Blast from the Past: Margaret Thatcher on Climate & the Free Market
March 31, 2023
Today’s blog is brought to you by Margaret Thatcher, who addressed the UN General Assembly in 1989. Excerpts follow.
What we are now doing to the world, by degrading the land surfaces, by polluting the waters and by adding greenhouse gases to the air at an unprecedented rate—all this is new in the experience of the earth. It is mankind and his activities which are changing the environment of our planet in damaging and dangerous ways.
It is of course true that none of us would be here but for the greenhouse effect. It gives us the moist atmosphere which sustains life on earth. We need the greenhouse effect—but only in the right proportions.
Put in its bluntest form: the main threat to our environment is more and more people, and their activities: The land they cultivate ever more intensively; The forests they cut down and burn; The mountain sides they lay bare; The fossil fuels they burn; The rivers and the seas they pollute.
The result is that change in future is likely to be more fundamental and more widespread than anything we have known hitherto. Change to the sea around us, change to the atmosphere above, leading in turn to change in the world's climate, which could alter the way we live in the most fundamental way of all.
That prospect is a new factor in human affairs. It is comparable in its implications to the discovery of how to split the atom. Indeed, its results could be even more far-reaching.
It is no good squabbling over who is responsible or who should pay. Whole areas of our planet could be subject to drought and starvation if the pattern of rains and monsoons were to change as a result of the destruction of forests and the accumulation of greenhouse gases.
We have to look forward not backward and we shall only succeed in dealing with the problems through a vast international, co-operative effort.
We should always remember that free markets are a means to an end. They would defeat their object if by their output they did more damage to the quality of life through pollution than the well-being they achieve by the production of goods and services. [our emphasis]
Mr President, the environmental challenge which confronts the whole world demands an equivalent response from the whole world. Every country will be affected and no one can opt out.
Reason is humanity's special gift. It allows us to understand the structure of the nucleus. It enables us to explore the heavens. It helps us to conquer disease. Now we must use our reason to find a way in which we can live with nature, and not dominate nature.
We need our reason to teach us today that we are not, that we must not try to be, the lords of all we survey.
We are not the lords, we are the Lord's creatures, the trustees of this planet, charged today with preserving life itself—preserving life with all its mystery and all its wonder.
May we all be equal to that task.
In December 2024, the Oregon Treasury published their Oregon Net Zero Plan 2024 Annual Report . Kudos to Treasurer Read for creating a Net Zero Plan and publishing the 2024 annual report before leaving office. Treasurer Read’s strong statement that climate risk is financial risk is essential context for the report. Divest Oregon published this analysis of the 2024 annual report including the following sections: Transition Readiness Framework/Carbon Intensive Review Manager Activity/Private Investments ESG Integration/Forming Alliances and Engagement Investing in climate-focused funds Proxy Voting Stewardship and Universal Ownership Divest Oregon strongly recommends the following: The Treasury's report should be sent to all PERS beneficiaries and prominently displayed on the Treasury website. Stakeholder input should be solicited during the formulation of Treasury action in this sphere and before the publication of the next plan report.
“First-in-the-nation” Pause Act will protect Oregon retirees from private equity’s overexposure to fossil fuels
Few public pension fund trustees have adopted a plan to address the risk of climate change to their portfolio. Oregon should be applauded as one of them, yet how does Oregon’s proposed plan compare to the major net zero plans of other US public pension plans? Divest Oregon has just released a comprehensive and detailed Comparison of US Pension Funds' Net Zero Plans Report . It allows the Oregon Treasurer and the Oregon Investment Council (OIC) to see what other fiduciaries are planning, to adopt best practices, and to change OIC policy as needed. Climate change is moving fast, and the report should be used by Oregon PERS and all fiduciaries to move faster in implementing a strong plan.
The newly released 2024 Private Equity Climate Risks Scorecard & Report by our allies, Private Equity Stakeholder Project, Global Energy Monitor, and Americans for Financial Reform Education Fund, gives us new insight into private equity firms and OST investments in these secret funds. Twenty-one major private equity firms manage $6 trillion in assets – and two-thirds of the energy companies in their portfolios are invested in fossil fuels. Oregon state employees’ pension plan (PERS) invests in 11 of these 21 funds.
