Hi and welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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Denmark goes Dutch
With about 40 days left until COP27 (deep breaths), the focus remains on loss and damage – a demand by vulnerable nations to create a new multilateral fund to compensate for climate impacts. Last week, Denmark became the first wealthy UN member to promise $13 million for loss and damage, which is laudable, with the caveat that a third of the money will go to InsuResilience Global Partnership, a program where private companies provide disaster insurance. As one Sierra Leone activist noted, it’s hard to buy insurance when you can’t afford to eat.
The US meanwhile continues its long tradition of obstruction on the subject. John Kerry bristled at being asked about US responsibility for loss and damage at a NYC Climate Week event. “Where's the money coming from?” he asked. Which, to be fair, is a challenge. “You can't just set up a [funding] facility in six weeks. Let's be serious about this.”
But that is completely unfair. Some of us were not born when the Alliance of Small Island States first called for a workable plan – in 1991. You can read about more recent proposals and context in this New Republic story. And if you’d like to chat more about loss and damage or COP27 storylines in general, do reach out. A few of us will be on the ground in Egypt.
Carney carnage
Last week, major US banks including JPMorgan Chase, Morgan Stanley and Bank of America threatened to leave the Glasgow Financial Alliance on Net Zero. JP Morgan is the world’s largest funder of fossil fuels, and its plan for achieving net zero is, at best, in need of some work. But it’s not just that they’re not doing enough to achieve climate targets that has them running for the hills – it’s that they might face real legal consequences for missing them. After thirty years of corporate commitments without consequence, you might think this was a good thing. The exodus may have already begun, with two pension funds becoming the first institutions to quit the alliance.
We’ve heard from insiders that a compromise can be reached, but as law firm DLA Piper points out, this isn’t just about Mark Carney’s club. “Should your company come to the unfortunate realization that its net-zero predictions may not come true,” they say, “immediate action is necessary to minimize FTC exposure. Additionally, you should engage your public relations team to help manage any fallout.”
If you’re a giant bank that’s going to miss climate targets feel free to reach out. We’re here to... help.
Oil and gas firms ride bailout to bigger profits
You heard it here first! BailoutWatch, the watchdog that tracks how fossil fuels are cashing in on federal stimulus money, will release a new analysis Thursday outlining how COVID-era bailouts are powering the recent, sharp recovery of oil and gas profits and stock prices. It finds 48 companies out-earned their peers in the first half of 2022 after receiving $6.6 billion in taxpayer money. Reach out to Shravya (sjain@climatenexus.org) for an embargoed copy.
Vivek gets social
Strive’s Vivek Ramaswamy is back making news on a press tour for his new book, straying outside of his anti-climate push and towards other social issues. Last week, he called out Apple and Disney on their ‘woke agendas’, urging them to ignore political debate and refrain from making hiring decisions based on DEI considerations. He also launched a new fund, the Strive 500 ETF, which will target companies' social agendas through shareholder engagement.
This all comes as retiring Sen. Pat Toomey requested ESG rating firms to disclose their methodology on how they assign corporate ratings, and called on banks to stop "embracing a liberal ESG agenda that harms America."
Time to DTR
An AP investigation finds that leading private equity firm Carlyle has been claiming to be better on climate than the rest of its PE peers, while conveniently neglecting to account for the emissions of its largest oil and gas investment. NGP has accounted for about 8% of Carlyle's total earnings over the last five years, yet appeared only as a footnote in the firm’s regulatory filings. Carlyle claims the relationship is only passive. No wonder it flunked a recent rating of private equity firms’ climate risks.
On our radar
IEEFA’s recent report warned potential buyers of West Virginia's Pleasants coal-fired power plant to steer clear. We’re looking at you, private equity.
