Week 44: Showbiz in the era of “sauve qui peut”
In this issue: ▸ Coal still not out at the COP ▸ Run for your lives, everyone for themselves ▸ How SDG-aligned is ESG? ▸ And much more...
It’s showbiz time in the era of “sauve qui peut”!
The dawns in the Nordic countries are dark, quiet and surprisingly shy. Lack of light makes faces and expressions gloomy and distant, shy lights hoping to find some reflection in a few bypassers.
The empty streets in the early mornings look more like humpback whales, dozing in the shallow waters, resting after a long night. Seagulls, doves and crows searching for a piece of food and leftovers. Occasionally fighting over a piece of bread then retreating in that circular dance to look for a yet another leftover.
I sit on a bench. Looking at the sky above me. Listening to the news that just arrived. They say we have just a few years left.
We live and talk, defend ourselves, walk and celebrate some ridiculous things, some ridiculous stories someone made just a few decades ago, for us. This planet is our home. Take a moment and think about that word. Home.
Meanwhile, the showbiz in Glasgow goes on. But to follow the news about a dying patient and the search for a cure without really understanding the illness is not so entertaining. Some of it is so wicked that even my keyboard reacted with that squawking sound of rejection. Bear with me.
Coal still not out at the COP
The U.S. and China have shunned the UK’s flagship coal pact, dealing a severe blow to the COP26 climate summit and drawing a warning from the world’s leading energy body, which said the chances of limiting global warming to the goals of the Paris accord were “close to zero”.
Fatih Birol, head of the International Energy Agency, said a deal to phase out the use of the dirtiest fossil fuel was one of three actions that must emerge from the Glasgow meeting for the rise in temperatures to stay below 1.5C since pre-industrial times. Global temperatures have risen an estimated 1.1C in that period.
“Without addressing this problem, the chances to reach our 1.5C target is close to zero,” Birol told the Financial Times. “I hope all the countries are going to be part of a deal where they can take these early steps for early retirements or repurposing their coal plants,” he added.
The UK hosts wanted the summit to be known for consigning “coal to history”, but were forced to weaken the pact to draw more signatories. The timeframe was extended to allow another decade, or even longer, for coal plant shutdowns.
After frantic last-minute negotiations, 40 countries including South Korea, Vietnam and Poland signed the pledge, which commits them to shut their coal plants and stop issuing licences for new plants. A further six countries including Indonesia and Morocco signed up to portions of the deal, without endorsing the entire pact.
The world’s top-three coal consumers in China, India and U.S., representing 72 per cent of global emissions from coal-fired power, did not sign, nor did Australia.
Phasing out coal in China and India, even over the next two decades, is simply not feasible due to their reliance on coal to meet demand they have in their own economies and among their own sizeable population.
We are at a dead end with this one.
Run for your lives, everyone for themselves
Now, the U.S. also said it was still committed to a “clean energy future” and is preparing to end financing for fossil fuels overseas. Read that sentence again. Yeah.
Meanwhile, the White House has also said that Opec+ risks imperiling the global economic recovery by refusing to speed up oil production increases and warned the U.S. was prepared to use “all tools” necessary to lower fuel prices.
The move came after Saudi Arabia-led Opec and its allies such as Russia rejected U.S. calls to help tame rising oil prices, insisting they would stick with a plan of only gradually increasing output, even as demand roars back from the depths of the pandemic. “Opec+ seems unwilling to use the capacity and power it has now at this critical moment of global recovery for countries around the world,” said a spokesperson for Biden’s National Security Council. “Our view is that the global recovery should not be imperilled by a mismatch between supply and demand.”
Words are not enough, just ordinary words. We are entering the era of “sauve qui peut” – run for your lives, everyone for themselves.
The latest IPCC report was launched 9th of August 2021. Whether by accident or design, the choice is a momentous date in human affairs, the anniversary of the atomic bombing of Nagasaki. Putting aside the horrors and the dubious efforts at justification, the Hiroshima bombing a few days earlier demonstrated that human intelligence would soon reach the level of being able to destroy everything.
What remained open when this happened only 75 years ago is whether human moral capacities, and the institutions humans had created, had the capacity to overcome what human intellect was on the verge of achieving: total cataclysm. After 75 frightening years, the question still remains open even as prospects shrink for a hopeful answer.
What is the next “last best hope”?
The concept of “last best hope” keeps narrowing. What’s the last best hope at one point is gone later, and the remaining last best hope becomes far more difficult to realize.
That’s been true since the 1997 Kyoto Protocol, ratified by 192 nations, but not the U.S. The Senate would not accept it. George W. Bush pulled out completely. Later Canada did as well. Kyoto was the last best hope in 1997. If the U.S. had joined, the task of escaping devastating climate change would have been far easier.
By 2015 (the Paris Agreement, COP21), the “best hope” was much more remote and difficult to realize. Again, the U.S. Senate blocked it. More precisely, the plan was for a verifiable treaty, but Republicans would not accept that, so it was reduced to toothless voluntary agreements. And shortly after, Trump pulled out completely.