Above: Natural coastal area of the proposed Rio Grande LNG terminal. Credit: Dylan Baddour/ Inside Climate News Below: Artist Rendering of the Rio Grande LNG project (Photo: Business Wire , 11/21/2019)
A recent article in Chief Investment Officer reported that the University of California had solid returns mostly stemming from a fund that excludes tobacco and fossil fuel investments: The University of California’s endowment and pension fund each returned more than 12% for the fiscal year ending June 30, boosting the total asset value of the university’s investment portfolio by $16 billion to $180 billion. Some $1.3 billion of that $16 billion gain came from a single S&P 500 index fund—one which excludes tobacco and fossil fuel investments—that provided the portfolio with its single biggest investment gain. We assume the OIC and Treasury would be thrilled by these types of returns, given the drag that private investments are causing to the portfolio returns, and the continuing liquidity problems of private funds. UC invests where they have a strong conviction while fulfilling their fiduciary duty. The two are not mutually exclusive: “This past fiscal year was about investing only in what we fully understand and taking full advantage of low-fee index funds guided by what we call the UC Investments Way,” said UC CIO Jagdeep Singh Bachher in a statement. “It’s about simplicity and leveraging our scale to concentrate on areas where we have strong conviction.” Bachher added that he believes the U.S. and “its resilient economy and thriving innovation ecosystem … is the best place to invest,” and the UC system has backed that up by allocating approximately 75% of its portfolio to domestic investments. We look forward to seeing the OST swiftly shift a significant portion of OPERF to index funds that exclude fossil fuels and to end any consideration of new investments in private funds that are laden with fossil fuel assets, as described in the Treasurer’s Net-Zero Plan. Collectively the country has moved past climate denial. The Oregon Treasury and the Oregon Investment Council should not get mired in solution denial . The solutions for a healthier pension and planet are available now!
A recent Bloomberg article explains that Oregon PERS made critical energy flow to the Putin regime possible, by enabling an LNG terminal. How? A $500 million financial commitment made in 2020 with $209.3 million is still available for investment, even after Treasurer Read said he would “Stand with Ukraine” and OIC agreed to end all Russian investments. This long-term, locked-in commitment of funds is one of reasons Divest Oregon continues to question private investments – especially since they are often laden with risky fossil fuel companies. Private investments comprise over half of the PERS portfolio . Background: The Oregon Treasury committed $500 million to the Stonepeak Infrastructure Fund IV in 2020 . In fact, the Treasury has been investing in Stonepeak Infrastructure Funds since 2012 . The commitment to a private fund is a long-term one. Once that commitment is made, the Treasury can only exit that fund at a steep loss, and once the commitment is made, the Treasury had no say in specific investments by the fund managers. Bloomberg reported that pension funds, including Oregon, enable the largest Russian LNG export terminal to function. Stonepeak invested in Seapeak LLC, which provides ice-class carriers specifically designed to carry Russian LNG from the Arctic. The carriers are only used for this purpose and are essential to the gas terminal. The investment by pension funds enables critical revenue flow to the Putin regime. The Bloomberg article states: The California Public Employees’ Retirement System, known as CalPERS, is one of the investors in Stonepeak’s fund and it said in response to a Bloomberg query that it had already raised concerns with the general partner. ‘We believe that Russian investments pose a material risk to our long-term investment success and have taken actions, consistent with our fiduciary duty, to remove these assets from our portfolio,’ John Myers, chief of Calpers’ office of public affairs, said in a statement. ‘We will continue monitoring events to ensure our partners’ actions are consistent with our investment beliefs.’ The Washington State Investment Board, Oregon Public Employees Retirement Fund, New York State Common Retirement Fund and the Teachers’ Retirement System of the State of Illinois declined to comment. Divest Oregon asked the Oregon Investment Council in one of our many emails to them: Is this a responsible investment, or a material risk? There were no sanctions violated, but does this uphold the pledge to “Stand with Ukraine” made by Treasurer Read and backed by the Council? We also asked: Do the long term risks justify continued new investments in predominantly fossil fuel private funds? We request that the OIC insure that there are NO NEW investments in fossil fuel investments especially in the private investment or bonds/credit markets. Digging the hole deeper makes no sense when you are already over target allocations in these private investments. Image: A Russian ice-breaking LNG Carrier. Source: VCG/Visual China Group/Getty Images
