Equilibrium & Sustainability

Equilibrium/Sustainability — GOP to go after ESG investing if they win Congress

U.S. Capitol
Greg Nash
The U.S. Capitol is seen from Upper Senate Park on Friday, September 30, 2022.

The Republicans have announced plans to investigate what they see as “woke capitalism” if they retake Congress — by targeting Wall Street firms that treat climate change as an economic risk. 

“My view is that ESG investing is a cancer within our capital markets,” Rep. Andy Barr (R-Ky.) told The Washington Post, referring to environment, social and governance-focused investing funds. 

Such funds are “a fraud on American investors,” Barr added. GOP members of the up-for-grabs Senate are pushing for legislation that penalizes corporations for prioritizing ESG goals over purely financial aims. 

Lawmakers in the House introduced a bill earlier this month that would prohibit the Department of Labor from considering ESG factors in deciding between pension plans, according to Pensions & Investment magazine. 

But for firms looking down the barrel of regulatory and climate risk, the difference between sustainability and profitability is an increasingly meaningless distinction — raising the possibility that the GOP push is simply “political hay making,” Ivan Frishberg of Amalgamated Bank told the Post. 

“But I don’t think this is changing what asset managers or banks are doing in terms of …their stewardship of assets in a changing climate,” Frishberg added. 

A primary driver behind the anti-ESG effort appears to be the fossil fuel industry, which has fought to weaken the new climate disclosure rules proposed by the Securities and Exchange Commission.  
“Banks and investors should not use ESG as a premise to just discriminate categorically against an entire sector,” Aaron Padilla, a vice president at the American Petroleum Institute, told the Post. 

The accusations of a fossil fuel boycott has caused the enormous asset manager BlackRock to roll out a new site in October to argue that it does no such thing

Welcome to Equilibrium, a newsletter that tracks the growing global battle over the future of sustainability. We’re Saul Elbein and Sharon Udasin. Send us tips and feedback. A friend forward this newsletter to you? 

Today we’ll check out the U.K.’s latest about-face on the United Nations climate summit, followed by a look at some suspicious evidence of illegal fishing on the high seas. Plus: Why investors just spent $2 billion on a forest. 

UK prime minister to attend COP27

British Prime Minister Rishi Sunak confirmed on Wednesday that he will attend next week’s United Nations climate summit — reversing course just days after he said he was skipping the meeting, our colleague Zack Budryk reported for The Hill.  

Sudden U-turn: “There is no long-term prosperity without action on climate change,” Sunak tweeted Wednesday.  

  • “There is no energy security without investing in renewables,” he continued.  
  • “That is why I will attend @COP27 next week: to deliver on Glasgow’s legacy of building a secure and sustainable future,” the prime minister added. 

Initial hesitance: Just after Sunak took office last week, a spokesperson for the prime minister said he would not attend the U.N. Climate Change Conference (COP27).

  • The summit is set to begin in Sharm El Sheikh, Egypt, on Sunday. 
  • Sunak’s office had cited “pressing domestic commitments,” including an upcoming budget deadline. 

Under pressure: But amid wide-ranging pushback, Sunak’s office indicated on Monday that he was reconsidering his previous decision, as we reported.  

  • Political opponents had jumped on Sunak’s initial announcement that he would skip the summit. 
  • Alok Sharma, the British president of last year’s climate summit (COP26) in Glasgow, also agreed that the prime minister should attend.  

Could the king now also attend? Sunak’s announcement may also open the door for King Charles III — whom Downing Street had told to stay home — to attend the summit, The Guardian reported.  

Sharma, meanwhile, said he was “delighted” by Sunak’s reversal, according to The Guardian. 

Fishing vessels may be hiding illegal activity

Researchers have identified tens of thousands of events in which fishing vessels have disabled their tracking devices — potentially to cover up unlawful activity.  

Legitimate versus cover-ups: Harnessing data from the shipboard Automatic Identification System — created as a collision avoidance tool — the scientists have homed in on what they believe may be illegal, unreported and unregulated fishing activity.  

  • While some disabling events may occur for legitimate reasons, others appear to be attempts at illegal cover-ups.  
  • The researchers published their findings on Wednesday in Science Advances.  

Millions of hours of hidden activity: The researchers said they spotted more than 55,000 suspected intentional disabling incidents from 2017-2019.  

These events obscured nearly 5 million hours — about 6 percent — of fishing vessel activity, according to the study. 

Suspicious behavior: The scientists uncovered two specific situations in which the disabling occurred “for potentially nefarious reasons,” lead author Heather Welch, of the Institute of Marine Sciences at the University of California Santa Cruz, said in a statement.    

  • Such reasons likely involved fishing in unauthorized locations or obscuring unauthorized transshipments, according to Welch.  
  • “The data are produced in real time, so it can be used to target inspections and improve fisheries management,” she added.  

Problematic places: More than 40 percent of the total hours obscured by suspected disabling occurred in four hotspots, the scientists found. 

  • Three of those hotspots are areas of concern for illegal fishing: the Northwest Pacific and two other areas near the exclusive economic zones of Argentina and West African countries.  
  • These zones contain rich fishing grounds and have limited oversight.  

And the fourth hotspot? The culprits in these cases were U.S. trawlers disabling in U.S. waters off the coast of Alaska.  

Rather than conducting illegal activity, these ships were likely “hiding from competitors,” according to Welch. 

