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The Real Threat to Banks Isn’t From Climate Change. It’s From Bankers.

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Over the last two years, some of the world’s most powerful and influential bankers and investors have argued that climate change poses a grave threat to financial markets and that nations must switch urgently from using fossil fuels to using renewables.

In 2019, the Federal Reserve Bank of San Francisco warned that climate change could cause banks to stop lending, towns to lose tax revenue, and home values to decline. Last year, 36 pension fund managers representing $1 trillion in assets said climate change “poses a systemic threat to financial markets and the real economy.”

And upon taking office, President Joe Biden warned government agencies that climate change disasters threatened retirement funds, home prices, and the very stability of the financial system.

But a major new staff report from the New York Federal Reserve Bank throws cold water on the over-heated rhetoric coming from activist investors, bankers, and politicians. “How Bad Are Weather Disasters for Banks?” asks the title of the report by three economists. “Not very,” they answer in the first sentence of the abstract.

The reason is because “weather disasters over the last quarter century had insignificant or small effects on U.S. banks’ performance.” The study looked at FEMA-level disasters between 1995 and 2018, at county-level property damage estimates, and the impact on banking revenue.

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The New York Fed’s authors only looked at how banks have dealt with disasters in the past, and what they wrote isn’t likely to be the final word on the matter. The United Nations Intergovernmental Panel on Climate Change and most other scientific bodies predict that many weather events, including hurricanes and floods, which cause the greatest financial damage, are likely to become more extreme in the future, due to climate change.

And in February, The New York Times quoted one of six United States Federal Reserve governors saying, “Financial institutions that do not put in place frameworks to measure, monitor and manage climate-related risks could face outsized losses on climate-sensitive assets caused by environmental shifts.”

But the Fed economists looked separately at the most extreme 10 percent of all disasters and found that banks impacted not only didn’t suffer, “their income increases significantly with exposure,” and that the improved financial performance of banks hit by disasters wasn’t explained by increased federal disaster (FEMA) aid.

In other words, disasters are actually good for banks, since they increase demand for loans. The larger a bank’s exposure to natural disasters, the larger its profits.

Happily, the profits made by banks are trivial compared to rising societal resilience to disasters, which can be seen by the fact that the share of GDP spent on natural disasters has actually declined over the last 30 years.

While scientists expect hurricanes to become five percent more extreme they also expect them to become 25 percent less frequent, and now, new data showglobal carbon emissions actually declined over the last decade, and thus there is no longer any serious risk of a significant rise in global temperatures.

Banking Against Growth

Biden nominee Saule Omarova said she wants to bankrupt energy companies

The real risk to banks and the global economy comes from climate policy, not climate change, particularly efforts to make energy more expensive and less reliable through the greater use of renewables, new taxes, and new regulations.

“For policymakers,” warned the three economists writing for the New York Fed, “our findings suggest that potential transition risks from climate change warrant more attention than physical disaster risks.”

While they may seem like outliers, they are far from alone in expressing their concern. The second half of the quote by the Fed governor about climate change, which was hyped by The New York Times, warned that banks “could face outsized losses” from the “transition to a low-carbon economy.” (My emphasis.)

And, now concern is growing among members of Congress about the dangers of over-relying on weather-dependent energy, with some members citing the New York Fed’s report after The Wall Street Journal editorialized about it last week .

Proof of the threat to the economy from climate policy is the worst global energy crisis in 50 years. Shareholder activists played a significant role in creating it, according to analysts at Goldman Sachs, Bloomberg, and The Financial Times, by reducing investment in oil and gas production, and causing nations to over-invest in unreliable solar and wind energies, which has driven up energy prices, and contributed significantly to inflation.

And yet a crucial Biden Administration nominee for bank regulation has openly said she would like to bankrupt firms that produce oil and gas, the two fuels whose scarcity is causing the global energy crisis. Progressive academic, Saule Omarova, nominated by Biden, said recently that “we want [oil and gas firms] to go bankrupt” and that “the way we basically get rid of these carbon financiers is we starve them of their source of capital.

Omarova is not an outlier. The Biden Administration’s Financial Stability Oversight Council (FSOC) is advocating 30 new climate regulations that should be imposed on banking. Many analysts believe the US Securities and Exchange Commission will require new regulations. The goal is to radically alter how America’s banks lend money, the energy sector, and the economy as a whole.

