February 27, 2023

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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…for everything else, there’s Mastercard, apparently, as the Biden administration hopes to bank on former payment-processing CEO Ajay Banga’s expertise to bring forth much-needed World Bank reform. His nomination so far has garnered mixed reactions from the climate world. Critics say he doesn’t have enough climate or public sector experience, and despite the insistence of this administration, the private sector so far hasn’t stepped up to unlock trillions of “de-risked” climate finance. Former Fed Governor Sarah Bloom Raskin suggests that, whatever happens, the focus should be on “scaling lending to help countries build resilient economies powered by clean energy” and enacting the Bridgetown Agenda for reform of the global financial system. 

As President Biden proposes quadrupling a new 1% tax on stock buybacks, Warren Buffett has entered the chat. The Berkshire Hathaway chairman and CEO’s 2023 investor letter praised the practice, calling those opposed to all buybacks either “an economic illiterate or a silver-tongued demagogue” – claiming buying back stock buybacks as good for shareholders and the country. Critics and legislators (or the “economic illiterate,” if you prefer) argue that buybacks allow uber-wealthy boards, especially of polluting industries like utilities and oil majors, to use windfall profits to aid shareholders rather than consumers and workers, while underinvesting in the energy transition. And, in the case of airlines, do all of that and then take advantage of an implicit government guarantee when they hit turbulence. 

On Tuesday, House Republicans plan to move forward with legislation to repeal a Department of Labor rule allowing pension plan managers to consider climate risk in investment decisions – a freedom that was restricted during the waning days of the Trump administration. Despite growing backlash from bankers, businesses, and constituents, Republicans are coordinating a multi-million dollar dark money effort to make ESG the next cultural rallying cry (more below). How far have the right’s anti-business, anti-free market, and anti-ESG efforts gone? Bankers are now being forced to sue lawyers to protect their freedom to address financial risk.

The Federalist Society’s Leonard Leo has poured at least $10 million into the right-wing dark money anti-ESG campaign through the Marble Freedom Trust after receiving $1.6 billion in funding from Chicago billionaire Barre Seid. The Trust has granted millions in funding to Consumers’ Research, the Heritage Foundation, the State Financial Officers Foundation, and the American Accountability Foundation to coordinate anti-ESG legislation, provide talking points to officials, and run attack ads “to crush leftist dominance in this arena.” With majors like Vanguard backing off net-zero targets, financial advisors are growing concerned with the politicalization of ESG. As Illinois House Rep. Sean Casten noted, “Republican opposition to ESG is rooted in fear of a world less dependent on oil and gas producers. When you’re not happy with how capitalism is working, you tend to call it ‘woke.’”

• How Climate Change Can Impact Your Finances 
• CalPERS Fossil Fuel Divestment Bill Hinges on Union Support 
• Activists demand AIG rule out support for East African Crude Oil Pipeline

• Mar 1: U.S. Senate Committee on the Budget - Rising Seas, Rising Costs - Climate Change and the Economic Risks to Coastal Communities.
• Mar 2: Proxy Season 2023: tools and resources from the PRI on voting and collaboration. Register here.
• Mar 2: 2023 Europe and UK Proxy Season Preview by Glass Lewis. Register here.
• Mar 22-24: Join Ceres Global and industry leaders from high-emitting sectors to examine what’s needed to transition to a more stable, just, and climate-resilient economy. Register here.

Thanks for reading! Tips, feedback, or questions? Reply to this email. 

– Tan Copsey, Katharine Poole, Steve Hargreaves, Jayson O'Neill & Shravya Jain-Conti