Week 15: Floating Fortunes, Sinking Futures: The Reality of Climate Inequality

Dear all,

I came across a headline in the Financial Times that left me stunned. It read simply, "Where do you park your superyacht?" This evidently represents a growing problem for billionaires worldwide—a real issue indeed. The challenge facing these billionaires is accommodating their ever-larger boats in the ports of the Mediterranean, due to the increasing number of yachts over 40 meters attempting to dock in marinas originally built for much smaller vessels.

Reading the article made me think of the French and Russian Revolutions. I recalled the eyes of the people depicted in a painting about hunger before the French Revolution, painted by Louis Hersent in 1817. It made me reflect on the rage that built up over the years, leading to despair, slaughter, destruction, and suffering. The vast income and wealth disparity we currently face is unlikely to result in anything positive. If anything, this issue is particularly acute for Sustainability and Governance in the impact and ESG investment space, now more than ever. If financial inclusion and shareholder responsibility are part of the ESG framework, then this issue becomes highly relevant for any investor.

History does indeed repeat itself, despite our often naïve hope for something different. Over the past four decades, income inequality has risen in most advanced and major emerging economies, which together account for about two-thirds of the world's population and 85% of global GDP. Billionaire wealth surged in 2022 with rapidly increasing food and energy profits. A report shows that 95 food and energy corporations more than doubled their profits in 2022, making $306 billion in windfall profits and paying out $257 billion (84 %) of that to wealthy shareholders. Meanwhile, at least 1.7 billion workers now live in countries where inflation outpaces wages, and over 820 million people, roughly one in ten on Earth, are going hungry. Women and girls often eat least and last, comprising nearly 60% of the world’s hungry population. The World Bank has stated that we are likely seeing the largest increase in global inequality and poverty since World War II. Entire countries are facing bankruptcy, with the poorest now spending four times more on repaying debt to wealthy creditors than on healthcare. Three-quarters of the world’s governments are planning austerity-driven public sector spending cuts, including on healthcare and education, totalling $7.8 trillion over the next five years. In the same Mediterranean Sea where billionaires struggle to find ports for their superyachts, at least 529 migrants were reported dead and 848 others missing off Libya last year, according to the United Nations’ International Organization for Migration (IOM). Since 2015, the EU has committed €700 million to support Libya under various funding instruments, including the EU Emergency Trust Fund (EUTF) for Africa. However, despite these numbers and facts, none of this really seems to matter. In the same way, the billionaires’ yachts do not matter. We lack the institutions and political leadership to address these issues. It is what it is. EU citizens pay taxes that the EU uses to finance prevention of refugees crossing the Mediterranean, while billionaires avoid most of the tax, and tax money is used to build ports for their superyachts. It is what it is.