Green or greedy? How the financial sector could save the planet

How corporations hide their environmental impact and how investors can hold them to account.

Giant multinational corporations have a bad name when it comes to the environment. While they would prefer us to remember their "responsibility" schemes, those of us with more than half an eye on the news are more likely to think of coal-fired power stations, oil-funded "scientists" and government lobbying. Yet when it comes to climate change, it is remarkable how little we know about what the world's largest companies are doing.

Less than half of Europe's 300 largest companies actually disclose complete verified data on their greenhouse-gas emissions, according to areport released this week by the UK-based independent non-profit research body the Environmental Investment Organisation (EIO). Moreover, over one in ten gives no information at all.

While the general trend is to greater corporate transparency, it is clear that there is a great deal of work to be done. The EIO hopes that by publicly ranking companies by their emissions and transparency, it will put pressure on the worst offending corporate giants.

However, public awareness alone is unlikely to make corporations clean up their act. Despite the hard work and success of groups such as Greenpeace and Friends of the Earth, we are still pumping greenhouse gases into the atmosphere at a rate that, if continued, will bring untold harm to society.

Co-ordinate your response

This is where the financial sector could help save the day. Time after time, governments fail to reach binding international agreements on emissions. Moreoever, even if all the relevant countries met the targets set by the (non-binding) Copenhagen Accord, this would still imply a dangerous temperature rise of between 2.5° and 5°C before the end of the century.

If governments cannot take the rapid action we need to avoid dangerous climate change, a co-ordinated private-sector response is needed. What better way to do this than through stock markets, operating across borders and without the need for lethargic governmental mandate?

Much of what the world's listed companies do is controlled ultimately by the stock market and those who invest in it. These companies also produce many of the environmentally damaging goods and services we consume. The EIO is aiming to use its emissions rankings to create new types of financial products that harness the western model of shareholder capitalism to drive emissions reductions.

The idea is simple: subtly modify where large, mainstream investors put their money to alter the supply and demand for different companies' shares according to their carbon emissions. The EIO's forthcoming Environmental Tracking Index series will be based on a conventional index fund, tracking stock-market performance to attract enough investors, but reweighted according to each company's emissions and transparency to give it clear incentives to reduce its footprint and be open to public scrutiny.

If the past 25 years have taught us anything, it is the power of financial markets. To many, particularly on the left, this is reason enough to distrust them. However, given that they exist, we can use them to our advantage, to hold corporations to account and build a greener, more open society.

We need to take hold of whatever resources are available to refashion our present, unsustainable means of production. The tools we need are right before our eyes.

Oliver Willmott is an analyst at the Environmental Investment Organisation and co-author of the ET Europe 300 Carbon Rankings Report 2011.

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Why the Liberal Democrats by-election surge is not all it seems

The Lib Dems chalked up impressive results in Stoke and Copeland. But just how much of a fight back is it?

By the now conventional post-Brexit logic, Stoke and Copeland ought to have been uniquely inhospitable for the Lib Dems. 

The party lost its deposit in both seats in 2015, and has no representation on either council. So too were the referendum odds stacked against it: in Stoke, the so-called Brexit capital of Britain, 70 per cent of voters backed Leave last June, as did 62 per cent in Copeland. And, as Stephen has written before, the Lib Dems’ mini-revival has so far been most pronounced in affluent, Conservative-leaning areas which swung for remain. 

So what explains the modest – but impressive – surges in their vote share in yesterday’s contests? In Stoke, where they finished fifth in 2015, the party won 9.8 per cent of the vote, up 5.7 percentage points. They also more than doubled their vote share in Copeland, where they beat Ukip for third with 7.3 per cent share of the vote.

The Brexit explanation is a tempting and not entirely invalid one. Each seat’s not insignificant pro-EU minority was more or less ignored by most of the national media, for whom the existence of remainers in what we’re now obliged to call “left-behind Britain” is often a nuance too far. With the Prime Minister Theresa May pushing for a hard Brexit and Labour leader Jeremy Corbyn waving it through, Lib Dem leader Tim Farron has made the pro-EU narrative his own. As was the case for Charles Kennedy in the Iraq War years, this confers upon the Lib Dems a status and platform they were denied as the junior partners in coalition. 

While their stance on Europe is slowly but surely helping the Lib Dems rebuild their pre-2015 demographic core - students, graduates and middle-class professionals employed in the public sector – last night’s results, particularly in Stoke, also give them reason for mild disappointment. 

In Stoke, campaign staffers privately predicted they might manage to beat Ukip for second or third place. The party ran a full campaign for the first time in several years, and canvassing returns suggested significant numbers of Labour voters, mainly public sector workers disenchanted with Corbyn’s stance on Europe, were set to vote Lib Dem. Nor were they intimidated by the Brexit factor: recent council by-elections in Sunderland and Rotheram, which both voted decisively to leave, saw the Lib Dems win seats for the first time on massive swings. 

So it could well be argued that their candidate, local cardiologist Zulfiqar Ali, ought to have done better. Staffordshire University’s campus, which Tim Farron visited as part of a voter registration drive, falls within the seat’s boundaries. Ali, unlike his Labour competitor Gareth Snell and Ukip leader Paul Nuttall, didn’t have his campaign derailed or disrupted by negative media attention. Unlike the Tory candidate Jack Brereton, he had the benefit of being older than 25. And, like 15 per cent of the electorate, he is of Kashmiri origin.  

In public and in private, Lib Dems say the fact that Stoke was a two-horse race between Labour and Ukip ultimately worked to their disadvantage. The prospect of Nuttall as their MP may well have been enough to convince a good number of the Labour waverers mentioned earlier to back Snell. 

With his party hovering at around 10 per cent in national polls, last night’s results give Farron cause for optimism – especially after their near-wipeout in 2015. But it’s easy to forget the bigger picture in all of this. The party have chalked up a string of impressive parliamentary by-election results – second in Witney, a spectacular win in Richmond Park, third in Sleaford and Copeland, and a strong fourth in Stoke. 

However, most of these results represent a reversion to, or indeed an underperformance compared to, the party’s pre-2015 norm. With the notable exception of Richmond’s Sarah Olney, who only joined the Lib Dems after the last general election, these candidates haven’t - or the Lib Dem vote - come from nowhere. Zulfiqar Ali previously sat on the council in Stoke and had fought the seat before, and Witney’s Liz Leffman and Sleaford’s Ross Pepper are both popular local councillors. And for all the excited commentary about Richmond, it was, of course, held by the Lib Dems for 13 years before Zac Goldsmith won it for the Tories in 2010. 

The EU referendum may have given the Lib Dems a new lease of life, but, as their #LibDemFightback trope suggests, they’re best understood as a revanchist, and not insurgent, force. Much has been said about Brexit realigning our politics, but, for now at least, the party’s new normal is looking quite a lot like the old one.