And former Bank of England chief, Mark Carney, co-chair of the Glasgow Financial Alliance for Net Zero, has organized $130 trillion in investment and said recently that his investors should expect to make higher, not lower, returns than the market. How? In the exact same way Omarova predicted: by bankrupting some companies, and financing other ones, through government regulations and subsidies.

Carney created the Glasgow Financial Alliance, or GFANZ, with Michael Bloomberg, and they did so under the official seal of the United Nations. “Carney said the alliance will put global finance on a trajectory that ultimately leaves high-carbon assets facing a much bleaker future,” wrote a reporter with Bloomberg. “He also said investors in such products will see the value of their holdings sink.”

What’s going on, exactly? How is it that some of the world’s most powerful bankers, and the politicians they finance, came to support policies that threaten the stability of electrical grids, energy supplies, and thus the global economy itself?

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The Unseen Order

Tom Steyer, Michael Bloomberg, and George Soros

Three of the largest donors to climate change causes are billionaire financial titans Michael Bloomberg, George Soros, and Tom Steyer, all of whom have significant investments in both renewables and fossil fuels.

Soros is worth $8 billion and recently made large investments in natural gas firms (EQT) and electric vehicles (Fisker), Bloomberg has a net worth of around $70 billion and has large investments in natural gas and renewables, and much of Steyer’s wealth derives from investments in all three main fossil fuels—coal, oil, and natural gas — as well as renewables.

All three men finance climate activists and politicians, including President Biden, who then seek policies — from $500 billion for renewables and electric vehicles over the next decade to federal control over state energy systems to banking regulations to bankrupt oil and gas companies — which would benefit each of them personally.

Bloomberg gave over $100 million to Sierra Club to lobby to shut down coal plants after he had taken a large stake in its replacement, natural gas, and operates one of the largest news media companies in the world, which publishes articles and sends emails nearly every day reporting that climate change threatens the economy, and that solar panels and wind turbines are the only cost-effective solution.

Soros donates heavily to Center for American Progress, whose founder, John Podesta, was chief of staff to Bill Clinton, campaign chairman for Hillary Clinton’s presidential campaign, and who currently runs policy at the Biden White House. So too does Steyer, who funds the climate activist organization founded by New Yorker author Bill McKibben, 350.org, which reported revenues of nearly $20 million in 2018.

The most influential environmental organization among Democrats and the Biden Administration is the Natural Resources Defense Council, NRDC, which advocated for federal control of state energy markets, the $500 billion for electric cars and renewables, and international carbon markets that would be controlled by the bankers and financiers who also donate to it.

In the 1990s, NRDC helped energy trading company Enron to distribute hundreds of thousands of dollars to environmental groups. “On environmental stewardship, our experience is that you can trust Enron,” said NRDC’s Ralph Cavanagh in 1997, even though Enron executives at the time were defrauding investors of billions of dollars in an epic criminal conspiracy, which in 2001 bankrupted the company.

From 2009 to 2011, NRDC advocated for and helped write complex cap-and-trade climate legislation that would have created and allowed some of their donors to take advantage of a carbon-trading market worth upwards of $1 trillion.

NRDC created and invested $66 million of its own money in a BlackRock stock fund that invested heavily in natural gas companies, and in 2014 disclosed that it had millions invested in renewable funds.

Former NRDC head, Gina McCarthey, now heads up Biden’s climate policy team, and Biden’s top economic advisor, Brian Deese, last worked at BlackRock, and almost certainly will return at the end of the Biden Administration.

Money buys influence. In 2019, McKibben called Steyer a “climate champ” when Steyer announced he was running for president, adding that Steyer’s “just-released climate policy is damned good!” And in 2020, McKibben wrote an article called, “How Banks Could Bail Us Out of the Climate Crisis,” for The New Yorker, which repeated the claim that extreme weather created by climate change threatens financial interests, and that the way to prevent it is to divert public and private money away from reliable energy sources toward weather-dependent ones.

Forms filed to the Internal Revenue Service by Steyer’s philanthropic organization, the TomKat Charitable Trust, show that it gave McKibben’s climate activist group, 350.org, $250,000 in 2012, 2014, and 2015, and may have given money to 350.org in 2013, 2016, 2017, 2018, 2019, and 2020, as well, because 350.org thanked either Steyer’s philanthropy, TomKat Foundation, or his organization, NextGen America, in each of its annual reports since 2013.

