When science-based reasoning fails to dislodge ideology and orthodox dogma, selfish interests and the exigency of just making money can be what it takes to jolt political intransigence.
Take energy, for example. By all appearances, big money is reducing the carbon footprint of their portfolios. Glancing recently at the comparative returns of different mutual fund types, I was surprised to see energy funds performing at the very bottom of the pack over the past one-year, three-year, five-year and 10-year periods. The 10-year total average annual return has been 0.15 percent (including re-invested dividends.)
It brought to mind the 1970s in Maine when the fir trees on the southwestern sides of all the islands were turning brown and dying — the result of the prevailing winds sending acid rain from the mainland power plants — an illustration of what poisonous air did to anything in its path. After Richard Nixon launched the Environmental Protection Agency, which mandated smokestack “scrubbers,” the brown trees came back to life within a few years.
Today, of course, the agency is doing its best to ban phrases like “climate change” and other information from its websites and documents, but we have more than just dying trees to worry about at this point.
Climate change is upon us. Unlike politicians, investment managers have lost patience and have decided not to wait until the remaining climate change deniers have bowed to the preponderance of evidence. Those managing vast amounts of money have seen enough with their own eyes — floods, hurricanes, rising seas and other evidence — enough signs that investment in carbon-based energy is in trouble. They’re effectively saying, “We care about the future of the Earth, of course, but we REALLY care about the money we’re losing today.”
A New York Times opinion piece by Bill McKibben points out that within the past month, some major investors controlling more than $5 trillion have committed to reducing their carbon holdings. This is not a response to activist students rioting on campuses. It’s just a judgment call based on money managers who are betting that the vast majority of climate scientists are probably correct.
Meanwhile, the dominos are falling all over the place. McKibben points out that Axa, the insurance giant, is divesting itself of what is approaching $1 billion in oil production and pipelines “for both ethical and business reasons.” The company’s chief executive also points out that what is not sustainable is not insurable, so there you have the power of Machiavellian interests coming into play: not just in stock prices, but insurance risk as well.
Exxon Mobil has been pressured by 62 percent of its stockholders to perform an assessment of how climate change will affect its operations.
The Bank of England reports that 237 companies with a market capitalization totaling more than $6 trillion are now backing climate-related disclosure requirements.
Environmental groups have been pressuring banks, like Wells Fargo, to stop lending to companies building, say, the Keystone Pipeline. While environmentalists have been howling into the wind for years, there’s now the leverage of consumers questioning their choices of banking relationships along with city treasuries that are yanking billions in deposits.
So, money talks. And money, by itself, may overwhelm the powerful political forces that stand in the way of what most of us (according to polls) agree should be “The Real Way Forward.”