The Fed’s annual economic symposium in Jackson Hole passed without mention of climate change by Chair Jerome Powell, despite this year’s focus on structural shifts in the global economy and a summer of climate-related extremes and economic disruptions.
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Fed forgets climate risk
The Fed’s annual economic symposium in Jackson Hole passed without mention of climate change by Chair Jerome Powell, despite this year’s focus on structural shifts in the global economy and a summer of climate-related extremes and economic disruptions. Seventy civil society organizations urged the Fed to do more in an open letter arguing that climate-related impacts are outpacing authorities’ current efforts to address financial risks and highlighting the escalating costs of physical damage and growing gaps in insurance coverage. The Fed could require systemically important financial institutions (SIFIs) divest from carbon-intensive industries, incorporate climate risks into its regulatory work, and get banks to factor these risks into their stress tests.
Destruction dividend
Top U.S. energy companies last year paid out more to shareholders than they spent on new oil and gas projects for the first time. Historically, the sector has been known for running up huge debts to fuel speculative bets on ever-increasing oil and gas production. Less new oil and gas is, on the face of it, good news for climate. Unfortunately, the sector continues to lock in long-lived infrastructure inconsistent with Paris climate targets and rewards shareholders and executives at the expense of workers and communities. Government subsidies for fossil fuels also remain stubbornly high,reaching over $7 trillion in 2022.
What happened to woke?
Vivek Ramaswamy may or may not have done well in the first GOP primary debate, but one thing was clear—the whole “woke corporations” narrative was not high on anyone’s agenda. The term was mentioned only once, in passing, by Nikki Haley at the end of the night. The whole line of attack just isn’t resonating with Republicans, who continue to view restrictions on what companies can and can’t do as government overreach. Another bright spot: Ramaswamy was roundly booed when he called climate change policy a “hoax.”
BlackRock's declining support for shareholder proposals
BlackRock's backing of shareholder proposals addressing environmental and social concerns dropped for the second year in a row. The asset manager supported just 26 of 399—roughly 7%—of proposals related to climate change and social issues this year, down from 22% and 47% support for the 2022 and 2021 proxy seasons, respectively. This decline received backlash from proponents of responsible investing like NYC Comptroller Brad Lander, who accused BlackRock of caving into a "misinformed and shortsighted war against ESG at the behest of special interests."
In another corner of the BlackRock universe, the Oklahoma Public Employees Retirement System won’t be divesting from the firm for boycotting energy companies, signaling money managers are catching on to the financial perils of anti-ESG policies.