Week 29: It is not what it is

Jul 23, 2023

Dear all,

A man-made climate-killing machine. There is no pain, you are receding. A distant ship, smoke on the horizon.

A heat wave can kill you directly by inducing heatstroke, which damages the brain, the kidneys, and other organs. Or it can increase your chances of succumbing to a heart condition, a stroke, or breathing problems.

Heat-related stress can kill you in other ways too. Problems start when your body can’t keep its core temperature close to 98.6 ( F) degrees. In general, your nervous system starts working to cool you down every time your central temperature rises a couple of degrees above normal. To do that, it tries to divert blood away from your internal organs and toward your skin. Since blood carries a lot of heat, your best chance of cooling off is to get that hot stuff pumping to the surface. Meanwhile, your sweat glands start to release water, which has a cooling effect as it evaporates from the surface of the skin.

On a very hot, sticky day, you may not be able to radiate any heat from the surface of your skin, and your sweat won’t evaporate fast enough to keep you cool. (You’ll have an even bigger problem if you’re dehydrated.) The heart responds by pumping more blood away from the internal organs. This deprives the intestines of oxygen, which damages their linings and makes them more permeable to endotoxins. (The strain on the heart can also lead to arrhythmia or cardiac arrest.) At the same time, an overheated core causes an inflammatory response throughout the body. The combination of the inflammatory response and the endotoxins in the bloodstream can suppress the body’s natural mechanism for cooling down.

Once your core gets above about 104(F) degrees, you’re in serious danger. High internal temperatures lead to increased pressure in your skull and decreased blood flow to your brain. Doctors diagnose heatstroke when the heat starts to affect your central nervous system. Damaged tissue may also enter your bloodstream and lead to kidney failure. Very high internal temperatures—like 120 degrees—can destroy the cells in your body through direct heat damage and you die.

If not already, this description will most likely be told in elementary schools across the world describing for children what awaits them. I wonder if it will be part of the leading and prestigious universities and business schools' curriculums across the world too? Maybe told as a business case? What is the SWOT analysis on this one? Margin options? Market segments? Earnings projections?

Silent surrender

It is what it is; is what politicians and business leaders across the world signalling to all of us, with their brutal silence. Adjust. Submit. Surrender. We will have to be “prepared” for “worse” for “more severe,” “more unpredictable” climate. Media outlets thriving in the liturgy selling advice on “how to cope with heat” and “10 best ways to avoid heat shocks”. It is like saying to all of us “you are stupid,” it is a fact, accept it, adjust to it.

“What good is it to save the planet if humanity suffers?” Exxon’s former chief executive, Rex Tillerson, memorably told a company annual meeting in 2013.

Tillerson’s tactics live on. On July 6, as scientists confirmed Earth had just had its hottest June on record by a “substantial margin," the BBC broadcast an interview with Wael Sawan, Shell’s chief executive, who said cutting oil and gas production would be “dangerous and irresponsible”. Children in poor countries such as Pakistan had to “study by candlelight” when their nations lost a bidding war for gas supplies after war broke out in Ukraine, he said.

This would be the same Pakistan that is still recovering from devastating floods caused by massive rainfalls last year, probably intensified by global warming. Nice that Shell CEO cares about the children in Pakistan.

What should an oil company like ExxonMobil do about the alarming spate of heatwaves, rainstorms and wildfires raging across the world? How should Shell or Saudi Aramco respond to the record-shattering rise in global temperatures we are seeing at what appears to be just the start of a serious warming El Niño event?

These questions are more acute than ever for any company whose financial lifeblood comes from fossil fuels — the oil, gas and coal that are by far the largest contributors to global warming.

The answers are messier than they often seem. Oil and gas companies may not sell coal, the dirtiest fossil fuel. But as the world blasts through ever more climate records, such firms face pressure to upend their business models by shifting to cleaner revenues, without upsetting those owners or shareholders who want no such thing.

Many investors bought into an industry offering historically healthy financial returns, thanks in part to a cartel, Opec, that could support or stabilise prices in a difficult market.

Why switch to the uncertainty of a renewables sector with no cartel, no comparable record of returns and, for some green firms, no stonking profits like those made last year as the war in Ukraine supercharged fossil fuel prices? You see the logic? Makes perfect “sense”. Only politicians can cut fossil fuel extractions but for that, we need politicians and not the clowns we have today.

Turning a blind eye: climate negligence

It is what it is. Senior managers at the world’s six largest accounting firms are failing to ensure that climate change is adequately addressed in financial reports and audits.

Surprised? We will have fossil assets that are overvalued, and companies not providing for clean-up costs, creating the sort of financial risks that accounting and audit aim to protect against. But they don’t.

Investor group Climate Action 100+, which manages a collective $68tn in assets, found last year that 94 percent of 152 large companies it had assessed on a range of climate-related metrics had not met any of its audit-related criteria.

These included whether and how climate-related matters were incorporated into a company’s financial statements and whether auditors had assessed the effects of material climate-related matters. “Most companies do not fully consider material climate matters when preparing their financial statements (and their auditors, in their audits thereof),” CA100+ said in a report published in October.

