A London-based activist hedge fund that owns a stake in the operator of the Channel Tunnel has called on European governments to radically overhaul transport policy to encourage rail use to help fight pollution from carbon emissions.
Oceanwood Capital, which has $1.3bn in assets under management, has written to ministers in the UK, France, the Netherlands and Belgium, urging them actively to shift passenger and freight journeys away from short-haul flights and cross-Channel ferries.
The hedge fund owns about 0.75 per cent of Getlink, the French-listed company that has a concession to operate the Channel Tunnel until the 2080s and also runs Le Shuttle trains carrying passenger vehicles and freight between England and France.
“The key conclusion from our investment research is the catastrophic carbon inefficiency of short-haul passenger aircraft and cross-Channel ferry transport,” Oceanwood wrote in a letter to Grant Shapps, the UK’s transport secretary, seen by the Financial Times.
Oceanwood’s letter cites UK government figures which show that air travel emits about five times as much greenhouse gas per passenger kilometre as an equivalent domestic rail journey, and more than 30 times as much as the Eurostar.
The fund also cites Getlink’s own data that say ferries carrying freight running a Dover to Folkestone service emit 18 times more carbon dioxide on a per vehicle basis than Channel Tunnel freight services.
It added that conversations with Getlink suggested that, last year, the Shuttle was using only about half of the tunnel’s freight capacity.
The letter prompted a backlash from the air and shipping lobbies, which, like all transport industries, have been hard hit by the pandemic.
Airlines UK, a lobby group, said the industry had committed to reducing net emissions to zero by 2050.
“The rail industry is subsidised to the tune of billions of pounds every year and is now being propped up by ministers to run empty trains. Now is not the time to be playing off transport sectors against each other,” the group said.
The UK Chamber of Shipping pointed to data showing the UK’s overwhelming reliance on seaborne freight. Almost double the number of lorries and trucks used the equivalent short ferry crossing compared with the Channel Tunnel so far this year, the figures showed.
Bob Sanguinetti, the chamber’s chief executive, said shipping was “massively better for the environment than any other transport mode” and ferry operators were investing in new technologies to help lower emissions.
“During the last few months, without our cross-Channel ferry operators we would not have had the food, medicines and fuel the country needed to survive,” he said.
Oceanwood’s move comes as part of a growing trend towards environmentally focused activism among some hedge funds, which believe that environmental, social and governance (ESG) improvements at companies can go hand in hand with strong shareholder returns.
London-based activist TCI, run by Christopher Hohn, warned last year that it would vote against the directors of companies that did not improve their pollution disclosure, and called on investors to fire fund managers who did not insist on transparency.
TCI itself is one of the largest shareholders in Getlink with a more than 12 per cent holding, according to Refinitiv. The fund did not respond to a request for comment.
The impact of activists on ESG goals is complex. A recent academic study found that companies that rank highly on corporate social responsibility attract more attention from activists. That is particularly the case if they see a company’s efforts on these targets as little more than superficial greenwashing.
Oceanwood, which was set up by former Tudor Investment Corporation trader Christopher Gate, has been involved in the past in activist situations at companies including Dutch nutrition group DSM, Norwegian media company Schibsted and Spain’s NH Hotel Group.