Blackrock's decision to join Climate Action 100+ has me thinking about what pressure groups can seriously do to encourage corporations to reduce their carbon emissions.
It's worth saying from the outset that Blackrock decided to join CA100+ after accusations they were greenwashing their record, having heavily invested in some of the worst polluters on the planet. As of last year, the asset manager's fossil fuel portfolio in listed funds was worth $87.3bn, putting them second only to the Vanguard Group, whose own fossil fuel portfolio is worth almost twice as much. Contrarians might argue that $87.3bn is peanuts for an organisation that manages $7tn worth of assets, and if that helps them sleep at night then all right. Doesn't change the fact $87.3bn is a lot to sink into an industry that's hastening the demise of the planet though, does it?
Blackrock's fondness for the fossil fuel industry makes more sense when you look at its shareholders' voting record on climate-related matters. The Guardian has a handy chart, and it shows Blackrock has opposed more than 80% of climate-related motions between 2015 and 2019. Credit where it's due: it's not the worst. But it is fourth-worst. Which still isn't very good.
Alas, Blackrock has now decided to join CA100+, a group the newspapers regularly refer to as "influential" in their reports. How influential is it really, though? Is whatever they're influencing members to do enough to effectively fight the climate crisis? And are lobbying groups really the way to get companies to stop polluting the planet? It's worth exploring in some detail.
Founded in 2017, CA100+ collectively manages 370 investors with combined assets worth a total of $35tn. The stated goals of the organisation are to curb emissions, improve governance and strengthen climate-related financial disclosures. A hundred of CA100+'s target companies – organisations with the highest direct and indirect emissions according to data compiled by the CDP – include big names such as BP, Exxon and Shell. The signatories' aim is to encourage these companies to help achieve the goal of the Paris Agreement by reducing emissions and helping the green transition.
Regardless of how influential CA100+ actually is, the only way this sounds good is if you accept that the terms of the Paris Agreement were adequate enough to effectively tackle the climate crisis. I, for one, do not. As the UN Secretary General warned last summer, even if the promises of the Paris Agreement are fully met, the world faces a three-degree increase in global temperatures by the end of the century. This would literally redraw the map of the world: Osaka in Japan would disappear underwater. So would Shanghai in China. Rio de Janeiro in Brazil would shrink in size significantly as a result of rising sea levels. Millions of people would be displaced. If CA100+ wants to be taken seriously as a force for emissions reductions, its mission statement needs a dose of urgency.
All that said, a mission statement is useless if the organisation making it is ineffectual. In that respect, the jury's still out on CA100+, which is still a fledgling organisation. Its first progress report, however, looks bleak. Although 77% of the 159 total focus companies have a board member or committee responsible for climate policy, just 8% of them ensure said policy is consistent with the positions of their respective lobbying associations. And while 70% of the companies have set long-term targets for reducing emissions, only 20% of them have approved or committed to measures deemed scientifically in line to meet the terms of the Paris Agreement. This in mind, it's important to remember that targets set will not necessarily mean targets met, and with commitments so lacking in urgency as the Paris accords are, this doesn't exactly inspire confidence.
Last but not least, climate disclosure is an interesting part of CA100+'s mission statement. According to its progress review, 40% of the organisation's target companies carry out and disclose climate scenario analysis. This is a really important point: the only way for investors to properly assess climate risk is for companies to disclose the impact their business activities have, and are going to have, on the environment.
All in all, the progress report doesn't look good. But it also doesn't explain why corporate lobbying is a viable strategy for encouraging companies to reduce their carbon emissions. This is, in effect, a form of self-regulation: signatories will, in theory, pressure companies into taking steps to reduce their carbon footprint, and should they fail to do so, divestment (I should think) isn't out of the question. But this carries two massive assumptions. The first is that investors will, in fact, walk the walk and divest if necessary. The second is that we can trust polluters to honour their commitments should they make them. After all, it will take time to establish whether companies are on track to meet their emissions targets. And as illustrated earlier in this post: time is something we are desperately short of.
I don't see any reason to suspect corporate lobbying is a more effective way to bring polluters to heel than legislation. Unlike the private sector, regulations imposed by the state have the advantage of being legally binding and enforceable. Further, they can be brought into effect far quicker than the clout of fledgling lobbying groups. You could make the argument this is a false dichotomy, and the two can run in tandem. But a robust approach to tackling the climate crisis from the state would surely render lobbying obsolete if it went far enough.
Richard Murphy, who happens to be a professor at the university I study at, has a great example of this when it comes to accounting. At the minute, he explains in this very good video on his blog, there are no proposals anywhere in the world to bring climate change onto the balance sheet. Instead of relying on voluntary standards, which have failed completely, he argues that changing the rules so companies are legally obliged to disclose their contributions to the climate crisis would seriously hurt the bottom lines of the biggest polluters, and bring about change far more rapidly. Would some businesses become insolvent? Probably. Does that matter more than the survival of the planet? No.
In sum, I'm not convinced CA100+ will have any serious impact on greenhouse gas emissions at all in the coming years. That said, neither will government policy should the political landscape in countries like the UK and US not change very soon. Maybe that's what CA100+ really is: an indictment of the failure of governments worldwide to take the steps required to fight the climate crisis. In that respect, perhaps we should be thankful – it's certainly better than nothing.
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