I have been intrigued by three reports in the Guardian. The first is this:
A court in the Hague has ordered Royal Dutch Shell to cut its global carbon emissions by 45% by the end of 2030 compared with 2019 levels, in a landmark case brought by Friends of the Earth and over 17,000 co-plaintiffs.
The oil giant's sustainability policy was found to be insufficiently “concrete” by the Dutch court in an unprecedented ruling that will have wide implications for the energy industry and other polluting multinationals.
They added:
The Anglo-Dutch company was told it had a duty of care and that the level of emission reductions of Shell and its suppliers and buyers should be brought into line with the Paris climate agreement.
The court found there was a legal duty on the company to act, and it was not.
US oil giants ExxonMobil and Chevron have suffered shareholder rebellions from climate activists and disgruntled institutional investors over their failure to set a strategy for a low-carbon future.
Exxon failed to defend its board against a coup launched by dissident hedge fund activists at Engine No. 1 which successfully replaced two Exxon board members with its own candidates to help drive the oil company towards a greener strategy.
That was pretty amazing: the shareholders took action in this case to force the companies to go greener. Will it really change anything? Maybe not, as yet. But just wait: the warning klaxon has been fired and companies will notice.
And then there was this:
The federal court of Australia has found the environment minister, Sussan Ley, has a duty of care to protect young people from the climate crisis in a judgment hailed by lawyers and teenagers who brought the case as a world first.
Eight teenagers and an octogenarian nun had sought an injunction to prevent Ley approving a proposal by Whitehaven Coal to expand the Vickery coalmine in northern New South Wales, arguing the minister had a common law duty of care to protect younger people against future harm from climate change.
It looks like change really does come in threes.
There is, of course, a consistent theme, and that is that when it comes to climate change a company and a government has a duty of care.
My argument is a simple one. The proposed accounting rules from the Task Force on Climate-related Financial Disclosures (TCFD) and the proposals from the International Financial Reporting Standards Foundation (IFRS) for Sustainability Standards based upon them but do not, in my opinion, supply the data to fulfil this duty of care. This is because the TCFD and IFRS proposals have an inherent flaw within them. They both presume that sustainability reporting is to be accounted for off the balance sheet of an entity. As such they perpetuate the whole economic assumption which has given rise to the climate crisis, which is that sustainability can be treated as an externality to the core operation of the enterprise when it is in fact an issue that has to be embedded at the core of it if any company is to remain as a going concern.
Sustainable cost accounting is, I would argue, consistent with that duty of care: it puts the cost of climate change on the balance sheet.
And as macroeconomic entities (see this morning's blog on that issue)PIEs are big enough to do net-zero carbon without offsetting, which is essential. So they should really be capable of delivering net-zero. That, I suggest is the obligation that they have. They will need to prove that they do just that. I think sustainable cost accounting is the way to do that.
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While I agree with your general point about sustainability being a non-core commercial activity when it should be central, the desire to move climate change onto the ‘balance sheet’ is problematic. It implies the need to monetise carbon emissions (£CO2 / Tonne). There is a very large literature on the problems associated with this approach (equity, elasticity, pricing, integration with negative emissions etc).
We’re you implying going down this route? Or do you have other ideas as to how companies can be forced to meaningfully put sustainability at the heart of their business models?
Read what I have written
That is exactly not what I have written
That is why my position is different
So the answer to my question as to how sustainability can be incorporated onto a company’s balance sheet is nicely summarised in these 4 points from your excellent linked article. Companies will have to produce:
1. Hard evidence as to the cost the reporting entity will incur in becoming a net-zero carbon producer by an agreed date (we prefer 2030, but know that this is not universally agreed);
2. Audited confirmation that the entity will remain a going concern in the face of these costs;
3. Evidence that net zero carbon objectives in some locations will not be met by exporting emissions to other locations;
4. A mechanism for the orderly winding up of the affairs of those companies that are not going to survive into the new economy that we need.
I would agree with much of this, with the possible exception of ‘net zero’ which should be ‘real zero’ since the ‘Net’ harvests every scam out there (net zero minus offsetting = real zero).
I’d also like to see how the Business models of ‘Global Universities’ would fare! Their core strategy is to fly the next generation of the world’s movers and shakers across continents. Being finishing schools for a jet-setting rich 10% won’t look so good financially if your proposals were adopted.
I would agree with you on global universities, entirely
But that’s the point. We do have to change behaviour
I should add, you have extracted incorrectly, but you know that
The section I copied highlighted the goals not the details of your suggested mechanism. This seemed to best encapsulate the key points from your Sustainable Cost Accounting document as I saw it. If this isn’t correct, please say why. I’m trying to be helpful but will struggle in debate with a Delphic oracle.
You imply winding up is inevitable: it isn’t, of course. It only might be
Hopefully there will be increasing pressure to make ecocidal axtions/policies a criminal offence recognised in international law. Large scale citizen action can make a difference in this field..
Carbon Tracker released a report today on the oil companies. (free download if you register – also free)
https://carbontracker.org/reports/absolute-impact-2021/
In summary, mostly far too little, far too late. Exxon is at bottom of the list (no surprise) 15 – 20% by 2050 FFS!
The final point in the summary – confirmes/matches much of what Richard has been saying:
“Accountability and transparency is critical for emissions mitigations, both to avoid double-counting and to ensure that “offsets” have the intended effect.”
Euractiv did a commentary on the Shell court saga – I BTLed. I have no confidence that the court case will lead to any substantive reduction.
https://www.euractiv.com/section/energy/news/shell-ordered-to-slash-emissions-45-by-2030-in-historic-court-ruling/
I am increasingly disgusted by the lack of seriousness by all parties wrt emission reductions, typified by a constant parade of mental deficients driving past the house in SUVs etc.
I found this link intriguing earlier today
https://b.tc/conference/agenda
Of course, a lot of bitcoin miners are hobbyists or chancers, but they are not registered as businesses of sufficient size to come under the scope of SCA.
So what would be the best way to deal with their behaviours in an independent Scotland?
-a CO2 tax as recommended by the Green New Deal paper of 2008. Generators exist for sale or for hire after all.
-or no CO2 taxation, but SCA instead, which would only apply to the suppliers of the electricity in their Scope 3 costs if I’ve understood it right.
In other words, which version of your two recommendations is the best one for a future independent SCO?
Ban bitcoin production
Solved