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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Red trickle bad news for ESG bans
Republicans made it clear the SEC is in their post-midterm elections crosshairs regardless of the final results, but their inability to take the Senate and likely only having a very small majority in the House may put a damper on their efforts. House Financial Services Republicans already sent a letter demanding answers from SEC Chair Gensler, claiming he’s making too many rules too quickly, including one on climate-related disclosure. While a handful of Senate Republicans sent 51 law firms threatening antitrust ‘lawyer up’ letters if their clients participate in ESG initiatives, experts say they won’t stand up in court. Despite the poor election performance, it doesn’t appear to be the end of the line for GOP attacks. Fossil fuel funded ALEC released new astro-turf government blacklist legislation that is sure to be a hot topic in upcoming red-state legislatures. The only problem: ESG investing is consistent with asset managers’ fiduciary responsibilities because addressing systemic risks serves a business purpose.
Culture war jamming
Attacks on ESG form part of a wider culture war, new analysis from Graphika finds that climate deniers and general right-wing posters have fully merged audiences. Working with the Climate Action Against Disinformation's COP27 intelligence unit, Graphika mapped 13,000 tweets referencing ESG in October, and found that while climate deniers were a distinct subset of the general conservative poster network, they are now computationally indistinguishable in terms of followers and content consumed. The content with the most engagement was from Consumers' Research, the group backed by Leonard Leo, the billionaire behind the right’s anti-ESG campaign. The group also found that while the collection of pro-environment groups posted significantly more ESG content, the right-wing backlash gets considerably more engagement from social media algorithms that are built to spread salacious content – not quality. That means that environmental groups are at risk of ceding the public perception of the issue to bad faith actors amplified by social media if we don't double down on calling out both the ridiculousness of "woke capitalism" allegations, while also holding firms accountable for their climate commitments to prevent greenwashing and backsliding.
Greenwash watch
Over at COP27 in Egypt, a United Nations panel laid out best practices for firms looking to make good on their net-zero pledges and avoid accusations of greenwashing. The recommendations include such radical proposals as…wait for it…actually cutting emissions. Also, don’t build any more fossil fuels, and try not to lobby against climate policies. The blueprint may be helpful in separating the serious from the posers – already several large U.S. banks are looking to get out of commitments they made at last year’s COP. The group also suggested that countries and companies should avoid an overreliance on carbon offsets. The next day, Biden’s climate envoy John Kerry announced a new plan to encourage companies including Bank of America, PepsiCo, and Standard Chartered Bank to buy offsets associated with middle-income countries' efforts to get off coal.
Business told to get serious on gender
We thought we’d be moving away from COP with this next post, but we’re not. Also in Egypt last week, a number of finance firms, foundations, and other consultancies called on the financial community to get serious when it comes to achieving gender parity in developing climate solutions. Noting that women have far less access to capital for climate-related businesses, the group called for a greater effort to make climate financing more accessible, more consideration of gender in building policy frameworks, and a greater emphasis on gender-related metrics. Almost as if they knew it was coming, Amazon announced an effort to channel $50 million towards woman-led climate start-ups.
Reports and releases
Avinash Persaud, who works for Barbados PM Mia Mottley, released this paper on how to reform the international finance system and help developing countries borrow at lower cost
The Fed’s financial stability report explaining climate scenario analysis
International Organization of Securities Commissions’ report on voluntary carbon markets