At the June 15th national-level meeting of the American Association of University Professors (AAUP), delegates overwhelmingly approved a sweeping resolution demanding that state pension boards and other fund managers divest fossil fuels from their funds. AAUP Oregon, the state-level organization of the AAUP, is a member of the Divest Oregon coalition and a leading union voice for divestment in our state. Victor Reyes, AAUP Oregon’s executive director, responded: “Watching the resolution pass with such overwhelming support by AAUP members from across the United States filled me with pride and reinforced the importance of the work we are continuing to do in our state as members of the Divest Oregon coalition. Our members understand that there is no retirement in a destroyed environment, and I feel confident that public support for divesting from fossil fuels can only grow with these recent wins.” Now the resolution goes to the AAUP executive committee for ratification and to direct its implementation.
These articles were shared with the members of the Oregon Investment Council in June 2024. When considering the speed of the transition , here are some important data points: Electric Cars are Suddenly Becoming Affordable ( NYTimes Business Section, 6/3/2024) “The E.V. market has hit an inflection point,” said Randy Parker, chief executive of Hyundai Motor America, which will begin producing electric vehicles at a factory in Georgia by the end of the year. “The early adopters have come. They’ve got their cars. Now you’re starting to see us transition to a mass market.” IEA expects global clean energy investment to hit $2 trillion in 2024 ( Reuters , 6/5/2024) The Cleantech Revolution ( Rocky Mountain Institute , 6/2024) The world has moved on to the steep part of the S curve (as shown below), which will sweep us from minimal reliance on renewable energy to minimal dependence on fossil fuel. Last year or this year, we will hit peak fossil fuel demand — the advent of cheap solar and wind and batteries, combined with rapidly developing technologies like heat pumps and EVs, has finally caught up with the surging human demand for energy even as more Asian economies enter periods of rapid growth. (comments by Bill McKibben)
Four days before the start of his New York felony trial, presidential nominee Donald Trump engaged in some major self-soothing activity — shaking down Big Oil for $1 billion in order to help him trash the climate. According to the Washington Post, which broke the story, Trump invited two dozen oil executives to a dinner at Mar-a-Lago. After one executive complained about burdensome environmental regulations issued by the Biden administration, Trump responded with a stunner, telling his guests: You are wealthy enough to raise $1 billion to return me to the White House. That would be a “deal,” he said, because of the costs of taxes and regulation they would avoid thanks to him. He vowed to immediately reverse dozens of environmental rules and policies and stop new ones. Trump said he would: End the freeze on new LNG exports - “you’ll get it the first day”; Auction more Gulf of Mexico oil leases; Allow more drilling in the Alaskan Arctic-“You’ve been waiting on a permit for five years; you’ll get it on Day 1”; Continue to “hate wind” [explaining why he breaks it?]. (According to the New York Times, Trump claims that windmills cause cancer and are driving whales insane). Scrap electric vehicle mandates (although they do not exist). Presumably this means scrapping regulations to reduce auto tailpipe emissions. Trump has earlier promised to end California’s ability to require cleaner cars than federal regulations do. One person involved in the industry said many oil executives wanted Florida Gov. Ron DeSantis or another Republican to challenge Biden. But now that Trump is the nominee, this person said, they are going to embrace his policies and give. Alex Witt, a senior adviser for oil and gas with Climate Power, said Trump’s promise is he will do whatever the oil industry wants if they support him. With Trump, Witt said, “everything has a price.” “They got a great return on their investment during Trump’s first term, and Trump is making it crystal clear that they’re in for an even bigger payout if he’s reelected,” she said.