"Is capitalism a suicide machine - or capable of playing a crucial role in speeding the energy transition?" asks Bill McKibben
A straightforward revelation from veteran environmentalist Bill McKibben, reporting for the New Yorker.
A report indicates that the world’s biggest companies—and, indeed, any company or individual with cash in the bank—have been inadvertently fuelling the climate crisis. Such cash, left in banks and other financial institutions that lend to the fossil-fuel industry, builds pipelines and funds oil exploration and, in the process, produces truly immense amounts of carbon.
In order to make this clear, McKibben considers the emissions-reduction performance of Google’s parent company Alphabet:
Alphabet has worked hard to rein in the emissions from its products. Last year, for example, Google Sustainability published an account of the work it put into having casing suppliers convert from using virgin to recycled aluminum for Google’s new Pixel 5 phone
[This was] an immense effort involving everyone from the metallurgy team—which, the company said, “studied the chemical compositions of different recycled aluminum alloys and grades, looking for an optimal combination of alloying elements to meet our performance standards”—to executives who had “to go far upstream in the supply chain to the source that was supplying our aluminum, then negotiate a new type of deal that they’d never done before.”
All this was done, Google said, in order to “lower the carbon footprint of manufacturing the enclosure by 35 percent.” It’s the kind of grinding work that goes on day after day at companies that take the climate crisis seriously.
But, according to the new report, these efforts have missed perhaps the most important source of corporate emissions: the money that these companies earn and then store in banks, equities, and bonds.
The consortium of environmental groups—the Climate Safe Lending Network, the Outdoor Policy Outfit, and BankFWD—examined corporate financial statements to find out how much cash the world’s biggest companies had on hand, and then calculated how much carbon each dollar sitting in the financial system may have generated.
According to these calculations, Google’s carbon emissions, in effect, would have risen a hundred and eleven per cent overnight. Meta’s emissions would have increased by a hundred and twelve per cent, and Apple’s by sixty-four per cent.
For Microsoft in 2021, the report claims, “the emissions generated by the company’s $130 billion in cash and investments were comparable to the cumulative emissions generated by the manufacturing, transporting, and use of every Microsoft product in the world.”
McKibben reports that, when contacted about these figures, many of the companies welcomed the news of them - and vowed to address the provenance of these investments. The article is brilliantly comprehensive - and McKibben draws the major implications at the end:
This is where the question of the future direction of capitalism comes in—whether it’s a suicide machine or capable of playing a crucial role in speeding the energy transition. The big banks and asset managers are the capital in capitalism, and they provide whatever magic lies at its heart: they know how to take money that you deposit today and turn it into twenty-year loans to pay for a piece of infrastructure designed to last forty years.
“It transforms the short term into things that are going to be around for decades,” Vaccaro, the former banker and current head of the Climate Safe Lending Network, said. It’s a system that helps innovation flourish; without it, we would not have seen the price of renewable energy plummet, as one company after another raised capital to work on the next iteration of wind turbines or batteries.
But so far it refuses to discriminate between useful work and work that literally imperils the planet—and, if you want to think in those terms, all the economic activity that might someday take place on that planet, assuming that it survives in some recognizable form. As Peter Gill Case, a Rockefeller heir and the co-founder of BankFWD, told me, “the financial system can be one of two things—a driver of sustainable growth, or a driver of climate chaos.”
As with any truly self-destructive behavior, an intervention is required. That is why the possibility of some of these big players performing that intervention with the banks seems so necessary. In a world of widening inequality, companies such as Apple or Amazon have emerged as almost cartoonishly rich and hence uniquely powerful in their ability to force change.
We’re down to the last years when humans will have the leverage to really affect where the planet’s temperature settles. 2030 is just seven years and seven months away. Or, as they measure time at Google and Chase, thirty-one quarters.
More here. The original report, “The Carbon Bankroll: The Climate Impact and Untapped Power of Corporate Cash”, is available here (PDF download).