Week 21: Welcome to the optional reality
In this issue: ▸ Close your eyes ▸ Big Oil reality check ▸ Windfall tax ▸ Banks make pledges ▸ Scholarly bullshit ▸ State surveillance ▸ And much more...
Sometimes, in order to be able to see, you have to close your eyes. And when you do that, sounds and images get clearer, brighter, lines and shapes intensifies. Sometimes they don’t make any sense as they float around in that semi-darkness behind our eyelids while we listen to what’s going on around us and inside us.
Decomposing the reality we live in is, for every day that passes, a more and more daunting task. Seeing and listening makes you more and more dizzy, and the projections of reality get more and more blurry. It is a real-unreal world.
Understanding what is really going on right now is becoming a less and less rational exercise, and in some ways less emotional too. It’s more like a no man’s land between the past and the future with that clicking sound in your ears. We live in optional times, either rational or emotional.
Optional times provide different decomposition techniques enabling us to contest what we know is bad. We know it is not really smart to continue running our economies on endless growth and consumption. That is, for the 10% of the world population that holds the reins. Yet we still defend it with our lives. “The joint global science community is wrong on climate change.” That is basically how we respond to findings, reports, facts. They are wrong since our response to what they are saying to us is: “Yes, we hear you, but we can compromise our way forward.” And not only that. We also respond with a fairytale about how it is going to be profitable and it is going to be grand, and no one will be left behind.
It is a carrot and denial approach, and so far it works fairly well. It is, has been and will be about the narrative. We love stories, and we love happy endings where the good guys win. In an optional reality this is worth as much as truth is. What is truth? Well. Apparently that concept is not on the menu either.
The business as usual pretext is rather simple. In order to secure our future, given the war in Ukraine, we need to be more independent on the energy side, especially in relation to oil and gas. We abandon Russia (or pretend to, because given how stuck we are it will take years), and we drill, dig or buy more oil and gas elsewhere. Our future dependency on coal, oil and gas means an increase in production which in practice means more locked-in emissions. But we have solutions! We use (not commercially viable) CCS tech, and we compensate all of it by packaging nature like an financial asset in form of carbon sinks and credits. Then we trade. Optional reality style.
Nature is not a financial asset. It is not private property. It is not ours to monetize. The climate crisis is an absolute game, not a relative optionality. At the end of the day, carbon neutrality is only meaningful at a global level or territorial level, but not at the level of a company. There is no way around an radical reduction of carbon emissions by each and every human organization, as close as possible to zero before mid-century.
“Net-zero” emissions will be achieved when any remaining human-caused GHG emissions are balanced out by removing GHGs from the atmosphere. This is a good piece explaining it all.
The notion of compensation is interesting in this context. We are writing indulgence letters to ourselves.
Big Oil reality check
Now, what do you see when you close your eyes on this? The fate of the earth rests in the hands of energy and finance sector.
Never before has the case for keeping oil, fossil gas, and coal in the ground been stronger. And despite an array of new ‘net zero’ pledges released in the past two years, the climate promises of major U.S. and European oil and gas companies still fail to meet the bare minimum for alignment with the Paris Agreement.
This report entitled “Big Oil Reality Check” is an update from an inaugural 2020 study which analysed the latest climate pledges of BP, Chevron, Eni, Equinor, ExxonMobil, Repsol, Shell, and TotalEnergies against 10 minimum benchmarks for alignment with the 1.5°C temperature goal outlined in the Paris Agreement. The report reveals that these eight oil and gas companies alone are involved in over 200 expansion projects on track for approval from 2022 through 2025 – equivalent to the lifetime emissions of 77 new coal power plants.
Ultimately, no major oil and gas company considered in this analysis comes anywhere close to the bare minimum for alignment with the Paris Agreement. The companies that have collectively done the most to fuel the climate crisis cannot be trusted to confront it meaningfully.
Both public- and private-sector decision-makers must take action both to destroy the demand for fossil fuels and to choke off their production. Governments and the financial sector each have key roles to play. Fossil fuel projects stretch way into the future, they also lock in future emissions trajectories. They do not bend the curve. They blow it up.
But we can compromise and compensate! Oh, the joys of our optional relative reality!
Windfall tax is only a “sticking plaster”
Imperial Great Britain has left EU, claiming that treacherous chains of EU’s inefficiency, will be avoided by superior British administration. Right now Great Britain is punching its way through the thickness of party-gates and more optional realities enabling its elites to mark their place in history. Once again. And that thing is not so optional.
