58 Pages Posted: 1 Jul 2019 Last revised: 23 Aug 2019
Date Written: June 30, 2019
Despite worsening climate change threats, investment in energy — in the United States and globally — is dominated by fossil fuels. This Article provides a novel analysis of two pathways in corporate and securities law that together have the potential to shift patterns of energy investment.
The first pathway targets current investments and corporate decision-making. It includes efforts to influence investors to divest from owning shares in fossil fuel companies and to influence companies to address climate change risks in their internal decision-making processes. This pathway has received increasing attention, especially in light of the Paris Agreement and the Trump Administration’s decision to withdraw from it. But, alone, it will not be enough to foster transition to a cleaner mix of energy sources.
Key to achieving this goal of energy reinvestment is a second pathway focused on fostering investments in new companies innovating in clean energy. This pathway — which has received far less attention — uses emerging legal mechanisms to support greater investment in entrepreneurial clean energy ventures. The Article’s analysis of this pathway looks beyond the well-established ways in which subsidies support fossil fuels and renewable energy. It instead examines the significance for energy reinvestment of changes in U.S. securities regulation permitting greater crowdsourcing of investment and in state laws allowing for new types of corporations.
This Article is the first to examine how these two pathways can synergistically promote energy reinvestment. The first pathway moves money away from fossil fuels, while the second helps to spur needed reinvestment. The Article proposes strategies for deploying the tools in the two pathways together, taking into account the motivations and constraints of diverse investors and corporations.
Keywords: energy law, divestment, corporate law, reinvestment, climate change, corporate disclosure, shareholder proposals, fiduciary duties, social enterprise, public benefit corporations, entrepreneurship
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