In a particularly revealing sign of change on climate, “The biggest climate event of the calendar looks set to draw far fewer chief executives than it did just a year ago. BlackRock Inc. CEO Larry Fink won’t be at the COP27 summit in Egypt next month and will instead attend a meeting of the firm’s board of directors, according to people familiar with his plans. Citigroup Inc. CEO Jane Fraser will also stay away, as will Bill Winters of Standard Chartered Plc, spokespeople for the banks said. All three made a point of attending in 2021.” Yes, it would be the same Larry Fink who was until very recently using his massive financial clout to push Net Zero except when it came to Blackrock’s investments in China. Growing hostility to BlackRock’s posturing in American energy-producing states “led the world’s largest asset manager to embark on a PR-campaign to try to dispel any notion it’s withholding support for oil and gas. In a recent statement, BlackRock said ‘we do not boycott the energy industry’ and pointed to $170 billion in investments in US public energy companies as proof.” Us boycott fossil fuels? Wherever did you get that idea?
If Blackrock really is climbing down in response to pushback from US states maybe Canadian provinces could learn a lesson, but maybe Canadian banks and industries could too. Many in the corporate sector are tempted to rally round the white flag, insisting for instance that “The Facts: Banks investing in Canadian oil and gas means investing in responsible, low-emissions-focused energy”. But once you admit your product sets the planet on fire, it’s remarkably hard to get permission to produce or sell it, or get your equally woke or craven counterparts in the financial sector to help you do so (and stare down activist shareholders and even the baffled public).
But stare them down they must. As Bloomberg recently noted, “Banks Try Quiet Quitting on Net Zero/ Last year’s enthusiasm for GFANZ turns into anxiety.” One great benefit of markets is that everyone doesn’t make the same mistake simultaneously, as they far too often do in politics. If most financiers think oil is a loser, it only takes one with the opposite view to start correcting the situation, as profits flow away from the mistaken herd to the perceptive maverick. (As for mistaken mavericks, well, they go down while perceptive herds graze on the lush green grass, but there’s more where they came from.)
As for Carney, he’s down to gooblahoy like don’t heckle banks, we got them to make empty promises, and now comes the “plumbing work” whose purpose is to “operationalize those commitments into net-zero plans and transition plans.” Don’t hold your breath or you might turn not green but blue, we say. Because if you think shareholders are getting skittish, wait until a public suffering a crisis with unaffordable energy, shivering and hungry in dark apartments, discovers that you did it on purpose. That cocktail party invitation from Carney won’t look so appealing then.
Banks are also discovering Charlie Chan’s maxim that making a bedfellow of a serpent is no guarantee against snakebite. Thus “The Competition Bureau has opened an inquiry into Royal Bank of Canada’s environmental representations and marketing following a complaint last summer that the bank’s claims to be a climate leader were misleading because of its continued financing of fossil fuel projects.” Again whether through conviction, expedience, cowardice or some odd mix of the three, many banks and other companies had signed on to the notion that getting to Net Zero, in their own operations and throughout the economy, was a pretty simple business, with all these marvellous alternative forms of energy now actually cheaper than oil and gas blah blah blah. So their pledges to stop financing fossil fuels bought peace from the activists without sparking war with shareholders. And now that it's turning out to be as silly as it sounded, they’re stuck, even in some cases legally, which will not impress shareholders or indeed customers.
Here we might also cite Edmund Burke’s timeless maxim about the radical left that “Birds of prey are not gregarious” and if you think they’re your friends you quickly find them pecking at your eyes. As Robert Bradley Jr. recently wrote about the whole “Exxon Knew” conspiracy theory that Big Oil was aware that fossil fuels would ignite the planet three decades ago but lied for money:
“The problem with ExxonMobil is not what they said about climate change in decades past. It is what they are saying and doing about climate change now, a story that includes money-losing biofuels and a greenwashing/tax-credit play with carbon capture and storage. ExxonMobil touts CCS as potentially a $4 trillion market by 2050, a grandiose claim that might inspire a new-generation Exxon Knew investigation.”
Thus, he warns:
“It is past time to heed Alex Epstein and play offense, not defense…. Take the moral high ground with a better intellectual case. Trying to appease the enemy is futile. Employees, investors, board members who view oil and gas as destructive should not be part of the company.”
In the case of RBC it’s just six of the usual suspects, plus a couple of massively funded climate lobby groups (again, we deniers have all the money). Oh, and a major government body, because the bank did make pledges that in this strange world we live in bring the state and its supposedly most vocal critics into action together. As Ben Pile wrote on Substack, and if you try to Google it expect a detour, a curious feature of climate activism is that it looks like a traditional popular uprising against an entrenched Establishment, but in fact it is the Establishment. Groups like Extinction Rebellion are hand-in-glove with politicians they’re supposedly confronting while lacking any real grass-roots support. And by the way two months ago Jordan Peterson, yes the Jordan Peterson, gave Deloitte both barrels for its disastrous advocacy of Net Zero. But governments are so big, rich and generous to their friends that even massive multinational firms can make more money by tax farming than by tending to the real needs of clients, especially those in such curious occupations as “consulting.” Just as publicly funded institutions like universities can make catastrophic virtue-signalling decisions about funding, including from oil companies, garner applause from the smart set, and stick someone else with the bill.
Not all banks are craven. In a classic showdown American Congressperson from Michigan Rashida Tlaib, part of “The Squad,” heckled bankers over racism before demanding a pledge not to fund new oil and gas developments only to have one of them reply “Absolutely not and that would be the road to hell for America”. (At which point she said everyone who got student debt relief should withdraw their money, a rather ataxic piece of bullying.) And CNBC reports that a survey of CFOs in particular found that they were getting the cold robies over these kinds of profit-crushing promises whether sincere or cynical.
Here it is important to understand that while there are politicians who sincerely believe that businesses wouldn’t know an investment opportunity if it jumped into their lap with their slippers, the reason banks are backing away from dumping supposedly doomed petroleum energy for the supposedly now more efficient alternatives (a claim RBC has endorsed, incidentally, when you wonder why they didn’t quietly invest in it instead of telling their rivals) is quite simply that wind, solar and so on are not actually more efficient or anywhere close to it.
Incidentally if you ask most enthusiasts for “renewable” energy how much of it is actually wood, humans’ oldest external energy source, they probably won’t know. Industrially it’s a staggering 60% worldwide and in the U.S. it’s 21% overall while in the EU “biomass” including wood was around 2/3 of all renewables in 2017, leaving wind and solar looking pretty manky. And if any fool out there thinks burning wood doesn’t generate CO2 you should not entrust them with your retirement savings or your chemistry homework. And if you trust government estimates of efficiency over those of people with skin in the game, including on things like retrofitting homes, we are not going to trust you with our money. Just as the fact that people are doing something that is meant to be climate-friendly because they are being paid big bucks by the state to do it is no proof that it’s cost- or environmentally effective.
The banks are still covering their bases. Contrary to paranoid academic and activist fantasies, big corporations aren’t out there pulling strings, they’re trying not to offend governments or consumers. Thus, NBC reports, “The Federal Reserve announced Thursday that six of the nation’s largest banks would participate in a pilot climate scenario analysis exercise in 2023.” And they’re doing it because, everybody knows, “The potential effects of climate change – namely through rising sea levels, worsening floods and fires, and government policies transitioning away from carbon-heavy industry – could destroy trillions of dollars of assets around the globe.” Note the last risk: government policies. And here's the punchline. “Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo will undergo the exercise, which the Fed said will not have capital or supervisory consequences.” Because if they did, the banks would run away screaming, apparently.
And rightly so.