The THREAT of ‘sustainable finance’
IF CLIMATE RISKS WERE QUANTIFIABLE, AND LIKELY TO HAVE A MATERIAL IMPACT, THEY WOULD ALREADY BE INCORPORATED INTO FINANCIAL REPORTING
This week, the Canadian Association of Petroleum Producers, CAPP, holds its Scotiabank Energy Symposium in Toronto. The symposium is designed to bring the industry together with investors. It will be intriguing to see how much discussion — if any — there is about “sustainable finance.” Never heard of the concept? Well, consider the following.
It is 2028. We have come a long way since “the dark years preceding the grand transition,” when the global financial system had been pushing the world towards the climate precipice by investing in fossil fuels. The Fundamental Principles of Sustainable Finance were finally adopted at the UN Summit on Global Financial Governance in 2025. Despite “some last resistance from a few jurisdictions,” financial regulators and standard setters now acknowledge that “the purpose of the finance system is to serve the needs of sustainable development.”
A worldwide “clean air” campaign has led to the mass deployment of electric vehicles financed by “blockchain-assured green bonds.” Unspecified climate problems have led to the downgrade of an unnamed sovereign bond, in the wake of which governments, investors and credit rating agencies introduced a trillion-dollar program “that invested upfront in real resilience.” Carbon-intensive companies have been sued into submission by a “seemingly endless series of legal cases.” Stocks and bonds that don’t meet UN standards have been dismissed from stock indices, although this reportedly led to a “transition tantrum.” Meanwhile “rapid dietary change” has resulted in the stranding of fishing and agriculture assets. There are now Nobel Prizes in sustainable economics. Green infrastructure is being go fund-me’d. Sustainable finance rules.
I’m not making this up. The above scenario comes from a 2017 report, “Making Waves,” by the United Nations Environment Program, UNEP. Normal people might be inclined to write it off as the impossible dream/nightmare of wonkish far-left global governors, but sustainable finance has been embraced by Canada and many other countries, and is being promoted by a powerful cabal of regulators, billionaires, capitalist foundations and environmental non-governmental organizations, ENGOS. Its point man is Mark Carney, governor of the Bank of England, head of the Financial Stability Board, FSB, and former governor of the Bank of Canada. Its most prominent billionaire supporter is media mogul Michael Bloomberg.
Sustainable finance is a key weapon in the supposedly inevitable “transition to a low-carbon economy.” As such it represents a particular threat to Canada, where demonization of “dirty” oil has already resulted in pipeline delays and capital flight. Its suite of tactics include “voluntary” corporate disclosure to ENGO overseers of greenhouse gas emissions, along with showtrial-like confessions of what worst-case weather scenarios might look like. This is linked to engo-masterminded campaigns of pressure on investors to divest fossil fuel assets. Then come engo-initiated climate lawsuits, along with co-opting of regulators.
However, the inconvenient truth for the shock troops of climate finance is that if climate risks were quantifiable, and likely to have a material impact any time in the foreseeable future, they would already be incorporated into financial reporting. Also, if there were profits to be made in renewable energy and climate resilient infrastructure, investors would not need to be “crowded in” by scare tactics.
Sustainable finance, like all parts of the un global governance agenda, has spawned a plethora of institutions, processes, studies, initiatives and funding mechanisms, all of which tend to operate well out of the public view.
In the next month or so, a federally-appointed expert Panel on Sustainable Finance is due to deliver a final report. Set up by Ottawa early in 2018, the panel delivered an interim report last fall which received virtually zero media coverage. The chairman of the panel is Tiff Macklem, dean of the university of Toronto’s rotman School of Management and former number two to Mark Carney at the Bank of Canada. Its other members are Andy Chisholm, a board member of the royal Bank of Canada; Kim Thomassin of the Caisse de dépôt et placement du Québec; and Barbara Zvan, from the Ontario Teachers’ Pension Plan.
When the panel was announced in April of 2018, it was sold as being all about helping Canada tap into a “trillion-dollar opportunity from clean growth and climate action” and creating “good jobs for Canada’s middle class.” Nothing was said about killing fossil fuels.
The exercise kicked off with a “round table discussion” hosted by Catherine Mckenna, minister of environment and climate change, and Bill Morneau, minister of finance. The star attendee was Mark Carney.
Shortly before the Paris climate meeting in 2015, Carney gave a major speech at the insurance market Lloyd’s of London. Titled The Tragedy of the Horizon, its theme was that the financial sector was woefully short-sighted when it came to climate threats. Carney chose the insurance industry for his address both because it appeared most at risk from grisly projections of natural disaster, and because insurers were also major investors. He attempted to scare them by projecting that fossil fuel reserves might have to be “stranded” to save the world; the relevant legislation might not yet exist, but investors should get out while the getting was good.
