Jamie Dimon
Jamie Dimon

News from the front desk, issue 464Right now, while government twiddles its thumbs and minsters glance constantly at their watches waiting for the next holiday, the private sector is doing what the ideology of small government/big privatised economy meant it to do – taking charge and declaring war on carbon.

The speed of change is impressive.

Last week Larry Fink’s BlackRock, the world’s biggest fund manager, signalled it was moving out of coal. The green critics were unimpressed and called out greenwash, but those with a more nuanced understanding of the announcement don’t agree.

They say the move is about as significant as you can get. The world’s biggest investor might be starting small on its shift out of coal but the end point will be much bigger.

This week we hear that there’s hope another big financial behemoth might move: Jamie Dimon and the bank he runs, JPMorgan Chase, America’s biggest.

Take a look at a social media campaign launched by none other than Jane Fonda. Fonda has now stopped getting arrested on a regular basis in climate emergency protests and has been convinced to turn her sights to Dimon.

Energy finance expert Tim Buckley, a director of Institute for Energy Economics and Financial Analysis, says get these two to roll over and it’s pretty much game over:

The reason is that Chase is America’s biggest bank – one half of the equation; the other is the country’s biggest investor.

“The BlackRock move was huge,” Buckley says, “I think it’s absolutely pivotal.”

There are five reasons why the greenie critics are wrong on BlackRock, he says.

One is that Fink has committed to investor movement Climate Action 100+ . He also says his behemoth outfit will disclose quarterly instead of annually the results of its proxy voting, an area where the company has come under intense criticism for consistently voting pro-coal.

He’s also promised that every company his company invests in will need to be signed up to the TaskForce on Climate-Related Financial Disclosure (TCFD). And finally, he’s signed up BlackRock to the sustainability accounting standards convention

These add up to big moves, Buckley says.

How it happened is interesting. Partly it’s been the public shaming from groups such as Extinction Rebellion. Fink himself cited public protests as part of the impetus.

But behind the scenes there’s been a far more personal, carefully crafted strategy by a bunch of NGOs, calling in favours from influencers and the powerful alike to influence the man himself in a very in-your-face kind of way.

Nothing like peer pressure.

Now, this resistance is turning its sights to Chase. Check out the article by 350.org founder Bill McKibben in the New Yorker late last year to see what’s in store.

And Buckley suspects Fonda will be like a dog with a bone.

He reckons you could go after State Street or some other big bank, but with Fink and “Jamie” you’ve got this irresistible “cult of personality” that’s so much easier to shift than a whole boring board.

If it took a year for Larry Fink to turn. There are people who say Dimon will take a month, Buckley laughs.

“If those two move, it’s game over.”

Here’s what Reuters says: “Larry Fink’s new green halo is Jamie Dimon’s for the taking.”

JPMorgan has got a long way to go to move away from its “atrocious” record but the logic from investors and regulators is pointing all one way.

Actions it could take are radical, it says, “but doing too little would be worse in the long term than jumping the gun. And there’s that shiny halo to play for.”

Buckley is not the first to say it, but he thinks 2020 is pivotal for the financial markets.

More evidence that he’s right came just two days ago when Lloyds Banking Group announced it would cut the carbon it invests in by 50 per cent within a decade.

Wendy Frew’s article this week has a load more evidence on big business shifts and it will lift your spirits immensely if you’re feeling undone by the horrors.

Among a string of good news is that European companies are now using a temperature measure to gauge the climate impact of their actions.

Another interesting change is that financial return – or payback – is starting to lose its lustre as a measure of action when it comes to sustainability.

A Deloitte report finds:

“If you look at [energy storage] battery technology, it is improving in a much stronger [than predicted] curve … people are willing to spend money on batteries in their house to support solar energy at a greater level than the pure economics that make sense if the only driver was to save money on your energy bills,”

The company’s chief strategy and innovation officer for Australia, Robert Hillard, says to expect a similar trend for electronic vehicles.

Given these scenarios, what we have is the potential for massive disruption. Move over Silicon Valley.

Almost all of them are coming from the private sector, underpinned by the mass driver of consumer demand. Not government, not in Australia anyway. 

The size and speed of the shift is why Buckley says he’s feeling positive.

“It’s why I’ve always been an optimist on this.”

The risky part

The power of the financial markets to shift is what Governor of the Bank of England Mark Carney promised and warned about a few years ago. Financial markets price risk, and when they do, they do it very quickly. He was advocating for an orderly transition.

This may no longer seem like a certainty. It’s possible that’s why the world’s central banks and Reserve Bank of Australia ended up in a splashy front page story on Monday saying they may need to bail out the coal and fossil fuel companies if their assets become stranded.

If you think that’s crazy and believe the terse dismissal of the idea from our politicians and other people of note, think again.

Remember the massive corporate welfare bailout of the GFC and the idea might not seem so crazy. In the GFC taxpayers bailed out the wealthiest people who had benefited most from the sub prime loan and all the associated rorts.

But at what cost is this bailout?

Then again, what cost is a planet? A home? An ecology?

Here’s an idea: We could put the entire fossil fuel industry in Jeff Bezos’ mad spaceship to find another planet to wreck.

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    1. There’s nothing dismissive about being labelled a greenie activist – I think anyone should be proud of that label. And the argument (from the climate action side of the fence) is there is a deeper impact from BlackRock than is first apparent. Besides we can keep a very very close eye on whether these people deliver.