The Angry Clean Energy Guy on pretty much everything you need to know about ESG, starting with the need to be very suspicious whenever you see an ESG label on an investment product. ESG has become a huge business, with one dollar out of every 3 professionally managed dollars in the US for example labelled “ESG” (and an even greater proportion in Europe). The trend is clear and pretty much 100% of funds under management will have an ESG label soon. But in order for this to have a material impact in the fight for clean air, against climate change and against environmental destruction, we need global ESG standards and we need to divorce the “E” from the “S” and the “G”. Then, we need to price the “E”: Climate risk isn’t just a disclosure issue and should be priced into earnings, as should other environmental risks. Then we would have a chance to change the world.
If you want to get elected, requirement number one is to come up with a meaningless tagline while pretending everything is going pear-shaped, e.g. “Take Back Control” or “Make America Great Again.” Adopting tactics from that playbook, today’s requirement number one to continue to pollute at will (while everything is actually going pear-shaped) is to announce “NET ZERO by [insert date, the more distant the better],” then to keep polluting at will, hiding behind voluntary carbon offsets. So I am just going to come out and say it: Voluntary carbon markets should be cancelled. All of them. Corporations buying carbon offsets when not required by law, in other words voluntary carbon credits, are greenwashing. Some know it, some don’t – it doesn’t matter in any case: They need to stop. Individuals buying carbon offsets on a voluntary basis (to offset their flights or the pollution from their gas-guzzling SUVs) are mostly being abused.
Over the past year, multiple oil and gas companies have invested hundreds of millions of dollars in planting trees, or threatening to do so, to offset their greenhouse gas emissions. There are, however, several fundamental problems with what they are doing, or probably more accurately, pretending to do. First, most are planting trees to earn carbon offsets, as if they are at Church, confessed, received a penance – the carbon offsets – and were imparted absolution. But even if they could be absolved by planting trees, which they can’t, surely they can’t then go and sell that absolution to consumers, which is exactly what some of them are doing. Shell for example has an entire effort trying to get petrol car drivers to pay a premium at the pump to buy carbon offsets from Shell, at a profit. Second, generating the carbon offsets from planting trees, even if this was real (it’s not, in most cases) does not mean they can keep burning down the house. They should be decreasing their emissions, not greenwashing. Finally, not much attention is being paid to what trees are being planted, how and where. The reality is that planting trees is largely unnecessary. Far more critical is to stop global deforestation and to re-grow the global forest by preparing the ground, understanding our limitations and then getting out of the way.