the biggest issue facing the country. On that day, proceedings were interrupted by 11 semi-naked protestors who glued themselves to the glass windows in the public viewing gallery. Members of Parliament were amused and attempted to add levity to their speeches by referring to “fleshing out arguments” and “cheeky interventions”. For many people, this was the first time they heard of Extinction Rebellion, a self-styled “international movement that uses non-violent civil disobedience in an attempt to halt mass extinction and minimise the risk of social collapse” (, n.d.). Their methods have been controversial and have sometimes backfired, but in the main they have been successful in their goal of bringing climate change to the forefront of conversation.

Not long before that protest in the UK parliament, in August 2018, a 15-year old Swedish girl refused to go to school. She had decided not to attend until the day of the Swedish general election as a protest against climate change following Sweden’s hottest and driest summer for over 250 years (Crouch, 2018). Initially, it was a solo effort as she had failed to get any of her classmates interested, but Greta Thunberg posted pictures of her protest on Instagram and Twitter, and by the second day she had company. By the end of the month, one of her teachers was part of the protest. From such a humble start, Thunberg was catapulted into the awareness of the world. By September 2019, she was addressing the UN Climate Action Summit in New York. She went on to be named 2019 “Person of the Year” by Time magazine. According to a UK opinion poll published by YouGov in June 2019, the visit of Thunberg to the UK earlier the same year, coupled with the Extinction Rebellion protests, raised environmental concerns to the “third most pressing issue facing the nation… …ahead of the economy, crime and immigration” (, 2019).

Thunberg became a notable supporter of the flygskam or “flight shame” campaign against flying, raising its profile globally. According to a poll by UBS in 2019 of people in the United States, United Kingdom, Germany and France, 21% of people polled had reduced the number of flights taken compared with the previous year (, 2019), at least in past as a result of flygskam. Of course, flygskam was overtaken by even more pressing issues in 2020 when demand for flights collapsed as a result of the Covid-19 pandemic. And it is worth noting that flygskam is not in vogue everywhere. China, with its 1.4 billion population, is building eight new airports each year (Yergin, 2020). It will be hard to know, when flying resumes, what the lingering impact there will be on demand as a result of the movement’s actions, but it would be naïve to think that the effect of changing public opinion will go away completely. If anything, it’s more likely that enhanced awareness of our vulnerability to natural catastrophe will strengthen resolve of and support for the protestors.

What has this to do with innovation? Well, investors are starting to echo similar concerns.

Speaking to the BBC in December 2019, the outgoing Governor of the Bank of England, Mark Carney, warned that “unless firms wake up to the climate crisis, many of their assets will become worthless” (Harrabin, 2019). In an open letter published in January 2020, Larry Fink, CEO of leading investment management company BlackRock, warned in bold type that “Climate Risk Is Investment Risk” and went on to announce a number of investment initiatives: “making sustainability integral to portfolio construction and risk management; exiting investments that present a high sustainability-related risk, such as thermal coal producers; launching new investment products that screen fossil fuels; and strengthening our commitment to sustainability and transparency in our investment stewardship activities” (, 2020). In October 2020, three members of the Rockefeller family, great-grandchildren of John D. Rockefeller Jr., wrote an article imploring major banks including JPMorgan Chase to stop investing in fossil fuels (Growald, Case, & Rockefeller, 2020). And a week later, Dutch fund manager Robeco Institutional Asset Management, which manages $183BN of investments, added 232 companies primarily involved with fossil fuels to its “exclusion list” (Quinson, 2020).

I could go on, but for a final specific example, Hiro Mizuno is Chief Investment Officer of the Japanese Government Pension Investment Fund (GPIF), one of the largest capital investment organisations in the world and controlling 1% of the world’s stocks. Mizuno has responsibilities looking forward a century into the future as he is responsible for the value of pensions, and in order to meet those responsibilities he believes that he needs to “improve the performance of the entire economy by improving corporate governance, increasing inclusion and gender diversity, and reducing environmental damage from climate change” (Henderson & Serafeim, 2019).

