Companies and individuals contest the holy grail of “shareholder value”

Signal of change / Companies and individuals contest the holy grail of “shareholder value”

By Futures Centre / 17 Mar 2015

In our topic hub on the future of shipping, we’re asking who the future captains of the sea will be, as the concept of 'shareholder value' evolves. How will changing shareholder expectations have an impact on shipping companies? 

2014 has seen some heroic CEOs swimming against the tide on shareholder value. “If you want me to do things only for ROI reasons, you should get out of this stock”, Tim Cook, the CEO of Apple, famously responded, when asked whether climate change investments were undermining shareholder value. Greater momentum is with new legal forms that try to avoid being trapped that way: B-Corporations; co-operatives; impact investors; social entrepreneurs; and others.

Shareholders themselves may soon be looking for companies to live up to different performance measures. Divestment campaigns have gained momentum in the past year, encouraging individual and institutional shareholders to divest fossil fuel stocks frm their portfolios. Campaigners argue that in a carbon-constrained future, fossil fuel companies will have a large stock of stranded assets, in the form of coal mines, oil wells, coal-fired power stations and the like. They may also, at some point, face damage claims on the basis that they knew their emissions were causing climate change, much as happened with tobacco companies that tried to bury warnings on cancer.

Image credit: Mike Deerkoski / Flickr

So what?

At the moment, the shipping industry remains heavily reliant on fossil fuels, with alternative energy sources struggling to gain mainstream adoption. If companies are required to set a value on fossil fuel-related assets, and report them as 'material risks', this could prove a large cost to shipping companies, resulting in stranded assets.

Click here to read the full report by the Sustainable Shipping Initiative exploring 15 signals of change and their potential impacts on the future of shipping.

Sources

Forbes. (March 7, 2014).Why Tim Cook Doesn't Care About 'The Bloody ROI'

Inside Climate News. (December 22, 2014). 2014: Riding a Rocket, Divestment Movement Gains Momentum  

What might the implications of this be? What related signals of change have you seen?

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