Unmasking hidden details: “We might not always be able to see what vessels are doing,” coauthor Tyler Clavelle, a data scientist at the nonprofit Global Fishing Watch, acknowledged in a statement.   

“But knowing when they’re intentionally hiding their movements provides valuable information that managers and scientists didn’t have before,” Clavelle added. 

Investment firm buys nearly $2B in trees

A Wall Street company is betting nearly $2 billion on a climate-saving technology that is both cutting-edge and potentially lucrative: trees, The Wall Street Journal reported.

  • Oak Hill Advisors — a subsidiary of T. Rowe Price — is mostly known for buying up corporate debt. 
  • But it is now leading a consortium to buy up 1.7 million acres of forest for
    $1.8 billion. 

That investment is part of a new wave of broad interest and funding of forestry. 

Market opportunity: In doing so, Oak Hill hopes to build a rich storehouse of assets that can be sold to polluters participating in regulated carbon markets, like California’s cap-and-trade system. 

An immediate growth opportunity exists in so-called “voluntary carbon markets,” in which companies can buy into carbon reduction schemes at levels above those required by their governments. 

Oak Hill could sell to companies that might want to use the credits — created as the growing trees pull carbon dioxide from the atmosphere — to offset investor concerns about their emissions levels or as a marketing tool to deflect a public relations hit around greenhouse gas emissions. 

Contracting out: Oak Hill is partnering with Houston-based environmental services company Anew to oversee its 56 new properties, which are mainly hardwood deciduous forests east of the Mississippi, according to the Journal. 

  • Many of these properties are so-called working forests income has traditionally come from logging. 
  • Anew plans to scale down logging levels to 10 to 20 percent — down from prior levels of 80 to 90 percent — in favor of growing a longer-term investment. 

Those involved in the effort say they are looking at the issue in terms of “decades, not years.”

Long-term bet: With carbon markets still a relatively young phenomenon, Oak Hill is aiming to let its new investments vest.

  • In May, for example, the London Stock Exchange Group announced a new trading market for carbon funds, according to a statement issued at the time. 
  • “Ultimately, creating a balance sheet of these assets should be valuable because everyone else has it on the liability side,” Adam Kertzner, an Oak Hill senior partner, told the Journal. 
  • Kertzner was referring to the considerable emissions most companies will have to eliminate or offset, a need far larger than the available supply of high-quality credits. 

More investment needed: The worlds of forestry, finance and tech are increasingly converging, industry experts told cleantech news site Greenbiz. 

  • Further investment could unleash a flood of “natural tech,” Angeline Chen of coral reef protection nonprofit Global Coralition told the audience at a clean energy conference last week.  
  • A primary problem concerns high-tech limitations — it is hard to define and measure how much carbon a forest has stored or lost. 

Don’t delay: “I feel like too often we kind of wait for the perfect measurement, we wait for the perfect definitions, we delay action, and everybody points at each other and nothing changes,” Martha Stevenson, director of forestry research and strategy at the World Wildlife Fund, told Greenbiz. 

“Don’t wait for perfect numbers — just get started,” she added.

Daylight saving time could reduce deer-car collisions

The permanent imposition of daylight saving time would lead to dramatically lower rates of collisions between cars and deer, a new study has found. 

The change to a permanently later sunset would save more than 30 human lives, more than 30,000 deer lives and nearly $1.2 billion per year, according to the study, published in Current Biology.

Dramatic difference: By analyzing more than a million deer-vehicle collisions, the team found that collisions are 14 times more likely in the two hours after sunset than before. 

And the week following the “fall back” to standard time sees a 16 percent uptick in the crashes.

  • “It surprised me how striking this pattern was, of how much more likely deer are to get struck in the hour or two after darkness,” first author Calum Cunningham of the University of Washington said in a statement.
  • “This one-hour shift in human activity could have such a significant effect,” Cunningham added.  

Didn’t this happen? Sort of. Last year, the Senate voted unanimously to pass the Sunlight Protection Act of 2021, which made daylight saving time permanent. But the bill has been in limbo in the House.

Water Wednesday

Winter is coming in the U.S. West, Ian’s damage to Florida waterways could last for months and why Germany is calling for deep-sea mining to halt before it’s even begun. 

Snow in store for U.S. West 

  • A storm system coming in from Canada is expected to bring snow to all
    11 Western states
     over the next two days, as well as a tornado threat to the South, CNN reported. The Sierra Nevada region will likely receive from 1 to
    4 inches of snow, while the Rockies will be hit hard as the cold front moves east, according to CNN. 

Florida’s waterways could stay contaminated for months 

  • In the aftermath of Hurricane Ian, residents are concerned that Florida’s waterways could remain contaminated for months, The Washington Post reported. Weeks after Ian’s departure, hundreds of pollution reports — most linked to sewage system leaks — have been filed to the state’s environment agency, according to the Post. 

Germany says ‘nein’ to undersea mine 

  • Germany is calling for a “precautionary pause” on all deep-sea mining until the there is sufficient research and regulation to ensure that the marine environment “is not seriously harmed,” a national representative wrote in a statement to the U.N. Costa Rica, New Zealand, Chile and Spain have made similar proposals, but Germany is the largest economy to call for a pause. 

Please visit The Hill’s Sustainability section online for the web version of this newsletter and more stories. We’ll see you tomorrow.

Tags Alok Sharma Andy Barr daylight saving time Hurricane Ian Rishi Sunak Sustainability

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