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Week 45: Walking into an avalanche
In this issue: ▸ Global CO2 emissions from fossil fuels hit record high ▸ 50+ poor countries in danger of bankruptcy ▸ Are young generations willing to pay for better investments? ▸ And much more...
Humanity. Not really willing to know and consciously rejecting what is going to happen next. It is easier that way. Less anxiety. For the moment. We know it. We have done it before. We think. It can be controlled. We will adapt.
The ones shouting out about the force of impact and the disastrous consequences are called “activists”.
The ones walking into it, trying to convince the masses that it’s all going to be just fine, with marginal changes to the system that rules it all, they are called “rational”, or even “transition leaders”.
There is no middle ground. It is nowhere to be found on this planet. We’re a strange species. Loveable, humble, funny, caring, yet brutal, vicious and cruel. Humans.
I’ve been following, like you probably, the sporadic news from Egypt from the latest “let’s pretend we want to fix this” climate conference. For us it is easier to accept a change of the earth’s climate in ways that will be chaotic and disastrous than the prospect of changing the fundamental growth-based logic of capitalism.
We simply think, brainwashed, that we need to compromise. Walking into an avalanche, we compromise. CO₂ emissions are about 5 percent higher than they were in 2015. Yes, 5 percent higher. The emissions will hit a record high this year, in spite of a drop in China’s emissions. This world has increased its coal use while the economic activity has continued to pick up post-coronavirus.
Global CO2 emissions from fossil fuels hit record high
Those numbers come from the Global Carbon Project, a coalition of international climate science bodies. According to them, the emissions from energy will rise 1 percent to reach 37.5bn tonnes in 2022, with the biggest increases coming from India and the US. The sudden drop in emissions in China, the world’s biggest polluter, will be more than offset by the surging emissions in the rest of the world.
If global emissions continue at today’s levels, the remaining carbon budget to limit warming below the 1.5C ideal under the Paris climate accord would be used up in just nine years, according to the report. Already global temperatures have risen at least 1.1C in the industrial era. India and the US both experienced rising emissions this year, as economic activity – and the aviation sector – recovered strongly following the pandemic restrictions of the previous year.
Reaching net zero emissions by 2050 would require a decrease in total emissions of about 1.4bn tonnes of CO₂ each year. This is comparable to the fall in 2020 as a result of the concerted government efforts globally to tackle the pandemic. This world of ours was more or less standing still.
You get the picture, the avalanche, the force and silence just after it has crushed everything in its way. Like Las Vegas, but worse. The prime minister of Barbados has expressed it in the clearest way so far on the “let’s pretend we want to fix this” conference: “We were the ones whose blood, sweat and tears financed the industrial revolution,” she said in a lacerating speech that invoked colonialism. “Are we now to face double jeopardy by having to pay the cost as a result of those greenhouse gases from the industrial revolution? That is fundamentally unfair.”
She is, of course, an activist.
50+ poor countries in danger of bankruptcy
More than 50 of the poorest developing countries are in danger of defaulting on their debt and becoming effectively bankrupt unless the rich world offers urgent assistance, the head of the UN Development Programme has warned.
Inflation, the energy crisis and rising interest rates are creating conditions where an increasing number of countries are in danger of default, with potentially disastrous impacts on their people, according to Achim Steiner, the UN’s global development chief. “There are currently 54 countries on our list [of those likely to default] and if we have more shocks – interest rates go up further, borrowing becomes more expensive, energy prices, food prices – it becomes almost inevitable that we will see a number of these economies unable to pay,” he said.
The climate crisis is further compounding the problem, he warned, as countries are facing increasing effects from extreme weather. Poor countries are not receiving the funding they were promised from the rich world, yet are facing a growing danger of storms, floods, droughts and heatwaves.
Steiner warned that some developing countries were in danger of giving up on the UN climate talks if developed country governments failed to fulfil a longstanding promise to poor nations of $100bn a year in assistance, to help them cut greenhouse gas emissions and adapt to the impacts of extreme weather.
“If Cop27 does not deliver a convergent path on the $100bn, I think many developing countries will leave Sharm el-Sheikh at least thinking about their commitments to the global climate process”.
Activists, the whole bunch! Poor countries are activists too! Not to be trusted! They just want out money!
And now a Unicef poll also suggests almost half of young people in Africa have reconsidered having children due to the climate crisis.
An activist bunch! I mean, how come they don’t get it?!
People legally selling destruction as salvation medicine
There are 636 lobbyists from the oil and gas industries registered to attend the UN event in Sharm el-Sheikh, Egypt. At Glasgow, the figure was 503, which outnumbered the delegation of any single country.
This year the only country with a larger delegation is the United Arab Emirates, hosts of Cop28 next year, which has 1,070 registered delegates, up from 176 last year. Why?
Well, these rational system-defenders are transition leaders, knowing what needs to be done when walking into an avalanche.
Oil and gas companies are planning a “frightening” expansion that would result in 115bn tonnes of climate-heating CO2 being pumped out, equivalent to more than 24 years of US emissions, a new analysis has found.
Virtually all oil and gas companies are planning further exploitation of fossil fuels, the report found, pouring $160bn dollars into exploration since 2020. None of this investment is compatible with the International Energy Agency’s (IEA) route to reaching net zero emissions by 2050 and limiting the climate crisis, the report said.
The IEA said in 2021 that no new fossil fuel projects could go ahead from 2022 if the world is to tackle global heating and its worsening impacts on billions of people. The analysis, by German NGO Urgewald and 50 NGO partners, also found expansion plans for the export of liquefied gas around the world would more than double under current plans.
This would lead to emissions equivalent to the current annual emissions of the African continent. The oil and gas companies are betting against our collective future. But. We trust them. These guys know what we need.
