Money Is the Oxygen on Which the Fire of Global Warming Burns
What if the banking, asset-management, and insurance industries moved away from fossil fuels?
By Bill McKibben
September 17, 2019
New Yorker Daily Comment: 'Money is the Oxygen...'
This is a long article, and I had to take notes- so in the interest of passing along the ideas, here they are.
Intro: Bad news, worse news
Alarming records set so far this year:
- another high mark for CO2 in the atmosphere: 415 ppm
- hottest June ever recorded; July hottest month ever recorded.
- new high temperatures in Europe, Greenland
- Siberian wildfires
- Hurricane Dorian, called “the longest siege of violent, destructive weather ever observed” on our planet
More drastic measures than ever will be needed to meet the goals we set in the 2015 Paris climate accord- we’ll essentially need to cut our use of fossil fuels in half by 2030 and eliminate them altogether by mid-century.
It’s not technologically impossible: in the past decade, the world’s engineers have dropped the price of solar and wind power by ninety and seventy per cent, respectively. But we’re moving far too slowly to exploit the opening for rapid change that this feat of engineering offers.
The good news: far more people are joining in the fight
The question: what levers can we pull that might possibly create change within the time that we need it to happen?
Climate change is a timed test, one of the first that our civilization has faced, and with each scientific report the window narrows. By contrast, cultural change—what we eat, how we live—often comes generationally. Political change usually involves slow compromise, and that’s in a working system...
The answer:
I suspect that the key to disrupting the flow of carbon into the atmosphere may lie in disrupting the flow of money to coal and oil and gas... those who hold most of the money also have enormous power, and their power could be exercised in a matter of months or even hours, not years or decades.
So a small group of activists has begun probing the financial industry, looking for chances to toss the kind of Hail Mary pass that could yet win this game. The odds are definitely long, but just talking with these groups has begun to lift my despair.
The fossil-fuel industry is dependent on Banks, asset management, and insurance companies. The reverse is not true.
1. Banking: Profiting off loaning money
Rainforest Action Network: using brokers’ tools to track fossil-fuel financing, they now can rank the financial giants according to how much damage they’re doing.
Possible action
So what would happen if, tomorrow, Chase announced that it was going to phase out lending to the fossil-fuel industry—probably first by restricting loans for particular projects, and then by ending general corporate lending and banning the underwriting of new debt and equity for fossil-fuel companies? “the music would stop, very suddenly.” Wall Street, Buckley said, “can be very deaf to warnings for years, but the financial-market lemmings will suddenly act in unison” once the biggest players send a signal.
Everyone knows that the fossil-fuel era will come to an end sooner or later; a giant bank pulling back would send an unmistakable signal that it will be sooner.
Hopeful indicators
In June, the French giant Crédit Agricole said that it would no longer do business with companies that are expanding their coal operations. At the same time, they announced a phase-out plan for funding any coal project worldwide. This is a trend with banks elsewhere in Europe as well as Singapore and Japan.
At this point, the coal business is already on its heels, so campaigners are increasingly focussed on gas and oil, but C.A.’s move shows that big, quick shifts are possible.
2. Asset Management: Profiting off the financial markets
The assets under BlackRock’s management are worth nearly seven trillion dollars, making it, by some measures, the third-largest economy on earth, after the United States and China, and ahead of Japan. No one else is trying as diligently to make money off the destruction of the planet. And no one else has as powerful a remedy at hand.
Possible action
If (the firm) simply decided to exclude fossil-fuel stocks from its main funds—or if it even just decided to underweight the stocks—it would send a message like no other.
“The stock market would react by driving oil- and gas-stock prices down ... institutional investors would understand that continued investment in the fossil-fuel sector meant more volatility, lower returns, and negative future outlook.”
The sell-off in fossil-fuel stocks would be only half the story, though, Sanzillo says. Money would instead pour into renewable energy,
Hopeful indicators
Holy heck. The University of California system has just divested from fossil fuels. That's $80 billion, from what is the biggest and arguably best public system in the world. Thanks to all who have campaigned so long and hard--this is a breathtaking win!
Bill McKibben 9/17/19
The reason we sold some $150 million in fossil fuel assets from our endowment was the reason we sell other assets: They posed a long-term risk to generating strong returns for UC’s diversified portfolios.
We have been looking years, decades and centuries ahead as we place our bets that clean energy will fuel the world’s future. That means we believe there is money to be made. We have chosen to invest for a better planet, and reap the financial rewards for UC, rather than simply divest for a headline.
U.C. officials in the LA Times, 9/17/19
3. Insurance: Profiting off the need to secure projects
In some ways, the insurance industry resembles the banks and the asset managers: it controls a huge pool of money and routinely invests enormous sums in the fossil-fuel industry.
Consider, though, two interesting traits that set insurance apart.
The first is, it knows better.
Insurance companies are the ones with the data to really see what is happening as the climate changes, and for decades they’ve been churning out high-quality research establishing just how bad the crisis really is.
The second thing that makes insurance companies unique is that they don’t just provide money; they provide insurance. If you want to build a tar-sands pipeline or a coal-fired power plant or a liquefied-natural-gas export terminal, you need to get an insurance company to underwrite the plan. Otherwise, no one in his right mind would invest in it.
Possible action and a hopeful indicator
In April, Chubb took a step that no other big U.S. insurer has managed, and announced that it was restricting insurance and investments in coal companies. But it still invests heavily in oil and gas, and so does virtually every other major insurance company.
Following the money isn’t a new idea
Since the fight over the Dakota Access Pipeline erupted, at the Standing Rock Reservation, in 2016, Connon has been focussed on the role of the banks that underwrite such projects. Working closely with indigenous-led groups, such as Mazaska Talks (Lakota for “Money Talks”), he helped launch one of the first campaigns to encourage consumers and communities to switch banks. Two years ago, the groups organized their first civil disobedience, shutting down thirteen Chase branches in Seattle for the better part of a day, with everything from pray-ins to picnics with live music.
“We worried at first that it might be a cognitive leap for people,” Connon said. “That it wouldn’t be as clear to people as going directly at the fossil-fuel companies. But that’s not been my experience on the ground. It’s pretty clear. You can tell the story in one sentence: they’re funding the fossil-fuel industry, which is wrecking the planet.”
Conclusion
It's almost impossible to stop using fossil fuels on an individual basis. Bit many of us can join in local actions, and almost everyone has a voice through their money- their bank, their insurance, their retirement account.
We are indeed in a climate moment—people’s fear is turning into anger, and that anger could turn fast and hard on the financiers. If it did, it wouldn’t end the climate crisis: we still have to pass the laws that would actually cut the emissions, and build out the wind farms and solar panels.
Financial institutions can help with that work, but their main usefulness lies in helping to break the power of the fossil-fuel companies. For the moment, the financial giants are the masters of our planet. Perhaps we can make them put that power to use. Fast.