With the publication of his new essay, “The great delusion of rescuing the planet by a great reset: How the economic and financial circles are pleased to be convinced” Michel de Rougemont examines the romance that increasingly binds together the financial world and green ideology. He answers our questions here to outline his key points.
The European Scientist : In your latest book you question the almost unanimous conversion of the financial world to the precepts of environmentalism. Why did you consider this issue important?
Michel de Rougemont : Since their beginnings, environmental movements have shown an allergy to the economic and financial realities of the policies they proclaim. As soon as wider circles take hold of them, one must ask whether the terms of a debate that never takes place are the right ones, in particular the exploitation of diagnosis of disaster for the purpose of a financial mobilisation. In view of the sums involved – several percent of global GDP each year for a period of one or two generations for the most expensive – focusing on the climate issue alone becomes problematic, even dangerous.
TES. : How do you think it came about that all economic activities listed as such comply with the ESG label?
MR. : There is a certain amount of fashion associated with a possibly sincere concern, but also a lot of opportunism in being a champion in this area. As the funding mechanisms consist of levying taxes and redistributing them to the good pupils, there is a great appetite to participate in this meal. There is also a reputational risk that a company or financial actor would be exposed to if it did not do as the others do.
TES. : You show that this situation is all the more absurd as the ESG label does not guarantee superior performance.
MR. : Do you know of a label that guarantees anything other than having passed a bureaucratic check? Like certification for quality (ISO 9000), for environmental management (ISO 14000), or for so-called “organic” agriculture, obtaining an ESG label is above all a matter of demonstrating a certain activism. However, achieving concrete results or not does not favour or penalise those who can show their green credentials. ESG requirements are compliance requirements; placing a company or an investment fund in such a category does not guarantee its success. Moreover, the stock market indices of companies that are deemed to be ESG or not have much difficulty distinguishing one from the other, unless one carries out a skilful cherry-picking exercise, as communicators know how to do.
TES. : Like Bjorn Lomborg, you draw on Nordhaus’ work to express surprise at the financial community’s overweighting of climate risks. In your view, this is a totally unjustified risk assessment. Can you explain?
MR. : The question of the “social cost of carbon” is central. Any good economist knows that finite resources must be committed in order to achieve a result. It is not a question of money, but of the means to be used for action and the effectiveness of that action. Bjorn Borg and his Copenhagen Consensus have been trying for two decades to make this clear. The Nobel Prize in Economics was awarded to W. Nordhaus for his work on the climate. He notes a disproportion between the enormous resources that would have to be required to de-carbonise as a matter of urgency and the relatively modest losses that would result from global warming. This, of course, makes other economists howl… To fuel the battles of experts, the most catastrophic scenarios are used to establish what is called a “business as usual” case. These scenarios are so unrealistic that one wonders why they are used as a reference. The answer is that the more frightening your disaster prediction, the higher the potential losses and the more justifiable it is to do something, “whatever it takes”. This is a very big string, but it works like a charm.
Moreover, given that decarbonisation measures would only have tangible effects in the long term (as confirmed by the latest IPCC report), it would be more justifiable to respond to the climate challenge with adaptations that minimise the damage. But these are not the big projects that make you drool.
TES. : You seem to deny the ability of the financial world to establish ratings that have any scientific value. In this respect, what is your opinion on the “European taxonomy”. Do you think it is normal that the nuclear industry is struggling to be included?
MR. : It is not the world of finance alone that would have this inability. The very essence of a rating is to refer to an ideal, to a standard of perfection. In environmental, climate, social and governance matters, it must be realised that conflicts are programmed between the priorities of each of the many parties. With 17 chapters and 169 priorities, the UN’s sustainable development criteria are obviously unmanageable. Choices need to be made, such as whether to continue oil and gas exploration in order to provide the energy needed to achieve the desired decarbonisation.
European taxonomy (sic) touches on the bureaucratic sublime by appropriating and crippling an essential term in biology. To operate a ‘taxonomic’ classification of acceptable or unacceptable activities presupposes that these industries would be frozen in an immutable state. It is therefore the negation of all progress. Nuclear power plants already have a favourable profile, both in terms of CO2 emissions and environmental impact. The next generations will only be better. But it must be said that this is not the heart of the matter. As Jean-Paul Oury points out, Greta killed Einstein, i.e. the censors’ motivation has become sentimental, devoid of reason, as if rationality were the cause of human failings.