The chancellor Rishi Sunak has announced a £15bn package of support for households struggling with the cost of living crisis, part-funded by a £5bn windfall tax on energy companies. The chancellor set out what he called a “significant set of interventions” to help offset the impact of rocketing inflation. These will include a £650 one-off payment for families on means-tested benefits, and an extra £200 for all energy bill payers that will not have to be repaid. You look at this and it looks grand. People get £850.
Now let’s take a deeper look at this. Sunak also announced that oil and gas companies that invest in new fossil fuel production would receive a tax break worth 90% of the windfall tax. Yet new oil and gas production will take years, perhaps decades, to come to fulfilment, making no impact on energy bills now and potentially busting the UK’s future carbon budgets. And there’s no tax relief for investments in renewables.
Read more here. And yes, you have to hold your breath on this one. It is optional reality explained.
US oil and gas wants to expand, of course
This research details an active effort from the US oil and gas industry to use the war in Ukraine to advocate for long-standing policy asks relating to the continued expansion of oil and gas. The research looks at the month following the invasion of Ukraine on the 24th February 2022. This has happened across social media, traditional media, public presentations, investor calls, and direct interactions with America’s policymakers.
This lobbying behaviour mirrors that seen from the oil and gas industry following the COVID-19 crisis. These narratives are being used to push for a long-term role for oil and fossil gas in the energy mix and appear to be targeted towards specific policy demands. These include advocating for policies which encourage new and/or increased oil and gas production, and rolling back previous climate policy decisions that limited the production of oil and gas or required climate considerations in new projects.
While calling for policies to increase the production of oil and gas, the oil and gas industry continues to actively oppose a number of state level policies designed to reduce the need for fossil fuels. These include opposing fossil gas bans in new buildings and electric vehicle mandates.
Banks make pledges, then support fossil fuels
A comprehensive assessment of the world’s 30 largest listed financial institutions shows a clear disconnect between the concrete short-term targets and actions needed to address the climate emergency and the limited, long-term targets currently being set by the financial sector.
Despite 29 of the 30 assessed financial groups having set 2050 climate goals in line with the Glasgow Financial Alliance for Net Zero (GFANZ) initiative, all 30 financial institutions remain members of financial industry associations which are opposing emerging sustainable finance policy, including finance sector disclosure requirements in the EU and requirements to consider ESG as part of investment duties in the US.
Furthermore, 15 of the 30 are members of real-economy industry associations which have lobbied directly in line with fossil fuel interests, including the US Chamber of Commerce and the American Gas Association. A small number of financial institutions, most notably BNP Paribas, AXA and Allianz, are bucking industry trends and engaging on sustainable finance policy with mostly ambitious positions.
The 30 assessed financial institutions cumulatively enabled at least $740 billion in primary financing to the fossil fuel production value chain in 2020 and 2021, equivalent to 7% of their total primary financing in this period. This financing stands in direct contrast to science-based guidelines from the IPCC and the IEA, making clear the need for the rapid scale-down of coal, oil and gas exploration and production and halve global emissions by 2030.
The largest enabler of fossil fuel financing was J.P. Morgan with $81 billion in 2020-2021.
So, simply put: We know it is against science. So what?
Scholarly bullshit in sustainability literature
This is a very provocative academic piece, entitled Bullshit in the Sustainability and Transitions Literature. As the piece argues, up to 50% of the articles that are being published in many interdisciplinary sustainability and transitions journals may be categorized as “scholarly bullshit.” These are articles that typically engage with the latest sustainability and transitions buzzword (e.g., circular economy), while contributing little to none to the scholarly body of knowledge on the topic.
The piece proposes a typology of “scholarly bullshit” which includes the following archetypes: boring question scholarship, literature review of literature reviews, recycled research, master thesis madness, and activist rants.
Since “scholarly bullshit” articles engage with the latest academic buzzwords, they also tend to accumulate significant citations and are thus welcomed by many journal editors. Citations matter most in the metric-driven logic of the academic system, and this type of scholarship, sadly, is thus unlikely to decrease in the coming years.
State surveillance in China – powered by Alibaba
Have you heard about responsible consumption? No? Well, the topic is big in Davos this week and some of the participants just love the optional reality.
Last week, on one of the WEF’s live-streamed panels, Alibaba Holdings President J. Michael Evans claimed that the company is working on an app that could track an individual users carbon footprint. The former-Goldman Sachs vice-chairman said:
“We’re developing, through technology, an ability for consumers to measure their own carbon footprint. What does that mean? That’s where are they travelling, how are they travelling, what are they eating, what are they consuming on our platform. So: An individual carbon footprint tracker.”
