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The Climate Paradox

14 July 2023

By Nick Lyth

 

How do we reconcile the news of a backlash against ESG investing in the US by a number of Republican politicians with the news that many of the same people are suffering from the cloud of air pollution caused by the wildfires in Canada which spread over the whole of the Eastern US seaboard?  While on the other side of the Atlantic, recent reports in Unearthed told us: Despair. That’s the overriding feeling in the EU’s environment community this week, as a signature piece of the much-touted Green Deal looks set to fail.” (Greenpeace, Unearthed, 30th June 2023)

How do we reconcile news that the Insurance market is raising domestic and commercial insurance rates to an unaffordable level in parts of Florida and California owing to the extreme weather events when they themselves are frequently part of the communities they are destroying?

 

 

The Climate Paradox is this: the leaders of our economy are knowingly taking steps in directly the opposite direction to that which is required to protect us from the reality of the damage caused by climate change.

This is different from the failure of our business and political leaders to take steps against climate change in the last three decades.  During this period, the great catch phrase was “The Precautionary Principle”.  We were urged to take precautions against a threat, the scale and dimension of which was far from clear, but the principle was to guard against what might be the most severe consequences of not taking care.  We failed to do this with respect to Climate Change, as we all know, and we are now seeing what these consequences are.

The difference now is that climate change is clear because it is a reality, its consequences are visible, and they are severe.  Our economic and political leaders who are choosing to take action of a kind calculated to ignore climate change and act as if it is not happening are doing so in the full knowledge that it is.

These are consciously self-destructive choices, rather than evasive tactics.  In the case of UK Government, they are actually both.  In response to a recent critical report from the Climate Change Committee, the acknowledged and mandated UK authority on climate change, exposing the situation in the UK as being far from delivering on Net Zero commitments, UK Government simply contradicts the conclusions of the report.  “No, it’s not,” says UK Government.  We’re straying into the realms of the playground here.  It’s less who you believe, more whose side you are on.

The people who are ignoring climate change in favour of business as usual are clearly and explicitly motivated by a different and understandable purpose.  These political and business sectors can see how destructive climate change is.  But they can also see how the measures being urged on the financial and other institutions they represent will also be destructive.  These measures threaten to destroy the systems within which they have operated all their lives.  Investment, for example, cannot take account of ESG without driving a coach and horses through its commitment to deliver a return to its investors, its clients.  Once this goes, the entire structure goes.

Similarly, the Insurance market cannot ignore the basic risk ratios governing the calculation of insurance premiums since time immemorial.  If it does, this puts the entire insurance system at risk.

These are people who are not just well aware of the consequences of climate change, they are actually being affected by the problems it is creating.  Many parts of the US are in the eye of the storm.  The US is expected to suffer almost as much from the consequences of climate change as India and Bangladesh, and indeed it already is suffering much more than almost any other country in the world.  Reports of the heat currently being experienced in Texas, are shocking, second only to the temperatures in Kuwait, consistently over 50 degrees.  These are places which are becoming uninhabitable, regardless of insurance premiums.

 

 

The people pursuing actions blocking climate change prevention in favour of maintaining traditional financial strategies and systems are going to suffer as much from climate change as the rest of the population of their regions.

The research has not been done, or if it has, it has not been published, to analyse what their expectations and perceptions are, and how they justify their position.  But there can only be one rational explanation.  They believe that climate change will be solved by other means.  They believe that other bodies must take responsibility for solving climate change, starting with Governments.  They believe that financial markets and systems will not affect climate change at all, and that success in stemming it will depend on technological solutions.

Are they wrong?  The alternative is unthinkable, that there is no solution to climate change at all, we are all doomed.  Of course, we can see this mindset in the Extinction Rebellion movement, and its adherents.

This nihilistic perspective is perhaps the foundation for a more sinister trend, evident especially in the USA.  There is a degree of rage manifesting itself in the political divide exposed by Trump, most clearly in the aftermath of his defeat by Joe Biden when, in January, 2021, his supporters stormed the Capitol and invaded the Halls of Congress.  Those who make common cause with Trump conflate social issues regarding tolerance and permissiveness, which they describe as “wokeism”, with the issues raised by global warming and climate change, which they either deny is happening or now rather more discount the measures taken to try to arrest it, most especially with regard to the Oil & Gas industry.  The problem with this is the rage and hatred it invokes.  This extreme branch of right wing politics in the US and Europe seems to feed off anger rather than civility, confrontation rather than debate.

