Week 37: G20 countries are failing on climate targets

In this issue: ▸ All major economies are off track from Paris Agreement ▸ Convictions are more dangerous enemies of truth than lies ▸ BlackRock and the problem with ESG ratings


Dear all, 

I’m writing this in a slow motion, each letter taking time to settle in, land on the white screen in front of me. It takes time. Letters forming words, and words forming sentences. That subtle dance where the love, fear, dreams, expectations we carry are transformed into text.

Today it takes longer than usual, and I keep telling myself that it will be fine. After the first 15 minutes, there’s still just one sentence, it stands there all alone, deserted, eclipsed by nothingness, empty. I look at it, trying to feel it. I read the sentence aloud:

“None of the world's major economies – including the entire G20 – have a climate plan that meets their obligations under the 2015 Paris Agreement, according to an analysis published Wednesday, despite scientists' warning that deep cuts to greenhouse gas emissions are needed now.”

I read it again, but this time I don’t get far. The word “plan” starts wobbling and jumping on the screen, tries to release itself from the sentence, from the other words. I can see the chains holding it down, see the strings around its neck. I keep deleting the other words around “plan” but they keep coming back. The sentence keeps returning and to claim its place on the screen. I wonder why? 

All major economies are off track from Paris Agreement

The sentence came from the news that watchdog Climate Action Tracker (CAT) has analysed the policies of 36 countries, as well as the 27-nation European Union, and found that all major economies were off track to contain global warming to 1.5 degrees Celsius above pre-industrial levels. The countries together make up 80% of the world’s emissions.

The analysis also included some low-emissions countries, and found that the Gambia was the only nation among all 37 to be “1.5 compatible.” As the study only included a few smaller emitters, it’s possible there are other developing countries in the world on track as well.

CAT reported that progress had stalled after dozens of world leaders made ambitious new pledges to slash greenhouse gas emissions during Joe Biden’s Climate Leaders’ Summit in April. But since then, there has been little to no improvement: nothing is moving.

The overall climate plans of the US, European Union and Japan are not sufficient to reach the 1.5-degree goal, the analysis found, saying that while their domestic targets are relatively close to where they need to be, their international policies are not.

Under the Paris agreement, countries submitted their pledges to cut emissions, also known as Nationally Determined Contributions, or NDCs. All signatories were supposed to update their NDCs by July 31 this year under the Paris accord. There are still more than 70 countries that have yet to submit an update.

India, Saudi Arabia and Turkey are among countries that missed the July 31 deadline. China, the world's biggest polluter, announced a new target, but hasn't formally submitted it to the UN. And many countries submitted an “update” without actually increasing their pledge. Brazil and Mexico submitted the same targets as they did in 2015. Changes to those countries' baseline assumptions make their pledges weaker than they were before, the analysis showed. Russia, the CAT report said, submitted an update that looks stronger on paper, but doesn't amount to meaningful change.

The continued use of coal remains a significant policy problem, the report found, with China and India retaining huge coal pipelines. Indonesia, Vietnam, Japan and South Korea are also planning to go ahead with coal use in the future.

CAT also warned that in many countries’ attempts to wean of coal, which is generally the fossil fuels that causes the most emissions, many countries were looking to use more natural gas, which CAT said was being falsely sold as a “bridging” fuel. (Gas is a fossil fuel, and any investment into gas today risks becoming a stranded asset. And while interest in green hydrogen has grown exponentially, there is still a large number of hydrogen projects in the pipeline where it’s produced from gas. Hydrogen produced from gas still produces carbon, and is inconsistent with reaching net zero). 

Convictions are more dangerous enemies of truth than lies

Are we surprised? Are we angry? Are we anything at this stage anymore?

Some people are optimistic. Over the last couple of weeks I have participated in several digital ESG conferences, listening to panellists outlining actions and talking about solutions. “We are all aligned, we need to act now, things are moving.”

I’m envious, jealous of that optimism. I want it, my precious, I want that ring of optimism. I want to seduce my senses with it, I want to drown in that warm, cosy emptiness. To forget how that word “plan” is chained down and strangled.

In a few hundred thousand years someone from another galaxy may look with pity upon the agony of our time on this planet, taken hostage by the dogma of the economic system we created.

Indeed, as Nietzsche once said, “convictions are more dangerous enemies of truth than lies.” Our centuries-long experiment of treating nature as a measurable resource, as a commodity to be extracted, burned and sold for profit, has led to a global crisis that uncannily makes a mockery of logic’s supposed acumen.

If we continue to operate our global economy on the neoclassical paradigm, then we will experience the mother of all crashes and spiral inexorably into a very long nothingness.

Now is it really this bad? Let’s give it a 50% probability. Still good enough? 

BlackRock and the problem with ESG ratings

My quest to release the word “plan” from that terrible sentence goes on. If our economies are far from even calling themselves sustainable how can our ESG and sustainable investments, the beacons of light in the darkness, be sustainable?

They can because “convictions are more dangerous than lies.”

Here’s an example. This week we could read in Wall Street Journal that BlackRock Inc. has vaulted from fourth to first place in socially responsible fund assets in the past 18 months with a barrage of 29 launches of mutual funds and exchange-traded funds. BlackRock has gained ground thanks to its deep ties with institutional investors and a push to include its sustainable funds in model portfolios used by advisers with individuals as clients. 

Meanwhile in the impoverished West African country of Liberia, a unit of the world’s second-largest palm oil company has admitted to destroying forests and violating the rights of indigenous people. Which is particularly interesting because its parent is among the industry’s leaders in investor ratings for environmental and social policies.

Golden Agri Resources Ltd. acknowledged in February that its Golden Veroleum Liberia (GVL) unit hadn’t done enough to compensate local residents for business practices that included razing part of one of the planet’s richest biodiversity regions.

And guess what? Among the company’s shareholders is BlackRock Inc.

Part of Golden Agri’s attraction for investors is that it tops a global list of more than two dozen agricultural producers and wholesalers for its environmental efforts, and ranks fourth on social-related issues, according to data compiled by Bloomberg.

And while the industry’s performance as a whole isn’t good – Golden Agri rose to the top of the environment chart with a score of only 4 out of 10 – it makes the company the best of the pack for investors that need to keep a diverse portfolio.

This is an school book example of a common problem with ESG ratings. Their inaccuracy can protect bad actors by impeding pressure for real improvement.

That would be all for this week. If you’ve read our book, then please don’t forget to review it here!

Best regards,