The surge in liquefied gas export plans is centred in North America, with 44% of global liquefaction plants under development located in the US and 11% in Canada.
Most of this gas would be produced by fracking. QatarEnergy and Gazprom are also among the companies with the biggest liquefied gas plans. They are not activists. They are solution providers. A carnival of hypocrisy.
Defending the system non-activists
Capitalism, especially the dominant Anglo-Saxon variant of capitalism, has trouble thinking beyond the here and now. People running big corporations see their job as maximising profits in the short term, even if that means causing irreparable damage to the world’s ecosystem. What’s more, they think they should be free to get on with maximising profits without any interference from politicians, even though the fight against climate change can only be won if governments show leadership, individually and collectively.
People, yes people, flesh and blood, running big corporations, indeed, those running businesses of all sizes, seek to maximize profits not because they are misguided, but because that’s their job in a capitalist economy.
The common goal of both the private and public sectors is rapid, sustained GDP growth, so the only climate actions that companies or governments are willing to take are those that will not risk slowing wealth accumulation.
The economist Joseph Schumpeter talked about the process known as “creative destruction”, the way in which inefficient producers are put out of business by disruptive new technologies and that, as a result, transformation happens. During wars, the best brains are employed by governments to produce more efficient killing machines.
But normally creative destruction takes time, especially if the old guard can marshal sufficient resistance to change, something the fossil fuel industry has been adept at doing.
It is vital that capitalism’s Dr. Jekyll emerges victorious over its Mr. Hyde. More than that, it needs to be an immediate knockout blow.
Read more here.
Are 26 of the richest people on planet Earth participating at COP27 in Egypt?
Who are we fooling in relation to an avalanche, or rather what are we trying to protect? All of this talk about tackling climate emergency. What is all of this truly about?
Since the financial crisis almost a decade ago, the number of billionaires has nearly doubled, with a new one created every two days between 2017 and 2018. At the same time, the mega-rich and wealthy corporations are enjoying lower tax rates than they have in decades. Top 1 percent of households own 43 percent of global wealth.
Global rich must cut their carbon footprint 97% to stave off climate change. The richest 1% would need to reduce their current emissions by at least a factor of 30, while per capita emissions of the poorest 50% could increase by around three times their current levels on average, the U.N. says. That translates into a reduction of 97% in carbon emissions for the wealthiest people.
But who is then the 1%? When we think of “the rich”, we might think of millionaires and billionaires with private jets and multiple mansions. But an income of $38,000 is enough to put someone in the world's richest 10%, and $109,000 puts them in the top 1%.
And then there is the top 26 wealthiest people. They own $1.4 trillion, or as much as the 3.8 billion poorest people.
And as it turns out, a billionaire emits a million times more greenhouse gases than the average person, a study from Oxfam has found.
Solutions? Well... Imagine a future…
Imagine a future where the economic and financial system serves everyone, a system that’s accountable for its effects on people and the planet. Envision a world where financial markets serve all members of society and where finance plays a central role in solving the social and environmental challenges facing the global community, such as poverty, inequality, and climate change.
In this future, investors integrate impact considerations into all decisions – building strong communities, a healthy environment, and a sustainable future for all people.
The status quo of the global economic system is not working. It is not serving the planet. It is not serving the vast majority of the world’s people. Over the long-term, it is not even serving investors.
The current status quo in capitalist societies tends to extract value from the economic system, from its workers, and from our shared natural resources largely for the benefit of those who already hold assets and power.
In a transformed economic system, investors should ask new questions about how to define “value,” and about who benefits from it. It is time to take a broader, longer-term view about the value investments create for people, for communities, and for the planet.
We need a transformed financial system that offers a new way of doing business.
We need to create a system that addresses inequality and poverty, that invests in solutions to addresses the climate crisis, and that delivers sustainable and inclusive economic growth.
One aspect of fuelling this movement for new capitalism requires the leadership of organizations to drive a change in the way people think about the power of investment capital.
It is this changing of mindsets as well as mobilizing more capital to invest in solutions to address the climate crisis and inequality that will drive a movement for the future of capitalism.
In addition to focusing on how we can unlock more capital for impact, we also need to think about how to have an impact on investing itself.
Reimagining capitalism. Do we have capacity to even try?
Read more here.
Are young generations willing to pay for better investments?
Luckily, younger investors are more willing to put money behind environmental and social goals – even if it’s costlier.
That’s the conclusion in this great piece on how young people views ESG investing. You should read it.
On that note: How are ESG funds performing under dire market conditions and over 3-5 years? Well. Market data show that the average equity fund adhering to ESG factors has lost slightly less money this year than products that track vanilla benchmark indexes such as the S&P 500.
Young people know, after all, where to put their money!
A review of the longer-term record also supports the notion that ESG funds can outperform. About 56% of US sustainable funds beat rival category groups in the three-year period ended Sept. 30, according to researchers at Morningstar.
ESG is not impact investing, and impact investing is not ESG
If you find yourself using the terms ESG and impact investing interchangeably, you’re not alone. Some of the smartest and most sophisticated educators and investors in the world have trouble distinguishing between the two. And these are the people overseeing billions, if not trillions of dollars, collectively.
Coined in 2004, ESG emerged as a joint effort by the UN, the International Finance Corporation (IFC), and the Swiss Government to support the financial industry’s consideration of ESG issues in mainstream investment decision-making (although its roots exist in the socially responsible movement, or SRI).
Read more here.
And we end this week with a quote from the newly appointed right-wing populist financial minister in Sweden on climate goals:
‘If we don’t make it, then we don’t make it’.
Such a lovely quote from a non-activist. Such splendid leadership showcased. A rational, mature, statesman-like and profound _______.
Have a great realistic, logical, real-politics, activist week!