Climate change

The politics of climate change and ESG are about to get ugly


Twenty-two will bring another election to the United States, a blessing bestowed on Americans every 24 months. There will be the usual basket of questions to debate – or, at least, to overthrow the opposition with whatever it takes. We’ll hear about the economy, jobs, immigration, wages, vaccines, healthcare, housing, guns, abortions and – wait – climate change and ESG.

Yes, climate and mandatory ESG reporting will be on the ballot in dozens of states and localities – not necessarily directly but as part of an effort orchestrated by the conservative right to thwart, and possibly reverse, efforts to transition to a low-carbon and fair economy. economy.

It defies logic: creating jobs, fostering innovation, and leveraging market forces are all ribbed Republican values. And yes, decarbonizing the economy will require some regulatory oversight as well as subsidies and financial incentives, albeit only a fraction of the subsidies that have existed for fossil fuels for decades. (Centuries, in fact, according to this study.) Along the way, there will be stranded workers who will need to be retrained or taken care of, although there will likely be many more new jobs created, including jobs. well-paid union members, in every US state.

No one said transforming our economy would be easy or painless.

So what is the problem? As far as I know, it’s a continuation of the conservative messaging machine that has long since turned environmentalism, Al Gore, climate change, renewables and pretty much the color “green” into scarecrows that can rally the viewers, voters and donors. Add to that the organizational ecosystem that helps conservatives shape state laws to suit their interests, fabricated culture wars aimed at dividing right from left, and Republican dominance of the judiciary and state legislatures.

No one said transforming our economy would be easy or painless.

Additionally, tackling climate change has become a key objective of the Biden administration, let alone that of almost every other democratic nation. So, naturally, Republicans are against it, even if their opposition is against the interests of their constituents.

Welcome to the “next corner problem,” as Politico has described it.

Ironically, this comes at a time when a small body of Republicans have finally recognized that the climate crisis is real and potentially devastating, and that denying or ignoring it may no longer be politically tenable. They support renewable energy and electric vehicles, although they are a voice in the wilderness.

“Just as the GOP’s clean energy champions find their place, the party’s culture warriors, led by climate change skeptic Donald Trump, brace for mid-term primary battles that could spark the effort. right off the bat, ”Politico’s Lorraine Woellert, Ben Lefebvre and Ryan Heath wrote last month.

Last week, The New Republic revealed another part of the strategy, courtesy of the American Legislative Exchange Council (ALEC), an organization of conservative state lawmakers that drafts model legislation its members can introduce into their states.

The newest bogeyman: something called “Critical Energy Theory,” a term that is, at best, mind-boggling in meaning, but clearly intended to capitalize on the fabricated outrage against the “Critical Energy Theory”. the critical race, ”which has become a topic of 24/7 discussion among some conservative media spokespersons.

At the CEFTA 2021 state and nation policy summit earlier this month, the group

voted to support “two model laws that describe climate policy – even climate policy that doesn’t yet exist – as unfair discrimination against fossil fuel companies,” according to Kate Aronoff, editor of New Republic. One of them, she wrote, is the “Energy Elimination of Discrimination Act,” which orders states to draw up a list of entities that are supposed to boycott fuel companies. fossils, explicitly citing the banks which “increasingly deny financing to solvent fossil energy companies solely for the purpose of decarbonizing their loan portfolios and marketing their environmental credentials”; institutional investors who “disengage from fossil fuel companies and pressure companies to commit to the Paris Agreement target of reducing greenhouse gas emissions to zero. ‘by 2050’; and significant investments that “collude to force energy companies to cannibalize their existing businesses”.

Thus, forward-thinking banks, energy companies and institutional investors may find themselves in the crosshairs of the radical right. And they may find themselves hampered in their ability to divert capital away from polluting technologies and businesses, to those working to create a carbon-free, net-zero economy.

And what about “regular” businesses – maybe yours? – who are committing to phase out their use of fossil fuels? Will they find themselves penalized or annoyed for “unfair discrimination against fossil fuel companies”? And will all this trigger on both sides a wasp nest that could drag on for years and slow down the march towards progress?

So much for free market capitalism.

Like I said, it’s not just the weather. Last fall, in anticipation of new US Securities and Exchange Commission mandatory ESG reporting rules, Republican lawmakers stepped up attacks on companies that publicly adopt such issues.

According to the roll call,

The GOP’s opposition to more corporate ESG reports doesn’t have much of a chance of success in a Democratic Congress, but some experts say their efforts underscore the important issues in the regulatory battle and offer insight into the long Republicans’ game before the midterm of next year. elections.

On the sidelines

All of this is meant to intensify the pressure on companies and their lobby groups to leave the sidelines and step into the game.

For decades, it was prudent for corporate government affairs teams to remain silent on sustainability topics. On the priority list for their lobbyists, they simply weren’t selected. And there was little to no reputation penalty for inaction. At the most, they could be criticized for the mismatch between their corporate sustainability goals and their membership in trade associations – the United States Chamber of Commerce, the National Association of Manufacturers – which were in turn climate deniers. or simply voted to maintain the status quo.

This is changing, albeit slowly. Nonprofits such as Ceres or ClimateVoice (where I am an unpaid advisor) are working to make companies less sure to remain silent on these issues. But it’s a chore: persuading employees, customers, investors and others to get companies to speak out on sustainability issues requires resources and political capital that companies seem unwilling to provide. spend.

So what will it take for the private sector to take a stand on these issues, ensuring that all the benefits of a clean economy – jobs, decarbonization, innovation, new business opportunities – are realized and those who want to do so? derail these efforts themselves being sidelined? What role will employees (and future employees) or customers play to push companies to act? Will institutional investors take over? Could “climate action” shareholder resolutions become a new trend during proxy season next year?

This is destined to be one of the most interesting and potentially disturbing stories of 2022. Brace yourself.

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