Is it time for worldwide legal restrictions on fossil fuels?
Amid the glamour of this week’s UN General Assembly in New York, it’s important to keep in mind one of the main missions of this global organisation: to rally and co-ordinate effective support for the world’s most vulnerable.
Currently, that category includes millions of people in Africa and the Middle East at risk of famine, amid surging food prices and broader economic and political upheaval. This report from the International Rescue Committee gives a sobering appraisal of the situation in countries from Somalia to Afghanistan.
It also delivers some interesting recommendations — notably a suggestion that the UN expand the membership of its famine prevention task force to bring together more voices from the affected countries, and from the donors who could help them. A renewed focus on that body could give a clearer focus to international efforts on famine prevention, which the IRC says have been diffused among a “proliferation” of different initiatives.
But it will be hard for any of this to happen without serious commitment from rich-world politicians, who bear an important part of the responsibility for the worsening hunger crisis, IRC head David Miliband told us yesterday. The crisis, he said, showed “the effect of political inertia at best and disinterest at worst”.
Today, we look at the gathering drive for a global treaty that explicitly restricts fossil fuel production, and at the challenges facing Microsoft’s drive to be an ESG leader. And we’ll be back in your inbox on Monday. (Simon Mundy)
UNGA in brief
World Bank president David Malpass tried to calm calls for his resignation after his refusal at an event this week to state publicly that he accepted the scientific consensus on climate change. On CNN yesterday he said that he did — but critics continue to demand his departure.
A draft UN policy memo, leaked to the FT, recommended that Pakistan seek to suspend debt repayments and restructure loans following devastating flooding in the country.
Nouriel Roubini, the New York University economics professor known to some as Dr Doom, claimed that we do not yet have solutions to tackle global warming without wrecking economies. The response to date involves “greenwashing, green-wishing and fig leaves”, he said at an event hosted by the Saudi sovereign wealth fund.
Support grows for a global fossil fuel treaty
Amid the many ideas swirling around at Climate Week NYC, one in particular seems to be gathering momentum: the push for an international fossil fuel non-proliferation treaty.
About 200 health groups, including the World Health Organization, threw their weight behind the concept just before Climate Week kicked off. It was also promoted this week in a speech by Mexico’s Xiye Bastida, a leading figure in the youth climate movement. And later today, we’re told, the leader of a climate-vulnerable Pacific island nation will become the first head of state to publicly endorse the idea.
The campaign for this treaty has been driven by a coalition of civil-society groups, spearheaded by Canadian activist Tzeporah Berman. The idea behind it is to fill some of the gaps left by the 2015 Paris accord and subsequent international pacts.
While the Paris agreement commits signatories to make efforts to keep global warming below 2 degrees, it gives them wide discretion on how they will do so, and makes no explicit mention of fossil fuels. Neither did the final text of last year’s Glasgow climate pact, except for a pledge to accelerate “efforts towards the phasedown of unabated coal power and phaseout of inefficient fossil fuel subsidies”.
The proposed treaty would go much further, creating major new restrictions on fossil fuels, which would be binding under international law. Most radically, it would impose a moratorium on the development of all new oil, gas and coal reserves. There would also be limits on the extraction of fossil fuels from existing reserves.
I spoke about the idea yesterday with James Bhagwan, a Fijian priest who leads the Pacific Conference of Churches and has been a prominent advocate of this proposal. “The Paris agreement is important,” Bhagwan said. “But at the end of the day, [it produces] voluntary national commitments. And this is the challenge, because what then pushes countries and states and businesses to make the shift that is so urgently needed?”
In our coverage of private-sector climate alliances, we’ve highlighted the limits of what can be achieved through voluntary corporate action, in the absence of mandatory measures imposed by governments. This treaty would apply the same logic to governments themselves — locking them into binding requirements, rather than relying upon their good faith and best efforts. And for precisely that reason, marshalling political support for it will probably be far tougher than for any international climate agreement to date.
This concept will surely surface again at COP27, where discussions will give a better sense of whether it will prove a Quixotic mission — or might have some chance of coming to fruition. (Simon Mundy)
Microsoft’s Brad Smith on the cloud, ESG backlash and taxes
Tech giant Microsoft is a top holding in many ESG-branded funds. As well as its huge market capitalisation, that reflects the company’s heavy public emphasis on boosting its sustainability credentials.
This raises some tough questions for the company. It is a vast energy consumer, thanks to the power-hungry data centres that drive its cloud computing service. It’s under pressure from critics — including some employees — to speak out more forcefully on social and environmental issues. And yet its efforts on that front could put it in the crosshairs of Republican politicians eager to tackle “woke capitalism”.
I discussed these issues with Microsoft president Brad Smith at the company’s offices near the UN, where he spoke yesterday about fostering technical solutions to global warming.
I asked Smith how Microsoft’s Azure cloud service, which has enjoyed explosive growth, would handle growing electricity needs with the company’s pledge to be carbon negative by 2030.
He said Microsoft was “relentlessly focused” on improving the energy efficiency of its data centres. And he talked about the power purchase agreements that Microsoft had signed to bring renewable energy into its systems.
We also spoke about the new backlash against ESG from Republican politicians. Microsoft is usually a top two or three holding in the biggest ESG funds. And with Microsoft’s conspicuous public statements on sustainability issues — and with internal and external pressure to go further — it could easily be pulled into the political fray alongside the likes of Apple, Disney and Starbucks.
Microsoft applied a three-pronged question to determine whether it would engage publicly on an issue, Smith said. Did the issue affect the interests of its customers, or its employees, or of the business itself?
“There are many issues that we are passionate about that do not meet those three criteria. Gun control is one,” Smith said. “You could take a poll of our employees — I could offer a guess as to what they would like to see; they often ask us to speak out. But we don’t feel comfortable, at least have not to date, when we apply the litmus test of those three principles.
“How will we stay above the fray?” Smith continued. “We will stay above the fray when we should but we will enter the fray when we must. The definition of ‘must’ is when our three principles are at stake.”
Microsoft will hold its annual meeting later this year. One of the shareholder proposals the company is facing involves a call for more transparency on how and where it pays its taxes. “We feel good about the taxes we pay,” Smith said, adding that the tax issue “is definitely one that we will need to talk a little bit more about and think a little bit more about between now and the shareholder meeting”. (Patrick Temple-West)
This morning the UK’s new chancellor Kwasi Kwarteng announced a 5 per cent tax cut for people earning more than £150,000 ($168,000). The Treasury explained the decision by saying that keeping the 45 per cent tax rate on the highest earners would have “reduce[d] the incentive to work, invest, and start a business”.
But will the extra cash for the UK’s richest make their lives any better? It’s a timely moment to read Tim Harford’s new column, looking at the relationship between income and happiness.