Big tech companies – Google/Alphabet, Apple, Microsoft and Amazon are just a few – are all emphasizing sustainability and touting their efforts to reduce their carbon footprint. They insist on using renewable energy to run their extensive server networks. And yet, according to one new reportthey may unwittingly provide the money fossil fuel companies need to continue raping and plundering the Earth for access to coal, oil and methane deposits.
How is it possible? The answer lies in the banking world. Once a person or company deposits money or other valuable financial products with a bank, they use them to lend money to others. The $500 you have in a savings account might not be that big, but companies are depositing hundreds of billions, which is A big deal.
Banks make loans. That’s what they do. And they don’t ask you or their corporate clients what kinds of loans they’re allowed to make. Instead, they seek the highest possible rate of return. Since fossil fuel companies are willing to pay high interest rates on the money they borrow to finance their operations, many banks actually prefer to lend them money because it means they make more money, which means big year-end bonuses for those at the top of the food chain.
Here is the introduction to the new report in its entirety. It makes for interesting reading.
Faced with the climate crisis, the world’s most responsible companies are stepping up their efforts to fight climate change. From using 100% renewable energy to electrifying fleets to investing in carbon removal technologies, the growing toolbox of climate solutions companies are using to decarbonize their direct emissions and those of the supply chain is becoming more and more systemic and efficient. However, one source of corporate supply chain emissions has long existed under the radar because it was difficult to analyze: the climate impact of corporate banking practices. Even for companies with billions of dollars in cash and investments, it was not possible to calculate the greenhouse gas emissions generated by their cash and investments.
Until now.
New research from the Climate Safe Lending Network, The Outdoor Policy Outfit and BankFWD calculates the emissions generated by a company’s cash and investments (cash, cash equivalents and marketable securities). This research shows that this previously hidden source of emissions is important. For some of the world’s biggest companies, including Alphabet, Meta, Microsoft and Salesforce, their cash flow and investments are their primary source of emissions. Indeed, for Alphabet, Meta and PayPal, the emissions generated by their cash and investments (funded emissions) exceed all of their other emissions combined.
This means that for a company like Microsoft, in 2021 the emissions generated by the company’s $130 billion in cash and investments were comparable to the cumulative emissions generated by the manufacture, transport and use of all Microsoft products worldwide. For companies like Amazon and Johnson & Johnson, whose operations are more carbon-intensive, their funded emissions further increase overall emissions by up to 15%.
In 2020, Amazon saw record sales and emissions due to the COVID-19 pandemic. However, in 2021, its $81 billion in cash and financial investments generated more carbon emissions than the emissions generated by the energy purchased by Amazon to power all of its facilities around the world – its fulfillment centers, its data centers, physical stores and other facilities.
Madness
Following the release of the latest IPCC 6 climate report, UN Secretary General António Gutteres said it showed a “criminal abdication of leadership”. Since then, according to the new yorker, 7 huge new oil and gas projects have been approved around the world, companies now labeled as “carbon bombs”. Exxon, which claims its carbon lies are protected by free speech, has announced a new offshore drilling project in Guyana. Canada has approved the drilling of 60 new wells in the Flemish Pass near Newfoundland. The lead company of this project, Equinor, has banks with Chase and Bank of America.
These projects will generate emissions far beyond the point at which scientists say we need to end fossil fuels. “We are blocking decades of issues every day because the banks are not acting fast enough,” says former European banker Paul Moinester. the new yorker suggests that over the next two years, we will discover whether large-scale modern capitalism can still play a role in helping us out of “the most serious dilemma our species has ever faced”.
For Big Tech, size matters
Let’s face it. Since the disastrous United Citizens United States Supreme Court ruling, corporations have replaced people as the holders of sovereign power in America. And yet, as a group, with the exception of Koch Industries, they have refused to use their power to engage directly in defining social policy. Sure, they’re campaigning and working to reduce the carbon emissions directly associated with their business activities, but they haven’t worked together to offset the power of banks and the fossil fuel industry.
the New Yorker says part of the reason is that size matters. They may be big, but Saudi Arabia’s Aramco has the highest market capitalization of any company in the world. Exxon is 15th and Chevron 22nd. Chase is number 18 and Bank of America is 28th. Therefore, if forced to make a choice, a banker might well decide to lend to Big Oil rather than a tech company.
