Third Act is presenting a webinar Wednesday, May 25, at 8:00 pm EDT. The topic is Climate Justice And Banking. We reported recently on a new study entitled “The Carbon Bankroll: The Climate Impact and Untapped Power of Corporate Cash” that attempts to quantify the carbon emissions that large tech companies are indirectly responsible for when they they make use of the traditional banking system. The order of progression is pretty simple. GigaCorp has a billion dollar profit in Q1. It deposits that money with GigantaBank, which then uses the money to fund oil and gas exploration around the globe.
The study suggests all those Big Tech companies could get together to organize their own banks and cut out the rapacious Wall Street lenders who care only about their fat bonus checks and would happily sacrifice the entire human race on the altar of greed. It’s a controversial idea, this notion of disrupting Wall Street. Can’t be done, right? The existing financial system is too powerful, too entrenched. It would never work.
Well, not so long ago, some wild eyed radicals suggested we could take a slew of laptop batteries, shove ’em into the chassis of a car, and drive on non-polluting electrons instead of gasoline molecules. “That’s crazy talk!” people said. And yet, just a little over a decade later, the company that started it all has transformed how the suits in the C-suites at Mercedes, BMW, Volkswagen, GM, Ford, and Stellantis think about the world of transportation. If such an earthquake could hit the world of transportation, who’s to say something similar couldn’t happen in the financial community as well?
Banking & Lunacy
The importance of disrupting the financial community was driven home recently by the words of Stuart Kirk, the head of responsible investing for the asset management division at HSBC, one of the whales of international banking. (HSBC stands for Hong Kong and Shanghai Bank.) Speaking at a forum organized by the Financial Times, Kirk’s speech was entitled “Why investors need not worry about climate risk.”
According to the New York Times, Kirk told those in attendance, “Who cares if Miami is six meters underwater in 100 years? Amsterdam has been six meters underwater for ages, and that’s a really nice place. We will cope with it.” There is an echo in there of the remarks made by former Exxon CEO Rex Tillerson, who dismissed the idea of climate change as a threat to the human species by saying that humans will just need to adapt. Easy for Tillerson to say with the billions he made by pillaging the Earth to protect him. Not so easy for those sweltering in India and Pakistan who are suffering right now this very moment with extreme heat.
Kirk embellished his speech further with this pitch perfect plaint of a prototypical plutocrat: “There’s always some nut job telling me about the end of the world. What bothers me about this one is the amount of work these people make me do. The amount of regulation coming down the pipes. The number of people in my team and at HSBC dealing with financial risk from climate change.”
Oh, poor little rich white boy being harried and harassed by those who seek to preserve the world as a place where humans can flourish. Boo hoo. Keep in mind, Kirk is the head of responsible investing at HBSC! And we should give him and his coterie of fossil fuel apologists billions to fund new oil and gas development because…why?
Who Is Third Act?
On its website, Third Act says, “We’re used to thinking that humans grow more conservative as they age, perhaps because we have more to protect, or simply because we’re used to things the way they are. But our generations saw enormous positive change early in our lives—the civil rights movement, for instance, or the fight to end massive wars or guarantee the rights of women. And now we fear that the promise of those changes may be dying, as the planet heats and inequality grows.
“But as a generation, we have unprecedented skills and resources that we can bring to bear. Washington and Wall Street have to listen when we speak, because we vote and because we have a large — maybe an overlarge — share of the country’s assets. And many of us have kids and grandkids and great grandkids. We have, in other words, very real reasons to worry and to work.”
As part of the webinar on May 25, Bill McKibben will speak about the importance of “The Carbon Bankroll: The Climate Impact and Untapped Power of Corporate Cash” report and show how the biggest, richest companies in the world — Google, Netflix, Amazon, Microsoft — emit more carbon pollution from the cash they keep in the banking system than from their actual business operations. The Third Act webinar will discuss ways to leverage this new data to further push Wall Street to stop bankrolling climate destruction.
The Dornbusch Law
Writing in the New York Times, Paul Krugman excoriates Stuart Kirk for this recent remarks and shares with his readers the Dornbusch Law that is well known in academic circles, particularly among international economists. Rudiger Dornbusch was a prominent economist at MIT who sad, “The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.” Krugman writes,
“Modern societies — certainly high-income countries like America, and even lower middle income nations like India — have far more capacity to deal with problems than pre-industrial societies. They can aid hard hit regions; they can adapt their agriculture and living arrangements to changing weather; they can probably preserve the appearance of more or less normal life for years to come.
“What I fear — and, alas, expect — is that for years, maybe even decades, to come we’ll avoid the worst case scenarios for climate disaster. Famines may kill millions, but not tens of millions, because food will be rushed in when crops fail. Incidents in which wet bulb temperatures — a measure of heat and humidity combined — pass the limits of human endurance will remain rare for a while. Residents of cities swamped by storm surges will be rescued.
“Thanks to human ingenuity, we’ll cope — until we can’t, because the scope of the crisis will exceed even modern society’s ability to adapt. I think of our response to changing climate as being like a rubber band that can be stretched a long way until it suddenly snaps. And then the megadeaths will begin. I wish I was being hyperbolic, but I think I’m just being realistic.
“The tragedy here is that the climate crisis is eminently solvable (emphasis added). Among other things, progress in renewable energy has been so dramatic that even a fairly modest policy push could still lead to a large reduction in greenhouse gas emissions.
“But none of this can happen without participation from the United States, and rational climate policy in what is still the world’s essential nation is being held hostage by people more concerned with imaginary threats from critical race theory and swarming immigrants than with the rapidly changing fate of the planet.”
Krugman’s rubber band analogy is apt — and terrifying. No one can say where the breaking point will be, but it can be said with reasonable certainty that it will happen in the foreseeable future. It can also be said the international banking community is playing a major role in moving the timeline forward. There are alternatives, however, and the point of the the Third Act webinar is to show how the world of Big Tech could accelerate those alternatives.
For the record, HSBC has suspended Stuart Kirk and issued a slew of statements decrying his remarks and assuring the world that what he said in no way reflects the policies of the bank. We are asked to believe that this loose cannon somehow rose through the ranks to be become the head of responsible investment and nobody knew his views on climate change or endorsed them? Do they really expect us to believe those fervent protestations?
Yes, they do. Just as the fossil fuel companies expect us to swallow their line of codswallop about “net zero” in 2050 and all the other lies they have been peddling for more than a half century. The time to act is now and that means no more “business as usual.” Tune in Wednesday night to learn more about how to transition away from greed based banking toward a sustainable economy. It should be quite a show.
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