Larry Fink on stage at the 2022 New York Times DealBook on November 30, 2022. in New York CityPhoto by Thos Robinson/Getty Images for The New York Times
As U.S. firms such as BlackRock and JPMorgan Chase continue to distance themselves from the ESG and ‘climate change’ agendas, Europe has been moving aggressively in the opposite direction, suggesting a rift is forming on the global economic landscape.
The climate change debate is usually thought to be focused on scientific analyses of the earth’s atmosphere. But that is only what is on the surface. It is also very much about money and politics and there has been a big shift that looks likely to threaten support for the net zero initiative. It may lead to a deep economic and political rift between the U.S. and Europe.
Estimates of the cost of decarbonizing the economy by 2050 have varied, but it is generally agreed that it is a financial bonanza. Goldman Sachs is at the low end with a modest $80 trillion while Bank of America estimates an extraordinary $275 trillion, about 10 times the current value of the U.S. stock market.
The finance sector, dizzy with the prospect of a huge investment opportunity, imposed a metric on corporations called Environmental, Social and Governance (ESG), a mechanism for demanding that companies go down the net zero route – and also comply with diversity equity and inclusion (DEI) requirements, the “S” part of ESG. Corporations that did not cooperate were threatened with a loss of support in the market and lower relative share prices.
That trend is starting to reverse. BlackRock, JPMorgan Chase, and State Street recently exited from Climate Action 100+, a coalition of the world’s largest institutional investors that pledges to “ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.” The passive fund Vanguard, the world’s second largest, exited over a year ago.
These four fund managers oversee assets of about $25 trillion, which is approximately a quarter of the entire funds under management in the world.
They are changing direction for two reasons. First, there was an implicit bargain with ESG, whereby compliant companies would not only get to save the environment but also get to see their share prices outperform non-compliant companies. It is not turning out that way. In fact, better returns have come from investing against ESG-compliant companies.
More compellingly, 16 conservative state attorneys general in the U.S. have demanded answers from BlackRock’s directors regarding the Climate Action and ESG initiatives. Other fund managers and banks have also attracted unwanted scrutiny.
Nothing concentrates the mind of fund managers more than the prospect of clients withdrawing their funds – in this case state government pension money. Larry Fink, chief executive of BlackRock, is now saying he does not think it is helpful to use the term ESG, having been one of the most aggressive advocates. In his 2022 letter to CEOs he was issuing veiled threats to companies not complying with ESG. In 2024, he omitted the term entirely.
Meanwhile in Europe, very different choices are being made. The European Union (EU) is looking to impose sustainability reporting standards on all medium and large businesses. The intention is to have European companies set up a new accounting system by the end of the decade. Rather than recording financial transactions, it will instead aggregate data related to climate, pollution, especially carbon dioxide emissions, biodiversity and social issues.
As one (anonymous) analyst writes:“It is a very detailed control system for European companies where the European Commission can, in the future, dictate anything it wants – and punish for any violations any way it wants. Apart from the crazy regulatory load, this initiative can only be seen as a direct seizure of operational control of European companies, and thereby the European economy.”
So, while the U.S. looks to restore an unsteady version of capitalism, Europe is heading towards some kind of climate-driven socialism.
The EU plan seems to be to eventually direct their banks’ lending, which would radically undermine the region’s free-market system and establish something more like communist-style centralized control.
This does not mean U.S. governments and bureaucrats will stop pushing their climate agenda. A court case brought by the city of Honolulu, for example, is one of several attempts to bankrupt the American energy industry. But when the big institutional money changes direction then corporations and governments eventually follow.
The situation is further complicated by the emergence of the expanded BRICS alliance, which will soon represent a bigger proportion of the world economy than the G7. Saudi Arabia, Iran, United Arab Emirates, Ethiopia and Egypt will be added to the original group of Brazil, Russia, India, China and South Africa.
The BRICS nations will not allow the West’s climate change agenda to reshape their polities. Most of them are either sellers or heavy consumers of fossil fuels. Both India and China are increasing their use of coal, for instance, which makes Western attempts to reduce emissions largely pointless.
The promise that hundreds of trillions of investment opportunities would come from converting to net zero was always just a financial projection, mere speculation. The scale of transiting to a decarbonized economy would be so enormous it would inevitably become a logistical nightmare, if not an impossibility.
Energy expenditure represents about an eighth of the world’s GDP. Oil, natural gas and coal still provide 84 percent of the world’s energy, down just two per cent from 20 years ago. Production of renewable energy has increased but so has overall consumption. Oil powers 97 percent of all transportation.
