Some scientists believe that the Green Deal policy is grounded in concerns for the environment and climate. But what should a relatively small company from a small country do if it has no climatologist on staff — especially at a time when public dissatisfaction with the consequences of climate policy is growing? Should it ignore these requirements, implement climate measures, and if so, in what way?
Germany’s Federal Minister for Economic Affairs and Climate Action, Robert Habeck, has acknowledged that Germany is unlikely to meet the climate targets set out in the Climate Protection Act over the next two years, as “we are starting with a severe backlog.” At the beginning of the year, the minister noted that “the trend is moving in the opposite direction,” with emissions in Germany increasing. The climate objectives are not only substantial — “they are gigantic.”
He anticipates that the structural changes triggered by the new federal government’s climate policy will intensify public dissatisfaction. Resistance may rise sharply, especially considering that Germany has committed to achieving climate neutrality as early as 2045 — earlier than the European Union as a whole. Moreover, the federal state of Schleswig-Holstein, represented by its Minister for Energy Transition and Environment, J. F. Albrecht, aims to move even faster and is targeting 2035.
The EU aims to achieve climate neutrality and negative emissions after 2050. Europe is revising all areas of climate policy, including the emissions trading system, as more ambitious targets for emission reductions have been set.
“The key question is this: until now, the EU had agreed to reduce our emissions by 40% compared to 1990. With the Climate Law, we have now set the target of reducing emissions by at least 55% by 2030. This means we must revisit all policies that were designed for minus 40 percent and ensure that they align with minus 55 percent,” emphasized F. Timmermans, Vice-President of the European Commission, last year.
He calls for examining a wide range of proposals — those related to the emissions trading system, renewable energy, energy-efficiency requirements, energy taxation, and vehicle emissions. Major changes are coming across all EU Member States, on a broad scale, affecting every sector and every citizen. It will not be possible to avoid dissatisfaction among various social groups.
The climate-policy monitoring organization Climate Action Tracker analyzed the policies of 36 countries, including the 27 EU Member States, and found that most of them have not achieved alignment with limiting global warming to 1.5 degrees Celsius compared to pre-industrial levels.
The analysis found that the overall climate plans of the United States, the EU, and Japan are insufficient. It noted that although these countries’ domestic targets are relatively close to the required level, their actions and financing — including support for developing countries — are not adequate. None of the world’s major economies, including all G20 countries, has a climate plan that aligns with the commitments set out in the 2015 Paris Agreement.
STICKS AND CARROTS
An old truth remains: nothing drives large-scale reforms forward as effectively as successful court cases. The architects of climate policy work with impressive systemic precision — Greta Thunberg fulfils her role (shaping public opinion and shaming national leaders), court cases push decision-makers ahead, central tasks are delegated to banks (to classify and provide cheaper financing to “sustainable” companies), and to EU directives. As it happens, the past two years have seen a considerable number of court rulings in favor of climate action — both in Europe and in the United States.
Six months ago, Angela Merkel’s government rushed to amend the law before the elections, committing Germany to achieving climate neutrality by 2045 — five years earlier than other EU countries. Her coalition was forced to act after the Federal Constitutional Court ruled that the original version of the Climate Protection Act endangered the future of younger generations by leaving the bulk of emission reductions to the distant future.
Six young people from Portugal have filed an unprecedented lawsuit against 33 European countries, arguing that these states are failing to take adequate measures to address the climate crisis, thereby endangering their human rights under the European Convention on Human Rights. As it happens, this is only one of several legal actions brought by young people around the world, demanding urgent steps in the field of climate policy.
France has had its own court case as well. The country’s highest judicial authority issued a ruling on an appeal filed by a small municipality (Grande-Synthe). The government was given three months to demonstrate that the measures intended to “enable the reduction” of greenhouse-gas emissions were on the right track and sufficiently stringent.
For understandable reasons, court cases against the fossil-fuel industry have been initiated with particular attention. New Jersey (USA) has joined the wave of litigation seeking to hold the fossil-fuel sector accountable for its impact on the climate. The city of Hoboken filed a lawsuit against major oil and gas companies (BP, Chevron, ConocoPhillips, ExxonMobil, and others) as well as the American Petroleum Institute (API), accusing them of promoting “uncertainty” about climate science.