Biden has formally rejoined, but what that means looks very bleak. Even when the U.S. fully accepts international treaties, it violates them at will, hence also violating the U.S. Constitution, which declares them to be the Supreme Law of the Land, binding on the political leadership.
The clearest case is the UN Charter, the basis for modern international law. It bans “the threat or use of force” in international affairs, with reservations irrelevant to the constant violation of the Treaty (and the Constitution) by U.S. presidents.
The discourse on international affairs has found a way around these inconvenient facts by devising the concept of a “rule-based international order,” as contrasted with the old-fashioned “UN-based international order.” The former is preferred, since the U.S. can set the rules and determine how and when they can be enforced.
A very interesting topic, I would say.
COP and the climate finance showbiz
Now we move on. In an earlier announcement at the meeting in Scotland, financial institutions accounting for around 40% of the world's capital committed to assuming a “fair share” of the effort to wean the world off fossil fuels.
A main aim of the COP26 talks is to secure enough national promises to cut greenhouse gas emissions – mostly from coal, oil and gas – to keep the rise in the average global temperature to 1.5 degrees Celsius.
But how to meet those pledges, particularly in the developing world, is still being worked out, and it will require a lot of money.
U.N. climate envoy Mark Carney, who assembled the Glasgow Financial Alliance for Net Zero, put the figure at $100 trillion over the next three decades, and said the finance industry must find ways to raise private money to take the effort far beyond what states alone can do. Read more.
Why private capital is essential for climate finance
Public demand for action on climate change is rising. According to a YouGov poll published in the UK last year, more than two thirds (67%) of people want the UK's government to be a world leader on climate policy.
But away from the showy glitz and glamour of COP26’s celebrity and business star participants, it is apparent that governments cannot do it alone.
Private capital – and backroom deals – will be essential if voters want the planet to be able to cash the political cheques its world leaders are now writing. Private capital plays a key role in “climate finance”, the term broadly used to describe funding for activities that help slow climate change.
This means private investments have the opportunity to reduce key climate technologies’ production costs relative to their output, while also accelerating said technologies’ ability to scale.
But with every G20 country behind in honoring commitments, and almost every other country following targets that are highly or critically insufficient to reversing current climate trends, private investment capital is becoming increasingly essential to accomplishing climate-related goals. Read more.
How SDG-aligned is ESG?
A recent study from Util found that, of 77 funds with names containing the terms “green,” “clean,” “climate,” or “sustainable,” only four have a positive impact on environmental targets.
In the study, peer-reviewed academic publications were reviewed to extract positive and negative relationships between a company’s products and the 169 U.N. Sustainable Development Goal targets.
The aggregated impact of both – the total U.S. fund universe and the sustainable fund universe – scored negatively against the Climate Action Sustainable Development Goals (SDG 13), with negative 10.6% and negative 5.88%, respectively.
About $68 billion has gone into ESG exchange-traded funds (ETFs) in 2021 for the year to date, with $118 billion over the past 12 months, according to Bloomberg. With this rising trend, it is crucial that capital has the intended impact, and contributes to meeting climate targets.
Insufficient reporting mechanisms, weak frameworks, and confusing terminology at least partly explain why sustainable and total fund universes have a net negative impact on all five environmental goals.
I have commented on this in an interview with Financial Times. Here’s a section from the article:
The growing popularity of ESG, however, has brought increasing scrutiny into its efficacy. Advisers may have been surprised to hear green finance expert Sasja Beslik’s remarks at a recent webinar. Addressing the effects of sustainable investing, Beslik asserted that “the current state of the world is that we are not actually making any tangible improvements”.
The research backs up Beslik’s pessimism. A September analysis of 281 U.S.-domiciled sustainable equity funds found that only four had a positive impact across any of the environmental sustainable development goals. Another report analysed the views of 90 chief executives and chief investment officers among asset owners and asset managers with a combined AUM of $34.5tn. It found that: “There is currently no clear line of sight between climate investing and its impacts.”
But how strong or weak is the ESG conviction in the investment industry? This will be interesting to see. With oil prices at multi-year highs, one may wonder whether any investors out there regret their exit from fossil fuels investments.
Brent has been changing hands for over US$82 per barrel since mid-October, while world leaders have begun discussing how to tackle climate change at COP26 in Glasgow.
Read more here.
Now they want nuclear to be green
Nuclear is back with a big fat rope around our necks.
A group of ten European countries have heaped pressure on the European Commission to grant nuclear energy a ‘green’ label under the EU’s sustainable finance taxonomy, which acts as a guide to climate-friendly investments.
Energy ministers from the group of ten supported nuclear’s inclusion in the taxonomy during an extraordinary meeting of the EU’s Energy Council on Tuesday 26 October, convened hastily last week in response to rising energy prices.
Do we really understand what is going on?
It’s growing like hope, like the sea, like speech,
like a movement, like dawn, like a child, like blood,
like that void between us and us
it’s growing like pain
and eats everything before our eyes.
That’s all for this week. The showbiz in Glasgow continues!