We have to taste it to believe it

James Hansen was a Nasa climate scientist when he warned lawmakers of growing global heating and has since taken part in protests alongside activists to decry the lack of action to reduce planet-heating emissions in the decades since.

He said the record heatwaves that have roiled the US, Europe, China and elsewhere in recent weeks have heightened “a sense of disappointment that we scientists did not communicate more clearly and that we did not elect leaders capable of a more intelligent response”. “It means we are damned fools,” Hansen said of humanity’s ponderous response to the climate crisis.

“We have to taste it to believe it.” Hansen has argued in a new research paper, which has yet to be peer-reviewed, that the rate of global heating is accelerating, even when natural variations, such as the current El Niño climatic event that periodically raises temperatures, are accounted for. This is due to what he said was an “unprecedented” imbalance in the amount of energy coming into the planet from the sun versus the energy reflected away from Earth.

While global temperatures are undoubtedly climbing due to the burning of fossil fuels, scientists are divided over whether this rate is accelerating. “We see no evidence of what Jim is claiming,” said Michael Mann, a University of Pennsylvania climate scientist who added that the heating of the climate system had been “remarkably steady”.

Others said the idea was plausible, although more data was required to be certain. “It’s maybe premature to say the warming is accelerating, but it’s not decreasing, for sure. We still have our foot on the gas,” said Matthew Huber, an expert in paleoclimatology at Purdue University.

You can find this new research here.

An unjust transition

There is some “action” some will claim. The climate “action” that’s happening is unmistakably inequitable.

Thanks to the Inflation Reduction Act’s extension of tax credits, US taxpayers are effectively subsidising the dividends of clean energy’s wealthy investors. China’s solar energy miracle is bound up with economic growth and a political system that are both brutally unequal.

The EU’s clean energy deal is ambitious but shifts some of the costs to poorer households. And these inequalities are both a reason that green finance is potentially lucrative and why it’s expanding so rapidly. So, we’re going green, but we’re not getting anywhere.

The claim that the market is facilitating this transition is not true. It’s really the state that’s doing the heavy lifting. Around the world, governments have taken on the financial risk of the transition and are often funding it as well. But too often they refuse to leverage this. More here.

‘Safe, secure and trustworthy’. Sure…

It is what it is indeed. The Biden-Harris administration secures voluntary commitments from leading artificial intelligence companies to manage the risks posed by AI.

Companies that are developing these emerging technologies have a responsibility to ensure their products are safe. To make the most of AI’s potential, the Biden-Harris Administration is encouraging this industry to uphold the highest standards to ensure that innovation doesn’t come at the expense of Americans’ rights and safety.

These commitments, which the companies have chosen to undertake immediately, underscore three principles that must be fundamental to the future of AI – safety, security, and trust – and mark a critical step toward developing responsible AI.

As the pace of innovation continues to accelerate, the Biden-Harris Administration will continue to remind these companies of their responsibilities and take decisive action to keep Americans safe.

These seven leading AI companies are committing to and we are safe now…

Ensuring products are safe before introducing them to the public

The companies commit to internal and external security testing of their AI systems before their release. This testing, which will be carried out in part by independent experts, guards against some of the most significant sources of AI risks, such as biosecurity and cybersecurity, as well as its broader societal effects.
The companies commit to sharing information across the industry and with governments, civil society, and academia on managing AI risks. This includes best practices for safety, information on attempts to circumvent safeguards, and technical collaboration.

Building systems that put security first

The companies commit to investing in cybersecurity and insider threat safeguards to protect proprietary and unreleased model weights. These model weights are the most essential part of an AI system, and the companies agree that it is vital that the model weights be released only when intended and when security risks are considered.
The companies commit to facilitating third-party discovery and reporting of vulnerabilities in their AI systems. Some issues may persist even after an AI system is released and a robust reporting mechanism enables them to be found and fixed quickly.

Earning the public’s trust

The companies commit to developing robust technical mechanisms to ensure that users know when content is AI generated, such as a watermarking system. This action enables creativity with AI to flourish but reduces the dangers of fraud and deception.
The companies commit to publicly reporting their AI systems’ capabilities, limitations, and areas of appropriate and inappropriate use. This report will cover both security risks and societal risks, such as the effects on fairness and bias.
The companies commit to prioritizing research on the societal risks that AI systems can pose, including avoiding harmful bias and discrimination, and protecting privacy. The track record of AI shows the insidiousness and prevalence of these dangers, and the companies commit to rolling out AI that mitigates them.
The companies commit to develop and deploy advanced AI systems to help address society’s greatest challenges. From cancer prevention to mitigating climate change to so much in between, AI—if properly managed—can contribute enormously to the prosperity, equality, and security of all.

ESG Radio: CODE RED

Climate emergency is NOW. Heat waves are destroying businesses and lives worldwide.

Media gives us scientific reports, but where are the interviews with business and political leaders taking responsibility? Where is the action? Why is World Health Organisation not taking firm steps to declare a climate emergency?

“I would like to ask all of you to pay attention to the sort of underlying narratives that we are told, and in your heads and with the people you know, and the friends you know, try to discuss what are the things that we could do to hold those who are accountable for the actions taking place right now, to take their responsibility and change the course of the developments that are going to be risking not only our lives but the life of the generations that we live after us.”

ESG on a Sunday