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22 January 2020

Leader: The limits of green capitalism

The notion that the climate crisis can be resolved through voluntary action, rather than state intervention, is an illusion.

By New Statesman

The world has perhaps just a decade left to prevent irreversible and catastrophic climate change. Each day brings new evidence of the remorseless speed with which the crisis is advancing. In Australia, the ongoing bushfires have charred an area twice the size of Belgium and affected an estimated one billion animals. In the Pacific Ocean, a marine heatwave was recently found to have caused the death of around a million seabirds.

Such events are not mere aberrations but the consequence of unprecedented warming. The 2010s were the hottest decade on record, and last year the oceans were warmer than they have been at any point in human history. The average temperature was perilously close to the 2°C rise that the UN Intergovernmental Panel on Climate Change has warned will significantly worsen the risk of droughts, food shortages, floods, extreme heat and poverty.

Yet major international institutions and corporations have continually treated the climate crisis as an afterthought rather than as an emergency. Only now is this beginning to change. In advance of the annual World Economic Forum (WEF) meeting in Davos, Switzerland, the climate crisis dominated the top five places of the organisation’s Global Risks Report, which cited the danger of extreme weather events, severe biodiversity loss and ecosystem collapse, and major natural disasters such as earthquakes, tsunamis and geomagnetic storms.

In the same week, BlackRock, the world’s largest asset manager (accounting for $7.43trn), announced that it would divest from any company that makes more than a quarter of its revenue from thermal coal and that it would demand greater disclosure from firms on their carbon emissions and climate risks. “The goal cannot be transparency for transparency’s sake,” Larry Fink, BlackRock’s head, wrote in an open letter to chief executives. “Disclosure should be a means to achieving a more sustainable and inclusive capitalism.”

The business world has awoken to the reality that the climate crisis threatens not just human lives and natural habitats but economic prosperity. Mark Carney, the out-going governor of the Bank of England, who will next month become the UN’s special envoy for climate, recently warned that pension fund investments could be rendered “worthless” if the financial sector does not act fast enough.

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But the rhetoric of Mr Fink and others is not matched by action. BlackRock’s planned divestment from fossil fuel companies would affect a mere 0.007 per cent of its assets (since it only applies to those under active management). Energy companies also trumpet their commitment to sustainability, but in 2019 just 7.4 per cent of capital expenditure by Europe’s seven largest energy firms was devoted to renewable sources.

The notion that the climate crisis can be resolved through voluntary action, rather than state intervention, is an illusion. Only governments can impose the regulation and provide the investment necessary to forge a green economy.

Yet the disparity between the scale of the threat and the global political response has only widened. Donald Trump, who denounced environmentalists as “prophets of doom” in his WEF speech, is withdrawing the US – the world’s largest carbon polluter after China – from the 2015 Paris Agreement on climate change. In Brazil, the far-right president Jair Bolsonaro last year presided over an 85 per cent increase in Amazon deforestation. And though the UK has reduced carbon emissions by 38 per cent since 1990 – a faster rate than any other major developed country – the government is forecast to miss its own targets by the middle of this decade. Ministers have floated the possibility of cutting air flight taxes even as they raise the price of rail travel – a greener alternative – by 2.7 per cent.

The cost of enduring climate change is incalculably greater than the cost of preventing it. But only sustained political will is capable of achieving the transformation required. Rarely has the need for global leadership been greater – and rarely has its paucity been more dangerous.

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This article appears in the 22 Jan 2020 issue of the New Statesman, Power to the people