Carney produced a raft of scary and misleading statistics, including those for rising insurance claims from extreme weather events. No less a financial authority than Warren Buffett had rejected such claims, pointing out that rising losses were due not primarily to worse weather, but to more valuable property being built in areas prone to natural disasters.
Nevertheless, claimed Carney, much worse was to come, so why wasn’t enough being done? The answer was greedy, selfish short-sightedness, creating a situation analogous to the “tragedy of the commons,” where un-priced collectively-consumed resources are depleted to the point of exhaustion. Climate disaster was not only beyond the time horizon of conventional financial calculation, it was beyond the horizon of democratic political concern, and even the official mandates of those charged with applying macroprudential regulatory wisdom, such as himself. However, “Forward-looking regulators consider not just the here and now, but emerging vulnerabilities and their impact on business models.”
Thus he called for global standards to manage the world’s “carbon budget.” He even threatened the insurers with nationalization.
Carney declared that “the risks will only increase as the science and evidence of climate change hardens.” But how could he possibly know that? What if the science and evidence weakened?
Carney’s bottom line was that “green” finance “could not conceivably remain a niche interest.” The threat of potential destabilization was too great. The role of the far-seeing regulatory elite was to develop “the frameworks that help the market adjust efficiently.” More had to be done “to develop consistent, comparable, reliable and clear disclosure around the carbon intensity of different assets,” on the basis that “that which can be measured can be managed.”
Carney’s perspective was facile and tendentious. While carbon emissions might be meticulously calculated, nobody could specify what the impacts of vague “climate change” might be on particular companies beyond Biblical laundry lists of floods, droughts, forest fires and hurricanes.
The very real immediate financial threat was not from climate change but from climate policy. If anything threatened uncertainty, instability and wealth destruction, it was the very regulatory arm-twisting that Carney was proposing.
Carney confirmed that the carbon disclosure shakedown was already well underway. He cited the Carbon disclosure Project, a billionaire-supported NGO which took carbon confession from 5,000 companies and “made it available” to “investment managers responsible for over $90 trillion of assets.” In fact, there were almost 400 such disclosure “initiatives” with no common standards. Thus Carney suggested a task force “to design and deliver a voluntary standard for disclosure by those companies that produce or emit carbon.”
Myriad ENGOS had softened up the corporate sector. Now it was time to formalize such global arrangements. Not only would companies have to confess to carbon crime, but also reveal their plans to “transition to the net-zero world of the future.” There would even be carbon “stress tests.” Carney’s regulatory pretension almost leapt through the roof when he suggested that such stress testing could act as a “time machine, shining a light not just on today’s risks, but on those that may otherwise lurk in the darkness for years to come.”
Two months later, Carney announced the Task Force on Climate-related Financial disclosures, TCFD, chaired by Michael Bloomberg.
Bloomberg is part of what The Wall Street Journal has dubbed a “Climate Mafia.” He had been mayor of New york during Superstorm Sandy in 2012, and had subsequently joined radical hedge fund billionaire Tom Steyer and former Treasury Secretary Hank Paulson — the man who had deluged Wall Street with cash in the wake of the 2008 crisis — in the risky Business Project, which had produced a typically alarmist report.
His Bloomberg Philanthropies were involved in “multiple climate efforts,” including partnering with the Sierra Club in its Beyond Coal Campaign, and “supporting state efforts to transition to renewable energy sources.”
Bloomberg was also the un Secretary-general’s Special envoy for Cities and Climate Change. As such he played a key role in establishing networks of mayors who were committed to meeting “ambitious climate-related goals.” The fruit of such initiatives might be seen in Vancouver’s stout opposition to the Transmountain Pipeline, and in Montreal’s rejection of the energy east project.
The 31 members of the task force were hand-picked by Carney’s Financial Stability Board, that is, by Carney, and were all involved in green initiatives and investments. They included Al Gore’s radical business partner, david Blood.
The TCFD delivered its report to the G20 Summit in Hamburg in July, 2017. Behind all the neat recommendations on climate governance, impacts and targets lay the monumental uncertainties of climate science and policy, but the report was sure of one thing: large investors should pressure the companies in which they invested to get with the program.
The Bloomberg report inevitably spawned scores of similar inquiries — including that of Canada’s expert Panel. Before the Panel announcement, as noted, the Liberals held a roundtable with Carney and “representatives of Canada’s business and financial sectors.” But also present were three figures that were from neither sector. They were Bruce Lourie, head of the Ivey Foundation, Stewart elgie, an academic and head of Smart Prosperity, and Toby Heaps, who runs a magazine called Corporate Knights.
Lourie is a serial promoter of junk science who was not only a key player in installing Ontario’s disastrous Green energy Act but was also front and centre in forcing Canadian forestry companies into the rancid Canadian Boreal Forest Agreement, CBFA. elgie’s Smart Prosperity (previously Sustainable Prosperity) is another NGO that has received major government funding to promote a radical climate agenda. Heaps’ Corporate Knights magazine ranks companies too scared not to respond to loaded questionnaires about corporate social responsibility and sustainability.
