Energy Day: BlackRock Downgrades ESG, Ford Curbs Electric Vehicles, and Tech Giants Rely on Questionable Green Credits

LATEST BLACKROCK PROXY REPORT: BlackRock highlighted its efforts to give its clients more direct input into corporate shareholder votes and highlighted its record of voting against climate-focused shareholder proposals in its latest proxy vote report. It comes amid continued Republican scrutiny of ESG-based investing.

The asset manager said it supported only a small minority of environmental proposals in the 2023-2024 proxy voting year, despite them making up the majority of shareholder proposals, up 13% year-on-year.

“As was the case last year, we found that most shareholder proposals on climate and natural capital (environmental) and people (social) were too broad, lacked economic value, or aimed at outcomes that were unlikely to support long-term shareholder value,” the report said.

The asset manager’s investment stewardship programme supported just 4% of proposals on environmental and social issues, down from 6.5% last year.

The drop in support comes as Republicans scrutinize financial firms and their environmental, social and governance investment goals, saying their actions could violate antitrust laws. Last month, the chairman of the Judiciary Committee Jim Jordan sent letters to more than 130 U.S. companies, pension plans, and government retirement plans seeking information about their interactions with green investment groups. In December 2023, Jordan subpoenaed BlackRock and State Street Global Advisors to file documents related to ESG investing.

More details: The largest portion of the proposals that BlackRock supported this year were related to corporate governance issues, and the asset manager increased its support for these proposals compared to last year. The proposals that the firm supported aimed to strengthen minority shareholder rights, for example. Read more from Nancy here.

Welcome to Every day about energywritten by Washington Examiner Author of texts on energy and the environment Nancy Vu (@NancyVu99). Email nancy.vu@washingtonexaminer dot com for tips, suggestions, calendar entries, and anything else. If a friend sent you this and you’d like to sign up, Click here. If registration doesn’t work, send us an email and we’ll add you to our list.

FORD CLEARS UP ELECTRIC SUV PLANS: Ford Motor Company is scrapping plans to introduce a three-row electric SUV and instead opting for hybrid models as automakers adjust to lower-than-expected demand for electric vehicles in the market, writes Nancy.

Details: The auto giant previously said it would delay plans for a new electric vehicle by two years to a 2027 launch date. However, on Wednesday, Ford announced it would discontinue the model entirely, citing cost-conscious EV customers and increasing pricing pressures.

“We are committed to innovating in America, creating jobs and delivering incredible new electric and hybrid vehicles that have a real impact on reducing CO2 emissions,” said Ford president and CEO Jim Farley “As the No. 2 electric vehicle brand in the U.S., we’ve learned a lot about what customers want and value, and what it takes to match the best in the world in terms of value, and we’ve developed a plan that gives our customers maximum choice and leverages our strengths.”

The company said its EV business is expected to post a loss of about $5 billion this year. The switch to hybrids, which have a shorter battery range but longer total range when combined with gas, is expected to cost $400 million and could result in additional expenses and cash outlays of up to $1.5 billion.

The company will continue to produce electric vehicles, but at a slower pace. It will begin production of an EV utility van in 2026 and two new pickups in 2027. Ford will also reduce its annual capital expenditure mix for electric vehicles from about 40% to 30%. Read more about that here.

TECH GIANTS OVERPRINT CAR EARNINGS USING QUESTIONABLE CREDITS: Some of the biggest tech companies are hiding their carbon footprint by using renewable energy credits that incorrectly understate their net emissions, a new Bloomberg Green analysis found.

Microsoft and other leading AI companies recently said that the massive amounts of energy they use in their AI data centers do not produce any emissions because they use renewable energy sources.

Reality: Companies buy the credits, also known as independent renewable energy certificates, to claim emissions reductions when making voluntary disclosures to CDP, a nonprofit organization that runs a global environmental reporting system. Current accounting rules allow independent RECs to be counted toward helping a company’s overall carbon footprint, even if it’s questionable whether they represent the use of additional renewable energy production.

But if companies were not allowed to use RECs, Amazon would have to admit that its emissions in 2022 are 8.5 million metric tons higher than reported — three times higher than the company reported. Microsoft’s reported 280,000 tons could be 3.3 million tons higher — and Meta’s carbon footprint could reach 740,000 tons, compared with levels it had reported near zero.

CHINA’S OIL DEMAND FALLS AS ELECTRIC VEHICLES TRANSFORM: Demand for oil in China has fallen significantly as the country has shifted towards electric vehicles and natural gas, Business information reports.

Goldman Sachs analysts say the shift to electric and hybrid vehicles has caused demand to fall by 500,000 barrels a day.

What’s happening overall: The expansion of China’s electric vehicle industry helped its three largest makers post record sales in June. In a separate report, Goldman Sachs analysts predicted that stronger sales of renewable technologies could push fuel consumption in China’s cars to a peak in 2025 — years before most emerging economies.

But: Analysts also warn that this could be a wake-up call, highlighting China’s reliance on manufacturing.

“While oil data currently sends an overly pessimistic message about China’s economic activity (switching fuel does not reduce GDP), overcapacity highlights the fragility of China’s manufacturing sector,” the analysts wrote.

The oil slowdown also coincides with the country facing a weaker macroeconomic outlook. Read more about that here.

REDUCED EU TARGETS ON TESLA: The European Union has cut expected tariffs on Chinese Teslas by more than half, giving the company an advantage over competitors facing higher tariffs, CNN reports.

The bloc lowered Tesla’s tariff to 9%, down from the 20.8% it had indicated in July. The tariffs are in addition to the EU’s regular 10% tariff on car imports — an effort the group says would level the playing field and counter what it sees as unfair subsidies. Still, the tariffs are lower than those imposed on other Chinese automakers.

Some Chinese companies that have joint ventures with EU carmakers will also benefit from lower tariffs, set at 21.3% instead of the maximum rate of 36.3%.

Reaction: China’s Ministry of Commerce said Tuesday it “strongly opposes and is very concerned” about the tariffs on electric vehicles. The decision comes after a wide-ranging investigation launched by the EU into subsidies for Chinese electric vehicles — which produced results the ministry called “distorted.” A day after the additional tariffs were announced, the Chinese government launched an anti-subsidy investigation into EU dairy imports, according to EU policies.

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