On the other hand, among Big Tech companies, Meta (the former company known as Facebook) is No. 8, Tesla is No. 6, Amazon is No. 5, Alphabet is No. 4, Microsoft, No. ° 3 and Apple. , #2. All of these companies have net zero goals. the New Yorker said: “If they decided to put pressure on the banks, it would be a battle of giants. And banks should consider not just who is at the top now, but who is likely to stay there. It’s pretty hard right now to make the case for Exxon’s long-term future, although Amazon looks likely to last. If Apple CEO Tim Cook sits down with Chase CEO Jamie Dimon, who blinks first? »
What is needed is not for the banking sector to make pretty speeches about reducing the carbon intensity of its operations, but rather for it to stop financing future fossil adventures. Jason Disterhoft, climate and energy campaign manager for the Rainforest Action Network, told the New Yorker“No opening of new oil and gas reserves for extraction, no exploration of new oil and gas reserves, no new or expanded pipelines, LNG terminals or other infrastructure in between, and no new or expanded gas-fired power, refineries or other downstream infrastructure.” All this at a time when the United States is pressuring Europe to build new LNG terminals to offset its dependence on Russian gas.
Big Tech and the future of capitalism
Going forward, capitalism can either be a suicide machine or play a crucial role in accelerating the clean energy revolution. the New Yorker says that big banks and asset managers are capitalism’s capital. They know how to take the money you deposit today and turn it into 20-year loans to pay for infrastructure designed to last 40 years. “It turns the short term into things that will last for decades,” said James Vaccaro, former banker and current director of the Climate Safe Lending Network.
It’s a system that helps innovation thrive, New Yorker said. “Without it, we wouldn’t have seen the price of renewables plummet, as one company after another has raised capital to work on the next iteration of wind turbines or batteries. But so far he refuses to distinguish between useful work and work that literally endangers the planet – and, if you want to think of it in those terms, all the economic activity that could one day take place on this planet, assuming it survives under a recognizable shape.
According to Rockefeller heir and BankFWD co-founder Peter Case, “The financial system can be one of two things: an engine of sustainable growth or an engine of climate chaos.” the New Yorker puts an end to things. “If Big Tech pushes Big Money to cut Big Oil, we could see the changes that have eluded us in the fight against climate so far, and that scientists are insisting we need to make. This could be a real turning point in the crisis. Carbon capture? Geo-engineering? Pish tosh. Responsible investment strategies could do more than these cockamamie schemes.
Takeaway meals
Our readers are encouraged to read the full New Yorker article. It’s full of interesting details and ideas, but its last paragraph clarifies things.
“As with any truly self-destructive behavior, intervention is required. This is why the possibility for some of these major players to intervene with the banks seems so necessary. In a world where inequalities are widening, companies such as Apple or Amazon have become almost cartoonishly rich and therefore particularly powerful in their ability to force change. We are in the final years where humans will have the power to really influence where the temperature of the planet settles. 2030 is just seven years and seven months away. Or, as they measure time at Google and Chase, thirty-one quarters.
It’s time to recognize that corporations are now super-citizens whose wealth, power and influence exceed that of mere mortals. To date, most of them have preferred to keep their heads down and make money. But the key to business is customers who have money to spend. It seems incredibly short-sighted to ignore the fact that an overheating planet might just drastically reduce their customer base. Death buys nothing, a key consideration that most companies overlook because they are unable to think beyond the next quarter of the next annual report.
Conventional business theory posits that corporations have only one duty: to create value for shareholders. If the world of commerce continues to exclude moral imperatives, that in itself could lead to the ejection of humanity from that tiny little blue lifeboat at the end of our galaxy.
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