At the same time, McKibben’s motivations are plainly spiritual. He claims that various natural disasters are caused by humans, that climate change literally threatens life on Earth, and is thus “greatest challenge humans have ever faced,” a statement so unhinged from reality, considering declining deaths from disasters, declining carbon emissions, and the total absence of any science for such a claim, that it must be considered religious.

McKibben first book about climate change, The End of Nature, explicitly expressed his spiritual views, arguing that, through capitalist industrialization, humankind had lost its connection to nature. “We can no longer imagine that we are part of something larger than ourselves,” he wrote in The End of Nature. “That is what this all boils down to.” Indeed, for William James, the belief in “an unseen order” that we must adjust ourselves to, in order to avoid future punishment, is a defining feature of religion.

Climate change is punishment for our sins against nature — that’s the basic narrative pushed by journalists, climate activists, and their banker sponsors, for 30 years. It has a supernatural element: the belief that natural disasters are getting worse, killing millions, and threatening the economy, when in reality they are getting better, killing fewer, and costing less. And it offers redemption: to avoid punishment we must align our behavior with the unseen order, namely, a new economy controlled by the U.N., bankers, and climate activists. Unfortunately, as is increasingly obvious, the unseen order is parasitical and destructive.

When Nuclear Leads, the Bankers Will Follow

Former German Chancellor Angela Merkel, French President Emanuel Macron, and U.S. Energy Secretary Jennifer Granholm

The unseen order of bankers, climate activists, and the news media is so powerful that it is difficult to imagine how it could ever be challenged.

The financial might of the climate lobby covers the wealth not only of billionaires Soros, Steyer, and Bloomberg, but also $130 trillion in investment funds, including many of the world’s largest pension funds, such as the one belonging to California public employees. The climate lobby’s political power is equally awesome, covering the entirety of the Democratic Party and a significant portion of the Republican Party, and most center-Left parties in Europe.

And all of that is sustained by cultural power, which has led many elites to view climate change as the world’s number one issue, has convinced half of all humans that climate change will make our species extinct, and has served as the apocalyptic foundation for Woke religion.

But serious cracks in the foundation are growing. The global energy crisis has revealed for many around the world the limits of unreliable renewables, with European governments having to subsidize energy to avoid public backlash, President Biden and other heads of state opening up emergency petroleum reserves, and all nations begging OPEC to produce more energy.

The blackouts and rising unreliability of electricity in California, along with the work of the pro-nuclear movement over the last 6 years, has resulted in a growing number of Democrats supporting nuclear energy. Energy Secretary Jennifer Granholm last week publicly urged California Governor Gavin Newsom not to close California’s Diablo Canyon nuclear plant, the signature nuclear plant Environmental Progress has been trying to save since 2016. Democratic support in particular for nuclear is growing.

And alternative media including Substack, podcasts, and social media platforms are increasingly providing a counterweight to the mainstream news media, exposing a huge number of issues that the media got wrong in recent years, and amplifying alternative voices.

Nowhere is the change occurring faster than in Europe, where energy shortages are affecting heating, cooking, and electricity supplies in ways that undermine the legitimacy of the banker-led climate efforts. In Britain, private energy companies have gone bankrupt, forcing the government to bail them out. For-profit energy companies, like banks, ultimately depend on taxpayers, who are also voters.

Outgoing German Chancellor Angela Merkel, who led her nation’s exit from nuclear energy, acknowledged that Germany had been defeated in its anti-nuclear energy advocacy at the European Union level, and that nuclear would finally be recognized as low-carbon.

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And French president Emanuel Macron, under pressure from the political right as voters look to elections next year, gave a passionate speech in favor of nuclear energy last month, announcing $35 billion for new reactors.

As the world returns to nuclear, policymakers, media elites, and climate advocates will be increasingly confronted with the question of why consumers and taxpayers will benefit from a global carbon trading scheme and more weather-dependent renewables, particularly at a time of declining global emissions from the continuing transition from coal to natural gas, reduced deforestation, and increased reforestation.

Simply building more nuclear power plants means there is no climate change justification for weather-dependent renewables, which actually require greater use of natural gas, in order to deal with the high amount of unreliability.

