Warren Buffett’s baffling blind spot

US Republicans took significant action this week against environmental, social and governance investments. Florida Governor Ron DeSantis has signed into law a sweeping anti-ESG bill that bans the state from issuing green or ESG bonds. The law also prevents state pension funds from considering ESG criteria in voting at corporate annual meetings.

Unlike other states, where bank lobbyists have successfully watered down anti-ESG bills, Florida’s law was enacted as originally proposed.

In Oklahoma, the state treasurer released a list of 13 financial firms believed to be boycotting the energy industry, including JPMorgan, a major fossil fuel lender. BlackRock, Wells Fargo, Bank of America and State Street were also barred from doing business with the state, Oklahoma said.

In an interview with our colleague Aime Williams, Oklahoma Governor Kevin Stitt said ESG companies are welcome in the state. But “for the return of shareholders, we will not allow it [pensions] funds to invest for someone’s political agenda,” he said. (Stay tuned for Aime’s full interview with the governor in the coming days).

Today, Simon has an incredibly important piece on how companies are getting people with criminal records into the workforce. And I look at the conspicuous absence of climate disclosures at Warren Buffett’s Berkshire Hathaway. (Patrick Temple West)

The next FT Moral Money forum report will dig deep into the carbon markets and we want to hear from you. Are you in favor of carbon taxes? Can voluntary markets overcome quality problems? Will compliance markets do more to push businesses to decarbonise? Share your thoughts Here.

Berkshire Hathaway hit by bad weather

Warren Buffett’s nickname is the Oracle of Omaha, and it sure is a religious fervor surrounded him at his company’s annual meetings each year. Shareholders come to pay tribute to his investment skills, but there is also respect for his frugality and its promise to give most of his fortune to charity.

He seems like the kind of selfish billionaire who would fit right in with the environmentalist crowd. So why doesn’t Buffett seem to care about climate change?

Buffett’s company, Berkshire Hathaway, is holding its annual shareholder meeting on Saturday. It’s usually a big party. But this year, Buffett and his team are under increasing pressure to address climate issues.

The Norwegian Oil Fund, the world’s largest sovereign wealth fund, said this week it would not support the re-election of any of Berkshire Hathaway’s board directors this year, in part because the company has not made public its climate risk information.

Proxy advisor Institutional Shareholder Services has recommended investors vote against the company’s chief independent director, Susan Decker, on climate liability. “The company is a major emitter of greenhouse gases and is not taking the minimum steps necessary to understand, assess and mitigate climate change-related risks,” the ISS said.

California’s public employee retirement system and the Caisse de Depot et Placement du Quebec also filed a petition for a vote tomorrow, asking Berkshire to issue a climate report.

Last year, BlackRock and Vanguard both voted in favor of shareholder proposals at Berkshire Hathaway on climate disclosures and emissions reduction targets. Berkshire Hathaway lacks adequate climate risk disclosures against all four pillars of the Taskforce on Climate-related Financial Disclosures (TCFD), BlackRock said.

Buffett controls more than 30% of the votes at Berkshire Hathaway, making it nearly impossible for outside shareholders to turn things around. Berkshire did not immediately respond to a request for comment.

Buffett’s legacy as a wise investor is indisputable, as is his humility and good humor. But for some reason, he’s tough on climate. TCFD disclosures have become the bare minimum in the United States. Why did Buffett shrug off climate concerns, if only to serve as an example to the rest of corporate America?

At some point, Buffett’s climactic stance could start to taint his reputation. Saturday’s shareholder meeting is likely to provide some evidence. (Patrick Temple West)

A criminal waste of potential

Paul Cowley’s memoir Thief Prisoner Soldier Priest chronicles a life that took him from crime and homelessness to prison, and then from the British Army to a priesthood in the Church of England. Now he has embarked on a new chapter: hiring people with criminal convictions to work for one of the largest supermarket chains in the UK.

Cowley’s unusual title – Director of Rehabilitation – reflects an approach that sets Iceland Foods apart from its peers in the UK business world.

Most large companies have made progress in providing opportunities for people who have historically been disadvantaged by their gender, ethnicity or sexual orientation. Few, however, have taken a similar approach to people with criminal records, who are often required to disclose it at the start of a hiring process, and then quickly dropped from consideration.

Many employers may not realize how large this demographic is: 27% of working-age British adults have a criminal conviction, mostly for relatively minor offenses that resulted in a short or no prison sentence. In the United States, about one-third have a criminal record or arrest. At a time of severe labor shortages – Iceland Foods is currently advertising nearly 650 vacancies on its website – companies could profit by making smarter use of this part of the workforce.

Since taking up his corporate role in September, Cowley has interviewed 130 inmates nearing the end of their sentences and has employed around 70. Of those, around half remain Icelandic employees. The other half dropped out — some failed drug tests, others didn’t show up for work — a setback that was to be expected, said Cowley, who has worked extensively with ex-offenders during his period in the Church. “You know, prison affects people,” he told me.

Since joining Iceland’s board at the invitation of its founder Sir Malcolm Walker, Cowley has been working to overhaul its recruitment process. Applicants for jobs on the company’s website are now being told that it is actively looking to hire more people with felony convictions, in stark contrast to the silent exclusion practice of other companies.

Iceland may be an anomaly in the UK, but companies have been much more active on this front across the Atlantic. Jamie Dimon, chief executive officer of JPMorgan Chase boasted last year that 10 percent of the bank’s hires in 2021 had a criminal record and that (contrary to Cowley’s experience thus far) “retention rates for this population are very high.”

Companies including Walmart, Target, and the Home Depot don’t ask for criminal background details until later in the hiring process, giving candidates a better chance of impressing their prospective employers. Big corporations such as Microsoft and Verizon have lent their support to campaigns in various US states for legislative reforms to erase old convictions from people’s records.

In the UK, the FairChecks campaign is calling for reforms that would give adults a clean slate for crimes committed in childhood and, after a certain period, for crimes that resulted in a short prison sentence. Its proponents include Lord Michael Hastings, a longtime advocate of smarter approaches to crime reduction. “We put these phrases of diversity, equity, inclusion into our mouths, but when it comes to this section of people, everything goes out the window,” he told me. “This is a resource of people that the economy needs.”

But companies should take the lead rather than focus on legislative change, said Ashish Prashar, who served time for theft before a career that included working for former Prime Minister Tony Blair and later as an advertising executive. “You don’t have to wait for the government to pass laws,” he told me, “to give people a second chance, to fill vacancies, to move the economy forward.” (Simon Mundy)

Smart reading

Prominent climate diplomat Pete Betts is only a few months old, but he remains hopeful of global action on the climate crisis. Don’t miss his moving exchange with Pilita Clark of the FT.

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