Relying solely on renewable energy was never realistic and now that the financial dynamic is changing the prospects of achieving net zero have become even more remote. As the finance website ZeroHedgeopines: “Both the DEI and ESG gravy trains on Wall Street are finally coming to an unceremonious end.” Financial markets continually get seduced by fads; the ESG agenda is starting to look like yet another example.
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“So we’re going to have an order on that pretty soon – we can’t do that to our farmers and leisure too, hotels, we’re going to have to use a lot of common sense on that.”
President Donald Trump said Thursday that changes are coming to his aggressive immigration policies after complaints from farmers and business owners.
“Our great Farmers and people in the Hotel and Leisure business have been stating that our very aggressive policy on immigration is taking very good, long time workers away from them, with those jobs being almost impossible to replace,” Trump wrote in a social media post Thursday morning. “In many cases the Criminals allowed into our Country by the VERY Stupid Biden Open Borders Policy are applying for those jobs. This is not good. We must protect our Farmers, but get the CRIMINALS OUT OF THE USA. Changes are coming!”
Later Thursday, Trump made it clear that businesses need workers.
“Our farmers are being hurt badly. They have very good workers – they’re not citizens, but they’ve turned out to be great. And we’re going to have to do something about that,” the president said.
He added: “We can’t take farmers and take all their people and send them back because they don’t have, maybe, what they’re supposed to have.”
Just how Trump may change his approach to immigration enforcement remains unclear, but he said he wants to help farmers and business owners.
“You go into a farm and you look and people, they’ve been there for 20 or 25 years and they work great and the owner of the farm loves them and you’re supposed to throw them out. You know what happens? They end up hiring the criminals that have come in, the murderers from prisons and everything else,” Trump said.
Trump said changes would be coming soon, but gave little detail on how policies could change.
“So we’re going to have an order on that pretty soon – we can’t do that to our farmers and leisure too, hotels, we’re going to have to use a lot of common sense on that.”
In a later post on Truth Social, Trump said illegal immigration had destroyed American institutions.
“Biden let 21 Million Unvetted, Illegal Aliens flood into the Country from some of the most dangerous and dysfunctional Nations on Earth — Many of them Rapists, Murderers, and Terrorists. This tsunami of Illegals has destroyed Americans’ Public Schools, Hospitals, Parks, Community Resources, and Living Conditions,” the president wrote. “They have stolen American Jobs, consumed BILLIONS OF DOLLARS in Free Welfare, and turned once idyllic Communities, like Springfield, Ohio, into Third World Nightmares.”
He added that deportations would continue: “I campaigned on, and received a Historic Mandate for, the largest Mass Deportation Program in American History. Polling shows overwhelming Public Support for getting the Illegals out, and that is exactly what we will do. As Commander-in-Chief, I will always protect and defend the Heroes of ICE and Border Patrol, whose work has already resulted in the Most Secure Border in American History. Anyone who assaults or attacks an ICE or Border Agent will do hard time in jail. Those who are here illegally should either self deport using the CBP Home App or, ICE will find you and remove you. Saving America is not negotiable!”
For years, Canada’s political class sold us on the idea that carbon taxes were clever policy. Not just a tool to cut emissions, but a fair one – tax the polluters, then cycle the money back to regular folks, especially those with thinner wallets.
It wasn’t a perfect system. The focus-group-tested line embraced for years by the Trudeau Liberals made no sense at all: we’re taxing you so we can put more money back in your pocketbooks. What the hell? If you care so much about my taxes being low, just cut them already. Somehow, it took years and years of this line being repeated for its internal contradiction to become evident to all.
Yet, even many strategic conservative minds could see the thinking had internal logic. You could sell it at a town hall. As an editorial team member at an influential news organization when B.C. got its carbon tax in 2008, I bought into the concept too.
And now? That whole model has been thrown overboard, by the very parties had long defended it with a straight face and an arch tone. In both Ottawa and Victoria in 2025, progressive governments facing political survival abandoned the idea of climate policy as a matter of fairness, opting instead for tactical concessions meant to blunt the momentum of their foes.
The result: lower-income Canadians who had grown accustomed to carbon tax rebates as a dependable backstop are waking up to find the support gone. And higher earners? They just got a tidy little gift from the state.
The betrayal is worse in B.C.
This new chart from economist Ken Peacock tells the story. He shared it last week at the B.C. Chamber of Commerce annual gathering in Nanaimo.
Ken-Peacock- B.C. Chamber of Commerce annual gathering in Nanaimo.