Nuclear power goes with slow and patient capital. The obvious funders of a nuclear expansion in the West would be the pension funds, which need the secure return on investment that major construction and infrastructure projects provide, and which unreliable renewables, as the energy crisis shows, do not.

And though the news media is currently ignoring the New York Fed’s report, reporters will not be able to continue spreading misinformation about climate change indefinitely. Increasingly, they, and thus policymakers and the public, will be forced to confront facts inconvenient to their narrative, including that humans are adapting remarkably well to climate change, that renewables make energy unreliable and expensive, and that only nuclear can achieve sustainability goals of reduced emissions, material throughput, and land use.

As people ask, “How Bad Are Weather Disasters?”, not just for banks, but for all of us, the answer will increasingly come back, “Not very.”

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Economy

GOP directs culture war fury toward green investing trend

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By Sam Metz in Salt Lake City

SALT LAKE CITY (AP) — Republicans are coming out swinging against Wall Street’s growing efforts to consider factors like long-term environmental risk in investment decisions, the latest indication that the GOP is willing to damage its relationship with big business to score culture war points.

Many are targeting a concept known as ESG — which stands for environmental, social and governance — a sustainable investment trend sweeping the financial world. Red state officials deride it as politically correct and woke and are trying to stop investors who contract with states from adopting it on any level.

For right-wing activists who previously brought criticisms of critical race theory (CRT), diversity, equity and inclusion (DEI) and social emotional learning (SEL) to the forefront, it’s the latest acronym-based source of outrage to find a home at rallies, in conservative media and in legislatures.

ESG has yet to take hold as mainstream political messaging, but backlash against it is gaining steam. Last week, former Vice President Mike Pence attacked the concept during a speech in Houston. And on Wednesday, the same day he said on Twitter he planned to vote Republican, Elon Musk attacked it after Tesla lost its place on the S&P 500′s ESG Index. He called it a scam “weaponized by phony social justice warriors.”

The concept calls on investors to consider criteria such as environmental risk, pay equity or how transparent companies are in their accounting practices. Aided by recently proposed disclosure requirements and analysis from ratings agencies, they have adopted the principles to such an extent that those who use them control $16.6 trillion in investments held in the U.S.

In response, Republicans — historically known for supporting fewer regulations — are in many places attempting to impose new rules on investors. Their efforts reflect how members of the party are willing to distance themselves from big business to push back against those they see as ideological foes.

“I don’t think we’re the party of big business anymore. We’re the party of people — more specifically, we’re the party of working people. And the problem that we have is with big banks and corporations right now trying to dictate how we’re going to live our lives,” West Virginia Treasurer Riley Moore said.

Opponents criticize ESG as politicized and a potentially costly diversion from purely financial investment principles, while advocates say considering the criteria more accurately accounts for risk and promises steadier returns.

“We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients,” Larry Fink, CEO of investment firm BlackRock and a leading proponent, told clients in a letter this year.

But Moore and others including Utah’s Republican state treasurer Marlo Oaks argue favoring green investment over fossil fuels denies key industries access to the financial system and capital. They have targeted S&P Global Ratings for appending ESG scores to their traditional state credit ratings. They worry that without changes, their scores could make borrowing for projects like schools or roads costlier.

In an April letter, Oaks demanded S&P retract analysis that rated Utah as “moderately negative” in terms of environmental risk due to “long-term challenges regarding water supply, which could remain a constraint for its economy … given pervasive drought conditions in the western U.S.”

The letter was co-signed by the governor, legislative leaders and the state’s congressional delegation, including Sen. Mitt Romney, whose former firm Bain Capital calls ESG factors “strategic, fact-based and diligence-driven.” It said ratings system “attempts to legitimize a dubious and unproven exercise” and attacks the “unreliability and inherently political nature of ESG factors in investment decisions.”

Though he likened ESG to critical race theory, Oaks said he was mostly concerned with capital markets and what he called attempts by fossil fuel opponents to manipulate them by pressuring investors to pick businesses with high ESG scores.

“DEI, CRT, SEL. It can be hard to keep up with the acronyms,” he wrote on an economics blog last month, “but there’s a relatively new one you need to know: ESG.”

Investors making carbon neutral or net zero criteria common were, in effect, Oaks said, limiting access to capital for oil and gas businesses, hurting their returns and potentially contributing to gas price spikes.