As in other lawsuits brought against fossil-fuel companies, the Hoboken claim argues that oil and gas corporations not only long knew about the harm their products caused to the climate, but also engaged in campaigns of deception. Minnesota’s Attorney General, Keith Ellison, has likewise filed a lawsuit in which the American Petroleum Institute (API) is named as a defendant.
WHO OPPOSES THE GREEN DEAL
It goes without saying that the fossil-energy sectors hold strong positions in politics and the financial world. Over the past six months, particular attention has been drawn to U.S. Senator Joe Manchin, who chairs the Energy Committee. In the deeply divided U.S. Senate, he stood out by refusing to support President Joe Biden’s 3.5-trillion-dollar budget bill, which would have included an aggressive climate policy requiring utility providers to stop burning fossil fuels and transition to wind, solar, or nuclear energy.
The U.S. media have noted that his position may be linked to the fact that he personally profits from coal-mining companies. His home state, West Virginia, is the second-largest coal producer and the seventh-largest natural-gas producer in the country — meaning, in a sense, he is serving his electorate and the existing jobs. In the current election cycle, Joe Manchin has received more donations from the oil, coal, and gas industries than any other senator (according to OpenSecrets).
Similar examples can be found at the state level. In Texas, two organizations with educational missions — Commission Shift and Texans for Public Justice — criticized the state’s fossil-fuel regulator in the autumn, arguing that its membership includes individuals who hold shares in oil or gas companies, amounting to a blatant conflict of interest, ambiguities in ethics laws, and problems within the campaign-finance system.
The fossil-fuel regulator’s commissioner, Christi Craddick, has a financial stake in Texas’s oil and gas industry. She owns oil and gas assets worth several million dollars. Taken together, this makes the fossil-fuel regulator an “agency dependent on the industry.” America, as we know, is a land of paradoxes — and perhaps a co-owner of fossil-energy companies will indeed end up promoting green energy?
Not to mention that in 2021, U.S. greenhouse-gas emissions rose again and were 6.2% higher than the previous year (according to Rhodium Group). This indicates that the country remains far from achieving President Joe Biden’s climate-change targets.
Many U.S. government agencies are routinely led by individuals coming directly from the industries they are meant to oversee, largely because those sectors have sponsored politicians’ election campaigns. Although, after Joe Biden’s election victory, the Democratic Party diligently “cleaned out” Donald Trump’s loyalists from key positions, this alone may not be enough to secure wins on the climate-policy front. It will therefore be important to watch closely how quickly — if at all — President Joe Biden manages to advance the climate agenda and, after negotiating with the relevant oligarchic clans, replace those officials who currently find themselves on the wrong side of climate history.
The well-known bank JPMorgan Chase has often been described as “the oil industry’s bank.” Its managing director, Greg Determann, when asked whether the bank would continue lending to oil and gas companies, responded rather boldly less than two years ago: “This is a huge business for us, and it will remain so for decades to come!”
In the few years since the Paris Climate Agreement was signed, the bank has lent more than a quarter-trillion dollars to the fossil-energy sector, making it one of the key forces slowing efforts to curb global warming.
In contrast, the assets of Europe’s eleven largest banks amounting to more than €530 billion are linked to fossil fuels (coal, oil and gas). Instead of reducing their dependence on fossil fuels, EU banks actually increased their support for this sector between 2016 and 2020.
FROM IDENTITY TO SHIFTS IN FINANCIAL FLOWS
However, even fossil-energy companies are changing their tactics — and global platforms like Facebook are greatly assisting them. The London-based organization InfluenceMap has found that advertisements by ExxonMobil and other fossil-fuel companies increased on the social network, with the aim of influencing political debates on how to address global warming.
