The idea of this column was to share a thought or two every month, vaguely pegged to business, economics or politics, and more often how the three things are inextricably linked. It wasn’t supposed to be a monthly spin on climate change, but of late it seems to be difficult to separate business from climate change and the action to halt or reverse it, and that has to be a good thing.
It was business, after all, that turbo charged the economy that inadvertently is damaging our planet. The profits you can make from digging up and burning fossil fuels, the production of bigger and bigger cars, the insatiable appetite of our species for the acquisition of shiny things and the increased demand for power when we want to plug them in, all were motivated by someone, somewhere reckoning they could make a decent living out of stimulating the demand, then fulfilling it.
It is also business that will be the key driver if we are to get ourselves out of this mess.
New Years Day on 2020 showed us an awful glimpse of the future. The population of planet Earth normally welcomes in the new year with images of Sydney Harbour’s iconic landmarks ringed by fireworks as we wait for the clock to strike 12 in whatever part of the world we are. This year the fireworks were there again, but against the backdrop of protest, and a fiery display of another, more menacing kind. 4,000 people saw in the new year on the beach in the Victorian coastal resort of Mallacoota. The town on fire and the roads cutoff. Emergency services advised that if they sounded their sirens, it was no longer safe to be on the beach and they should seek a last refuge in the sea. It mercifully didn’t come to that, not quite, but the media was flooded with images of huddled masses and their animals, on the beaches wearing breathing masks under darkened midday skies, lit only by a post apocalyptic red glow from the bushfires advancing on the town.
It’s difficult to appreciate the scale of these fires, 26 million acres burned so far, about 10 times bigger than the 2018 fires in California, twice the area burned in the Amazon last year, estimates of 800 million animals killed and a high chance that some species on the margins will have been pushed into extinction when the smoke clears, and the fire season hasn’t really even got started yet. Some say that this is the new normal, many more say it’s going to get much worse. Australia is about 1.4 degrees warmer than pre industrial norms, and in the unlikely event that the world hits all of its carbon reduction targets we will still be expecting a 3 degree warming by the end of this century. Hot dry places like large parts of Australia, Africa and possibly even southern Europe will effectively become uninhabitable in economic terms. You might be willing to rebuild your home, replant your crops or restock your herds every 20 years, but every 2 or 3? You would just pack up and move somewhere else, if you have the choice. The Australian public took to the streets to protest against Prime Minister Scott Morrison, a climate change sceptic and defender of the country’s coal industry. Around the world Hollowood stars, sports stars and all the rest pledging money and support for action to change. It felt to many like climate change’s 9-11. The defining event that makes you feel that something has changed forever.
That change, arguably one of the most important days so far in the climate change movement, came a few weeks later.
Larry Fink is the boss of Blackrock. If you have never heard of him or his company I can virtually guarantee you that if you have an insurance policy, a pension, a mortgage or a few quid tucked away for a rainy day, that Blackrock is looking after a bit of it for you. They are the world’s largest asset manager. They manage an eye watering $7 trillion of assets. They advise some of their clients what to invest in, you can buy into their investment funds and they vote on their shares at corporate AGM’s, shaping the policy and direction of these companies. Previously their prime motivation was to increase the value of their client’s investments, with little or no regard to what the companies invested in were up to, as long as it was legal.
In January Fink announced a major shift in Blackrock’s policy, putting sustainability at the heart of it’s strategy. Fink spoke of a ‘fundamental reshaping of global finance sooner than most anticipate’, and you can bet that if the world’s biggest asset manager moves in this direction, there will be a stampede to follow them.
Many still criticise Blackrock saying this does not go far enough, and sure, they have a while to go before you can even think of calling their climate change record squeaky clean, but make no mistake, this is a massive shift in direction. In practical terms, thanks to this, investment capital is going to favour new solutions, green technologies and renewable resources, turbo charging the speed of innovation. It will gradually disinvest from the old, polluting technologies forcing them to reform, it will vote in a sustainable way on its shareholdings steering corporate policy in a more sustainable direction.
If humans do ultimately reverse climate change by reshaping the global economy then January 2020 may well be the month that we look back on as the time the world said ‘enough’. Let’s hope so.
Phill McCoffers Islander February 2020