More generally, research conducted by Saïd Business School at the University of Oxford, looking at anonymised data from ABN AMRO, showed that wealthy private investors are more likely to invest in companies with higher Environmental, Social and Governance (ESG) ratings. Companies with good ratings received about 15% more investment than those with low ratings (, 2020). Further, it appears that Covid-19 has not dented the interest of the investment community in ESG. According to the FT, a 2020 survey carried out by them with Savanta, the market research company, found that the vast majority (87%) of UK-based wealth managers polled expect that the fallout from the Covid-19 pandemic will include greater interest by investors in ESG (Mooney, 2020). The same article quotes Mona Shah, director of Stonehage Fleming Investment Management: “I don’t believe that the Covid pandemic will do any significant or lasting damage to investors’ commitment to socially responsible and environmental investing… Most investors recognise that ESG and maximising profits are not mutually exclusive.” A recent study found that more capital is available to companies with strong ESG performance not only in equity markets but also in loan markets (Serafeim, 2020). And according to Laura Hurst of Bloomberg “the investment rationale for higher-ESG-rated companies presumes that such companies are better prepared to deal with anticipated as well as unexpected large-scale risks that the future may bring. The coronavirus crisis fast-forwarded us into the future, and the world has to deal with a disruption of vast proportions. One could argue that proper governance should have some impact on how well a company might cope with the disruptions” (Feder, 2020). Recent public opinion polls seem show public support. An Ipsos survey for the World Economic Forum shows a global average of 86% of the population agreeing that “I want the world to change significantly and become more sustainable and equitable rather than returning to how it was before the COVID-19 crisis”, with none of the countries polling less than 73% in support. This was from a survey of 21,104 adults (, 2020).

These anecdotes indicate significant investor pressure coming to bear on ESG issues and plenty of other examples can be found across the globe. Companies are seeing increased pressure from potential investors to prove ESG credentials before funding or investment is made available to them. This may result from shareholder pressure or, in the case of private equity and especially family trusts, from the impact of generational succession on investment attitudes.

This is striking, but it isn’t new.

While writing about scenario planning and strategy, Rafael Ramírez and Angela Wilkinson note that “… the business idea is basically about how an organisation creates value. The value that is created need not necessarily be profit or shareholder wealth; it may also be the enhancement of the public good, the fulfilment of an interest group’s increased capacity, better art, or other increase or improvement in some value” (Ramírez & Wilkinson, 2016). In other words, they suggest that companies can have purpose beyond simply making money. And in 2011, Michael Porter and Mark Kramer wrote “The capitalist system is under siege.  In recent years, business increasingly has been viewed as a major source of social, environmental and economic problems.  Companies are widely perceived to be prospering at the expense of the broader community” (Porter & Kramer, 2011). They continue: “A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation… How else could companies overlook the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers, or the economic distress of the communities in which they produce and sell? How else could companies think that simply shifting activities to locations with ever lower wages was a sustainable solution to competitive challenges?”

Porter and Kramer argue that companies have focused too closely and directly on the market, or the industry, in which they operate, to the detriment of their broader stakeholders. This is not unrelated to the myopia discussed in an earlier post (Clegg, 2020) that causes companies to ignore the business environment around them.

According to Porter and Kramer, “the purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy” (my emphasis).

To summarise, a strong shift in public sentiment is translating into a shift in the attitudes, expectations and behaviour of investors. Investors are starting to decline to invest in companies that they believe are associated with fossil fuels. If investors shun an industry, it makes it very hard for the industry to grow or even to survive. In such an environment, companies must continually assess and, from time to time, rethink their purpose. This has a very significant impact on strategy, especially for the oil and gas industry.

In what ways will we need to change our thinking in order to respond?

“Sustainability makes good business sense, and we're all on the same team at the end of the day. That's the truth about the human condition” – Paul Polman

Key Learnings

  1. The investment community is increasingly sensitive to environmental, social and governance (ESG) issues when it comes to choosing where to invest, and companies are seeing increasing pressure to prove ESG credentials in order to secure investment.
  2. Companies have a tendency to ignore the environment around them, including the nonmarket environment.
  3. There doesn’t have to be a trade-off between profitable growth and corporate responsibility.
  4. Indeed, shared value and sustainable development can drive innovation and productivity growth.

References and Further Reading


(2019, October 2).

(2019, June 5).

(2020, January 14).

(2020, May 13).

Clegg, J. (2020, August 18). Never Before A Failure Like It.

Crouch, D. (2018, September 1).

Feder, J. (2020). ESG and Energy Transition: Balancing Value and Values in a Post- Pandemic World. Journal of Petroleum Technology, June, 18-21.

Growald, D., Case, P., & Rockefeller, V. (2020, October 11).

Harrabin, R. (2019, December 30).

Henderson, R., & Serafeim, G. (2019, August 20).

Mooney, A. (2020, June 2). ESG passes the Covid challenge

Porter, M., & Kramer, M. (2011). Creating Shared Value . Harvard Business Review, January-February.

Quinson, T. (2020, October 28).

Ramírez, R., & Wilkinson, A. (2016). Strategic Reframing: The Oxford Scenario Planning Approach. Oxford: Oxford University Press.

Serafeim, G. (2020). Social Impact Efforts That Create Real Value. Harvard Business Review, September-October, 38-48. (n.d.). (2020, September).

Yergin, D. (2020). The New Map: Energy, Climate, and the Clash of Nations. New York: Penguin Random House.

© 2020 J M Clegg Ltd

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4 thoughts on “Investor Rebellion”

  1. I read your article on Investor Rebellion and agree with all your takeaway points. Looking forward to your presentation on V-Door Locksmith!

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