The organization concludes that the fossil-fuel industry no longer directly denies the climate crisis and instead uses social media to promote oil and gas as part of the solution. It also finds that Facebook has helped spread false claims about global warming by consistently failing to enforce its own policies on misleading advertising. According to the report, Facebook was unable to uphold its rules to limit the oil and gas sector’s disinformation and propaganda campaign about the climate crisis during the U.S. presidential election.
European fossil-fuel companies act similarly — most of their social-media posts aim to present a “green” corporate identity, including highlighting their net-zero emissions targets. This is despite the fact that, on average, 80% of these companies’ operations remain tied to oil and gas, and in one case even coal, while only about 20% of their investments lie outside fossil fuels — in areas such as renewable energy, carbon capture and storage, and research into green technologies.
So at least the advertising claims are beginning to change. Different sectors of the industry will move toward climate neutrality at their own pace and with their own degree of data manipulation and double standards, yet excessive complacency would be ill-advised.
HAS THERE EVER BEEN SO MUCH MONEY?
Last summer, ahead of the elections, Germany adopted several additional climate regulations. One of them aims to prevent German companies from relocating production abroad, where climate requirements are lower and CO₂-emission costs are cheaper.
In 2019, Germany’s coalition government decided to introduce a CO₂ price in the heating and transport sectors. The CO₂ price has been in effect since 2021. It currently stands at around €80 per tonne of CO₂ and will likely increase in the coming years. The purpose of the CO₂ price is to encourage investment in climate-friendly technologies.
According to Germany’s Emissions Trading Authority (DEHSt), around 1,500 companies are eligible to request compensation. In 2022, the total amount could exceed €300 million — meaning that German companies support climate goals but expect substantial financial assistance. This may well be a rational strategy: asking politicians to pay for the implementation of political objectives by diverting funds away from other priorities.
Given the new sustainability targets, European clients are changing their requirements for suppliers and paying closer attention to sustainability performance. Latvian companies are beginning to feel this as well. Financial institutions also expect higher sustainability standards from their clients. This is why it is important for Latvian companies to communicate their strategy publicly — especially for those exporting to other EU countries, Scandinavia, and elsewhere, where the implementation of sustainability principles is a priority.
A review of the websites of Latvia’s 100 largest exporters shows that sustainability information is generally communicated poorly or is missing altogether. For example, only 22% of the companies examined have a dedicated “Sustainability” section, although more companies describe sustainability-related topics in other parts of their websites — environment, goals, vision, responsibility, and so on.
Even fewer companies have published sustainability reports. Many list sustainability goals on their websites, yet only fewer than ten provide concrete, measurable targets — specifying what exactly they plan to achieve and by when. At present, Latvian companies more often choose to report what they have already done, and less about their future plans. Still, based on the website analysis, it appears that more and more companies are finally beginning to consider the use of green energy.
Such a decision comes at exactly the right moment — public-fund subsidies are already being distributed, and they will certainly not be enough for everyone, so delaying would be unwise. Companies that adopt sustainability principles at the right pace — that is, without losing their cool mind — will move ahead faster in the competitive race.
WHERE DO THE MOST INFLUENTIAL FAMILIES IN THE UNITED STATES KEEP THEIR MONEY
Naturally — not in one basket, but in several. The most influential family in the United States has announced its commitment to divest its 5-billion-dollar investment fund from existing fossil-fuel interests, while also refraining from such investments in the future. The fund’s board of trustees recently approved this new policy — as a result, investments in fossil-fuel companies will fall to 1% of the portfolio.
The fossil-fuel sector is no longer earning what it once did. A Bloomberg Businessweek report from last year noted that Exxon, once the “undisputed king of Wall Street,” the most powerful corporation on the planet, has become a “mediocre company” valued at less than Home Depot Inc. If the largest oil company is being compared to a home-improvement retailer, it signals that it is no longer worth investing in. And if the central U.S. families have already made their decisions, Europe will inevitably follow.
Financial flow is now being directed toward other, faster-growing sectors — perhaps even away from the fossil-fuel industry, at least for the time being. Looking at how financial flows are shifting, how market approaches are evolving, and how quickly competitors are “running,” every company — including relatively small Latvian firms — must determine its own individual pace of adaptation to climate requirements.
