Warren Buffet leads the way

There’s something to be said for going against the herd. As the grandaddy of the personal development movement Earl Nightingale once said, ‘the majority is always wrong’. Vaccines anyone?

For several years now the GroupThink narrative has been that we are all going to fry or drown as climate change reeks its revenge on two hundred years of human progress.

Corporations, Quangos and global institutions have liberally applied gallons of greenwash to every aspect of their communications. Companies looking for investment are being obliged to produce ‘Energy Transition Plans’ regardless of the impact on their operational performance.

The ESG fascists seek to change the very raison d’etre of companies from shareholder capitalism to stakeholder capitalism. That sounds like wordsmithing until you realise the full implications, such as companies being handed responsibilities for the community and the wider environment that would previously have been considered the duty of the state.

It also triggers the thinking that led to last week’s announcement that the RAF is halting recruitment of white pilots so it can meet its diversity quota – the ethnic mix of boards of directors is becoming more important than their competence as corporations seek to increase their ESG score rather than run their companies more efficiently.

Until this year one of the biggest champions of the ESG agenda was fund management giant Blackrock. It seems they have woken up, smelled the green coffee and realized that blind obedience to the GroupThink will hit them right where it hurts – their ability to make oodles of money. In this year’s AGM season they voted for just 24% of ESG related shareholder proposals, almost half as many as the 43% they approved in 2021. A report from the company with a mere 8.5 trillion dollars under management said:

“Many climate-related shareholder proposals sought to dictate the pace of companies’ energy transition plans with little regard to the disruption caused to their financial performance, given continued demand from consumers. Others failed to recognise the progress made. These factors made these proposals less supportable.”

Some of the pressure on fund managers to soften their ESG stance is coming from those with large pension funds to invest – the state governments of Texas and West Virginia have been particularly vocal in their threats to boycott fund managers who discriminate against fossil fuels.

Of course, at the core of this narrative is the foolhardy belief that the world can magically move to alternative clean energy sources without needing to rely on fossil fuels during the transition. This is about as thought-through as the virtue signaling Tesla driver who has no clue about where the electricity is being generated to recharge his pile of rare earth minerals every night.

Electric vehicle sales are booming in China, almost as much as coal fired power stations. With 1,110 already in use, you might expect them to pause or halt the development of any more? Not so. They have 95 more under construction and three major new coal mines are being opened up to feed them.

One man who clearly recognizes the ongoing need for fossil fuels is Warren Buffet. He may be something of a fossil himself as he progresses through his tenth decade, but that doesn’t seem to be slowing down his propensity to make strategic deals.

Last week his company Berkshire Hathaway won the approval of a US energy regulator to buy up to 50 per cent of Occidental Petroleum, one of America’s best known petrochemical companies

The Federal Energy Regulatory Commission said Berkshire’s proposal to increase its stake in the $60bn oil company, filed last month, was “consistent with the public interest”, causing the shares to leap by a shade under 10% on the announcement.

That said, even Occidental has had to make a commitment to the dreaded Net Zero, albeit with a 2050 target date that is likely to outlive its new 50% owner.  However, Buffet has even managed to make limoncello from these lemons – the oxymoronically named Inflation Reduction Act just passed into U.S. law includes generous tax breaks for carbon reduction technology in which Occidental is a leading player. Those tax breaks come on top of the 900m he will make by exercising warrants in place from his previous investment in Occidental when it needed cash to acquire Anadarko Petroleum back in 2019.

You can see why they call him the Sage of Omaha. And he’s not averse to spreading the love, having also increased Berkshire Hathaway’s stake in Chevron Oil to around 24 billion dollars.

There’s a lot we don’t understand about the earth’s climate. For every expert that says we’re doomed if we don’t change our ways immediately, there’s another who says global warming is a natural, cyclical phenomenon. Back in the 1980s the concern was the coming of another Ice Age.

I’m not advocating complacency. But trust in state sponsored ‘experts’ and global institutions took a nosedive during the pandemic. Now I find myself digging deeper to understand the true agenda and to answer the immortal question – who benefits?

Right now, I’m leaning more towards Warren Buffet than Greta Thunberg.

How about you?

Until next time

Graham