But the reasoned, well-argued measures of those who are trying to maintain the financial and regulatory systems governing our economy are not nihilists.  They are presenting well-intentioned policies and practice for a peaceful future, in which climate change is taken into account.  So where does this leave us?  Does this mean it’s technology or war?

This perhaps is the real question, the answer to which untangles the paradox.  These people might be right.  The measures they are blocking – ESG investments, community insurance, or indeed an entire Government programme in both the US and UK – might actually make no difference at all to the fight against climate change.  The solution might be entirely different.

They may indeed be justified by events.  Reality beats science.  There is little doubt that reality is bad for many of us, and shows no signs of getting better.  There are headlines of apocalyptic gloom in gathering numbers.  This trend is recent.  As little as five years ago, the extreme events reported in the media were occasional.  Now, they are almost daily.  They are reflecting the reality today, which requires no additional threats raising fears for tomorrow.  We are all frightened by what we are witnessing today.

 

A sample from last week:

 

“His Majesty King Charles III attended the launch of the Climate Clock at the Climate Innovation Forum 2023, representing a stark warning that there are only six years and 24 days left to limit global warming to 1.5 degrees.”  (Climate Action, 30th June 2023)

 

This explicit doomsday scenario is now commonplace.  In fact this is, if anything, optimistic as most commentators believe we are already certain to exceed 1.5 degrees, and to do so well before 2030.

 

From the financial sector comes a report which picks up the same IPCC statistic:

 

“At the time of publishing our 2022 Sustainability and Impact Reports, we have seen record breaking temperatures across Asia and Europe and we are facing the return of an El-Nino season. We have just 79 months to halve global emissions if we are to limit temperature rises to a level which avoids the most negative impacts of climate change, including the mass displacement of people and irreversible bio-diversity loss.” (Lyn Tomlinson, Head of Impact and Philanthropy at Cazenove Capital)

 

This report from the heartland of the finance sector is unafraid to confront the reality of disaster now.  Bloomberg brought us news of further problems in the US beyond the effects of the Canadian wildfires.

 

“The wilting heat has seared down on Texas for 10 days and it’s forecast to persist through the week without let up. Del Rio, Texas reached 110F Sunday, and has now posted eight daily record high temperatures in a row, including its all-time warmest June day of 115F on the 21st.

 

“Texans are poised to use unprecedented amounts of electricity this Monday through Friday as intense heat blankets the state, according to the Electric Reliability Council of Texas, the state grid operator. Solar generation is expected to be operating at max capacity for summer at more than 12 gigawatts, helping to offset low wind generating much of Monday.” (Bloomberg Green Daily, 26th June 2023) 

 

This heat was mirrored simultaneously in Kuwait where the temperatures were even worse.  Perhaps the gloomiest organ currently commentating on the Climate challenge is called Medium Daily Digest, which includes the well-titled weekly Collapse Catch-up.  This is pretty depressing reading, but you can get a flavour of it from other articles in the Digest.  Here are a handful of titles:

 

3rd July 2023

 

“A huge part of the country is no longer safe to live in”

“How the Future breaks down”

“Climate change raises the danger of violence towards women”

 

30th June 2023

“We’re knee deep in the age of collapse”

“Faster than expected – why most climate scientists can’t tell the truth (in public)”

“How science caused climate collapse – it ain’t gonna to save us”

 

These perhaps more than anything tell us why the paradox is not a paradox.  The recognition that climate change is already doing untold damage to our world; that it is in our midst, and not just a problem for poor countries and communities; that the predictions of its future trend are all bad; and that there are no immediate solutions to it; all these add up to a natural determination to maintain current practice, because there is no viable alternative.

If there were to be immediate solutions, we would, as a global community, perhaps behave differently.  If there was a visible enemy to fight, we would fight.  But there are neither the solutions nor the enemies, there is only ever more extreme weather and the life problems it brings.  Excessive heat, pollution, water shortage, flooding, drought.  The list goes on.

We must carry on, for another reason.  There are no immediate solutions, but there are future solutions.  There are the means that technology and science can give us both to mitigate climate change, and to adapt to climate change.  We have to work as hard as we can, as quickly as we can to find the raft of innovations that make our lives viable in future, even if we struggle to do it now.  

Meanwhile, it is easy to sympathise with those who believe that business must be maintained as usual, those who cannot offer any insight into the possible innovations and changes.  They want to cling onto everything they hold dear in the face of the onrushing disaster.  It’s a natural reaction.  But perhaps we could wish that they had less control over the levers of economic and political power.  Crisis is a time for brave leadership rather than frightened denial.