It’s not the first time the company wrestles with an “individual carbon footprint” app. In 2017 their payment platform subsidiary Ant Financial Services was named 6th in Fortune’s “Change the World” list for its Ant Forest app. According to Fortune, Ant Forest is “the world’s largest platform for tracking individuals’ carbon footprints”.
Here’s how it works (promise me you won’t laugh): “Users earn points toward planting virtual trees by adopting earth-friendly habits. The company plants a real tree for every 17.9 kg of carbon saved.”
They’re incredibly vague on how users “earn” these points, or what exactly these “earth-friendly habits” are. But it doesn’t take a genius to make some educated guesses. This it’s as optional as it gets.
I can recommend this piece on state surveillance in China. And we know that Alibaba is one of the mayor suppliers.
That is so sweet. Dear consumer, all of this is on your shoulders, dig in and let yourself and your data points be collected and surveyed by a company that delivers to authoritarian regime. It is business as usual but now with a climate twist.
The Chinese company is the second-largest e-commerce company in the world after Amazon, with revenues in excess of 715 billion Yuan in 2021 (that’s over 110 billion USD). And they’re not just an e-commerce platform. Through their financial and technological service companies, Alibaba runs the largest domain name market, email provider and cloud storage services in China, and the largest payment platform in the world. Through Alihealth they supply online pharmacy services, as well as providing computer technology to hospitals and clinics. Since they bought AutoNavi in 2014, they own the biggest e-map navigation company in China too.
Essentially, in China if you want to pay for something on the internet, you probably use Alibaba. If you want to order something online from a small business, you probably use Alibaba. If you want to sell your stuff second hand, you probably use Alibaba. If you want to register a domain, go to a pharmacy, check into a hospital, send an email, use a map or GPS… you get the idea.
Alibaba’s computing sector is also a market leader in AI services, being the first payment platform to start using facial recognition technology to confirm payments in 2017. Other projects on the go include “CityBrain”, an AI designed to scan cities and provide “streamlined” traffic services. Warning of potential accidents as well as making public transport more efficient, a clear move towards “Smart Cities”.
Welcome to the brave new optional world!
Murder, rape and abuse in fast fashion
I have been vocal for a very long time on how bad fast fashion is, how utterly unsustainable the business model is and how it will never become sustainable. Ever.
The reason for that is that it is based on two very nasty premisses: Cheap labour/bad working conditions/no insurances/no rights and volumes of clothes with horrible environmental impact and huge CO2 emissions embedded.
But now this. It’s even worse: Murder, rape and abuse in Asia’s factories.
I have been to these places, visited many factories over the past 20 years in different places in the world. Seen their faces, hands, eyes, their pain. Seen them working in 30 celsius in closed factories fainting on the floor of exhaustion.
Here’s one such story from the article:
“Jeyasre Kathiravel had always dreamed of a life beyond the garment factories of Dindigul, a remote corner of the southern Indian state of Tamil Nadu. Despite the meagre wages she was earning – about £80 a month – Kathiravel knew she was lucky to have a job at Natchi Apparels, a local factory making clothes for H&M and other international brands. Like many Dalit women in her community, a job at the factory had provided her family with a stable salary. Yet she wanted more. So, with dreams of escaping the deprivation and caste discrimination that had stalked her family for generations, the 20-year-old studied for the civil service exams by night before leaving her home each morning to work long shifts sewing clothes for other, luckier, young women thousands of miles away. Kathiravel never escaped the factory floor. She was killed by a supervisor that was torturing her but she didn’t know what to do because she was so scared of losing her job.“
Rules to prevent greenwashing of funds
We end this Sunday on a positive note. The SEC has unveiled rules to prevent misleading claims and enhance disclosures by ESG funds.
The SEC on Wednesday proposed two rule changes that would prevent misleading or deceptive claims by U.S. funds on their ESG qualifications and increase disclosure requirements for those funds.
The proposals, which are subject to public feedback, come amid mounting concerns that some funds seeking to profit from the rise in ESG investing practices have misled shareholders over what’s in their holdings, a practice known as greenwashing.
The proposals to tackle greenwashing come after the SEC in March debuted broad rules that would require publicly traded companies to disclose how climate change risks affect their business.
Have a great optional week!
Kind regards, Sasja