According to the government’s press release, the expert panel would build on the insights of Bloomberg’s task force, which was “recognized worldwide for its ground-breaking work to develop voluntary recommendations on climate-related information that companies can disclose to help investors, lenders, and others make sound financial decisions.”
It might more accurately have been described as part of a plan to pressure companies and investors to make unsound decisions in support of a subversive global political agenda.
While Justin Trudeau’s Liberals were keen to jump on the Carney/bloomberg bandwagon, one complicating factor was that financial disclosure in Canada is a provincial responsibility. In fact, the Canadian Securities Administrators (CSA) — the council of the securities regulators of Canada’s provinces and territories — had already held public consultations on disclosure and published a report. That report pointed to the key problem of climate disclosure: “materiality,” which is generally “the determining factor in considering whether information must be disclosed to investors.”
But how did one assess the materiality of a heavily politicized — and possibly scientifically corrupted — theory that in fact didn’t forecast catastrophe for many decades, and even then did so in the most vague, if alarming, of terms? The CSA noted that some respondents had stated that disclosure was “driven by considerations other than investment.” you bet.
On Oct. 25, 2018, the expert panel delivered its interim report.
Perhaps its most stunning admission was that sustainable finance — which had been pushed by the un for a quarter of a century — still lacked a definition. Moreover, the panel admitted that it found little enthusiasm for moving towards a “Parisaligned future.” One alleged reason was that investments such as Index-based funds merely entrenched the dreaded status quo. Another was that perceptions of materiality were “outdated.” Thus Canada was “lagging.”
The panel pointed to the necessity of the “support ecosystem” of lawyers, accountants, auditors and ratings agencies becoming appropriately “knowledgeable” about projected climate catastrophe. Perhaps mandatory training might be the answer. Perhaps the “voluntary” recommendations of the Bloomberg TCFD should be compulsory.
The report’s implications were alarming. Currently it would be contrary to fiduciary responsibility to invest in dubious low-carbon transition schemes to serve political purposes, but what if fiduciaries were subject to prosecution for investing in fossil fuels?
In terms of new and exciting sustainable financial products, the report suggested that building retrofits might be securitized. remember Collateralized debt Obligations, Cdos, the murky instruments that were at the heart of the 2008 sub-prime crisis? The panel seemed to be suggesting Collateralized Sustainable development Obligations — CSDOS! What could possibly go wrong?
As for sustainable infrastructure, there was already a Canadian Infrastructure Bank but why stop there? More bureaucratic institutions needed to be set up. Private capital needed to be “crowded in.” Meanwhile “Cleantech” was a “massive cross cutting opportunity.” Just forget Germany’s disastrous energiewende, or Ontario’s Green energy Act, or a thousand other climate policy snafus. What was needed were more green banks, more green bonds and more green procurement.
Then came the potentially touchy bit: oil and gas. The panel noted that the industry faced “pressure from many fronts.” These included access to capital (the cutting off of which was the main thrust of sustainable finance), “market access” (that is, not being able to build pipelines because of legal and non-legal action by ENGOS), and divestment campaigns (which were again part of The Agenda).
In February of this year, the Canadian Association of Petroleum Producers responded to the interim report. It stressed all the sustainable and responsible things it was doing in the vain hope of fighting off its enemies. It noted that oil and gas were going to remain dominant as global energy sources, and that responsibly managed Canadian supplies could replace more carbon-intensive coal. Material financial risks had to be reported, and big companies already disclosed their emissions. The Canadian oil industry was threatened by the trade disadvantages implicit in current or proposed Liberal policies such as “clean fuel” standards. CAPP stressed that its members were already engaged in multiple reporting initiatives. The industry didn’t need even more duplicative reporting. CAPP concluded that the Canadian financial sector was doing just fine, and would continue to serve its customers “without (more) government in the marketplace.”
The good news from the expert panel’s interim report was that investors, insurers and banks are refusing to be rushed into action on the basis of pressure from the un/regulatory/billionaire/ ENGO Axis. Its final report is bound to suggest a raft of new institutions and initiatives, but the fundamental issue is whether Canadian companies and financial institutions should be aligning themselves with the sustainable finance agenda instead of exposing it as the subversive threat to wealth, jobs, and freedom — and indeed even the environment — that it is.
Whether it is discussed at the CAPP energy Symposium this week is significant because sponsor Scotiabank, like all the major Canadian banks, is listed as a “supporter” of Bloomberg’s task force. Still, that may be a matter of keeping your friends close, but your enemies closer. Let’s hope so.
The good news ... was That investors, insurers and banks are refusing To be rushed into action.