In more than a dozen red states, officials dispute the idea that the energy transition underway could make fossil fuel-related investments riskier in the long term. They argue employing asset managers with a preference for green investments uses state funds to further agendas out of sync with constituents.

In statehouses, anti-green investing efforts are backed by conservative groups such as the American Legislative Exchange Council and the Heartland Institute, a think-tank skeptical of scientific consensus on human-caused climate change that has backed bills that either divest state funds from financial institutions that use ESG or forbid them from using it to score businesses or individuals.

In Texas, West Virginia and Kentucky, lawmakers have passed bills requiring state funds limit transactions with companies that shun fossil fuels. Wyoming considered banning “social credit scores” that evaluate businesses using criteria that differ from accounting and other financial metrics, like ESG

After conservative talk show host Glenn Beck visited the Idaho Statehouse and referred to ESG as critical race theory “on steroids,” the Legislature passed a law in March prohibiting investment of state funds in companies that prioritize commitments to ESG over returns.

The American Legislative Exchange Council recently published model policy that would subject banks managing state pensions to new regulations limiting investments driven by what it calls “social, political and ideological” goals.

Though the policy doesn’t mention it outright, Jonathan Williams, the group’s chief economist, said ESG’s mainstreaming amid broader trends of political correctness was a driving force. He said his research shows that incorporating factors beyond traditional financial metrics can lower the rate of return for already underfunded state pensions.

Sustainable investing advocates deny that charge and say considering the risks and realities of climate change amounts to responsible investing.

West Virginia and Arkansas recently divested their pension funds from BlackRock in response to the asset manager adding businesses with smaller carbon footprints to its portfolios. Moore, West Virginia’s treasurer, hopes more will follow.

Though it’s drawing enthusiasm, the green investment discourse differs from recurring debates over gender and sexuality or how history is taught. Both proponents and detractors acknowledged they’re surprised pensions, credit ratings and investment decisions have become campaign rally fodder.

Last month at the Utah state party’s convention, thousands of Republicans roared when Sen. Mike Lee described green investment in similar terms to critical race theory — another acronym-based foil: “Between CRT and ESG and MSNBC, we get way too much B.S.,” Lee said.

Bryan McGannon, a lobbyist with US SIF: The Forum for Sustainable and Responsible Investment, said opponents were wrong in framing sustainable investing trends as political. If states refuse to reckon with how the future will likely rely less on fossil fuels and limit how environmental risk can be considered, he said, they’re making decisions with incomplete information.

“If a state’s not considering those risks, it may be a signal to an investor that this might not be a wise government to be putting our money with,” McGannon said. “Investors use a huge swath of information, and ESG is a piece of that mosaic.”

___

Associated Press writers Stan Choe in New York and Lindsay Whitehurst in Salt Lake City contributed to this report.

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Energy

The Real Reason for Record Gas Prices

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Who’s to blame for record high gas prices which in turn have made EVERYTHING more expensive?

Politicians are using the playbook of environmental activists who want desperately to slow everything down, every business, and every single person (who can’t afford endless price hikes).

Here’s Emmy Award winning journalist John Stossel.

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From StosselTV

Putin! Price gouging! Excess profit! Politicians blame the wrong things for record gas prices.  Politicians say higher prices are caused by “corporate greed.” Nonsense. Greed is a constant. Companies are always greedy. They were just as greedy when prices dropped. “If big oil could raise prices anytime they wanted … then why were they so cheap in 2020?” asks Ben Lieberman of the Competitive Enterprise Institute. He points out that the record price “all comes down to cutting back on supplies.” Exactly. Prices change because of supply and demand. Politicians, pushed by environmental activists, have restricted oil production.

 

——– Don’t miss a single video from Stossel TV. Sign up here: https://www.johnstossel.com/#subscribe ——–

John Stossel

Libertarian journalist John Stossel created Stossel TV to explain liberty and free markets to young people. Prior to Stossel TV he hosted a show on Fox Business and co-anchored ABC’s primetime newsmagazine show, 20/20. Stossel’s economic programs have been adapted into teaching kits by a non-profit organization, “Stossel in the Classroom.” High school teachers in American public schools now use the videos to help educate their students on economics and economic freedom. They are seen by more than 12 million students every year. Stossel has received 19 Emmy Awards and has been honored five times for excellence in consumer reporting by the National Press Club. Other honors include the George Polk Award for Outstanding Local Reporting and the George Foster Peabody Award.

 

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