What is shows is that scrapping the carbon tax means the poor are poorer. The treasury is emptier.
What about the rich?
Yup, you guessed it: richer.
Scrubbing the B.C. consumer carbon tax leaves the lowest earning 20 percent of households $830 per year poorer, while the top one-fifth gain $959.
“Climate leader” British Columbia’s approach was supposed to be the gold standard: a revenue-neutral carbon tax, accepted by industry, supported by voters, and engineered to send the right price signal without growing the size of government.
That pact broke somewhere along the way.
Instead of returning the money, the provincial government slowly transformed the tax into a $2 billion annual cash cow. And when Mark Carney won the federal election, B.C. Premier David Eby, boxed in by his own pledge, scrapped the tax like a man dropping ballast from a sinking balloon. Gone. No replacement. No protections for those who need them most.
Filling the gas tank, on the other hand, is noticeably cheaper. Of course, if you can’t afford a car that might not be apparent.
Spare a thought for the climate activists who spent 15 years flogging this policy, only to watch it get tossed aside like a stack of briefing notes on a Friday afternoon.
Who could not conclude that the environmental left has been played. For a political movement that prides itself on idealism, it’s a brutal lesson in realpolitik: when power’s on the line, principles are negotiable.
But here’s the thing: maybe the carbon tax model deserved a rethink. Maybe it’s time for a grown-up look at what actually works
With B.C. now reviewing its CleanBC policies, here’s a basic question: what’s working, and what’s not?
A lot of emission reductions in this province didn’t come from government fiat. They were the result of business-led innovation: more efficient technology, cleaner fuels, and capital discipline.
That, plus a hefty dose of offshoring. We’ve pushed our industrial emissions onto other jurisdictions, then shipped the finished goods back without attaching any climate cost. This contradiction particularly helped to fuel the push to dump carbon pricing as a failed solution.
The progressives’ choice was made once the anti-tax arguments could no longer be refuted: to limit losses it would be necessary to deep six an unpopular strand of the overall carbon strategy. This, to save the rest. That’s why policies like the federal emissions cap haven’t also been abandoned.
To give another example, it’s also why British Columbia’s aviation sector is in a flap over the issue of sustainable aviation fuel. Despite years of aspirational policy, low emissions jet fuel blends remain more scarce than a long-haul cabin upgrade. The policy’s designers correctly anticipated that refiners would never be able to meet the imposed demand, and so as an alternative they provided a complex carbon credit trading scheme that will make the cost of flying more expensive. For those with a choice, nearby airport hubs in the United States where these policies do not apply will become an attractive alternative, while remote communities that have no choice in the matter will simply have to eat the cost. (Needless to say, if emissions reduction is your goal this policy isn’t needed anyways, since the decisions that matter in reducing global aviation emissions aren’t made in B.C. and never will be.)
I’m not showing up to bash those who have been genuinely trying to figure things out, and found themselves in a world of policy that is more complicated and unpredictable than they realized. Simply put, the chapter is closing on an era of energy policy naïveté.
The brutally honest action by Eby and Carney to eject carbon taxes for their own political survival could be read as a signal that it’s now okay to have an honest public conversation. Let’s insist on that. For years now, debate has been constrained in part by a particular form of linguistic tyranny, awash in terminology designed to cow the questioner into silence. “So you have an issue with clean policies, do you? What kind of dirty reprobate are you?” “Only a monster doesn’t want their aviation fuel to be sustainable.” Etc. Now is the moment to move on from that, and widen the field of discourse.
Ditching bad policy is also a signal that just maybe a better approach is to start by embracing a robust sense of the possibilities for energy to improve lives and empower all of the solutions needed for tomorrow’s problems. Because that’s the only way the conversation will ever get real.
Slogans, wildly aspirational goal setting and the habit of refusing to acknowledge how the world really works have been getting us nowhere. Petroleum products will continue to obey Yergin’s Law: oil always gets to market. China and India will grow their economies using reliable energy they can afford, having recently approved the construction of the most new coal power plants in a decade amid energy security concerns. Japan, which has practically worn itself out pleading for natural gas from Canada, isn’t waiting for the help of last-finishing nice guys to guarantee energy security: today, they are buying 8% of their LNG imports from the evil Putin regime.
Meanwhile, we’re in the worst of both worlds: our courageous carbon tax policy that was positioned as trailblazing not just for B.C. residents but for the world as a whole – climate leadership! – is gone, the poorest are puzzling over why things feel even more expensive, and nobody knows what comes next.
Ken-Peacock- B.C. Chamber of Commerce annual gathering in Nanaimo.