TES. : Do you think this is mainly for the benefit of the certification business?
MR. : The characteristic feature of a parasite is that it feeds at the expense of its host, while ensuring that the host does not disappear. It then performs small services, such as ridding the host of harmful worms or inducing immune responses. In human society, this is known as mooching houseguests, from whom you get compliments as they empty your pantry. Certification services help companies to meet phantasmagorical requirements. The most rigorous methods are employed, making the exercise look very serious. The problem is not that people make a living out of such work: it even helps to bring some discipline to the operations of a company or administration, which never hurts. But one should not assume that this is a virtuous and salutary action in all regards, environmental or moral.
TES. : In the end, the main explanation for this “frenzy” for ESG, according to you, ha a moral undertone: “the financial world wants to have a good image, the ingenuous investor will be proud of the idea that he or she is contributing to a common good or to saving the planet”. However, this is wishful thinking. Is what you describe just a slightly sophisticated form of greenwashing?
MR. : There is of course some greenwashing in there, and some pink, purple or rainbow washing too, depending on the trends of the moment. We won’t blame the slightly cynical opportunists who play this game and even find sources of income or funding. Others also find political grist for their mill. The piety of the vows is therefore questionable when the reality of the interests gives rise to great envy.
It can be seen as a gigantic brainwashing that has been going on since the advent of the green movements and postmodern deconstruction. Leaders are not immune to this phenomenon, on the contrary, the frenzy you speak of is in fact the action of the professional followers that most of them actually are. But far from thinking that this is just a matter of environmentally friendly convenience and good morals, one must realise that a permanent Coup d’Etat attempt in the form of a declaration of emergency is underway.
TES. : But isn’t it in the interest of the financial world to establish a green rent with the collaboration of the states? The fact that many investors have rushed into wind energy, for example, knowing that it offers a guaranteed return because its production is subsidised… you haven’t looked into this possibility, why?
MR. : State decisions to financially support so-called renewable energies have a certain effect on some investors. However, the financial short term is not synchronous with infrastructure transformations. As soon as a signal is given that the game is over, these investors will move elsewhere. This is already the case in Switzerland, where support for photovoltaic panels is losing its exuberance. The same applies to private individuals who buy electric vehicles because they are subsidised. My purpose is not to give them advice on financial investments – I’m not sure I’d gain much from that – but to point out in general the inanity of the foundations of these positions. There is a lot of economic and technical literature on energy supply, but it rarely addresses the issues of the corresponding financial decisions.
TES. : You seem to consider the world of finance as a uniform whole. Do you not think, however, that there may be global disparities and that the phenomenon you denounce is particularly prevalent on the old continent? Can’t we fear that the other markets (China, Russia, USA) will use this situation to their advantage?
MR. : The world of finance is a whole, yes, but shapeless or multiform. The big influencers are still in the Western world. If we look at where the money is, we see that the decision-makers are in small numbers, interconnected in a rather particular ecosystem, following little diversified catechisms such as the messages of the WEF in Davos, the exhortations of emblematic figures like Bill Gates, the business schools, or the big consulting firms.
In Asia, the sums committed to sovereign wealth funds and pension funds are of abysmal proportions. Yet the learning curve still needs developing, with jumps, falls and bounces like the hundreds of billions in debt of the Chinese company Evergrande. It is there that the bell may ring to signal the end of playtime.
TES. : You conclude from this that technological banning will take place. However, in the 2000s there were already financial reports from rating agencies bribed by NGOs that denigrated green biotech… this has not prevented GMOs from developing in the world, except once again in Europe.
MR. : Green NGOs have enormous lobbying resources and have an open room in all multilateral conferences. They also infiltrate the work of expert groups in climate, biodiversity, or public health. Their task is easier in political regimes that are not very liberal but are very legalistic, as is the case in most European countries. In financial matters, their means are those of fear, especially that of opprobrium, of being seen as el malo de la pelicula (the bad guy in the movie). In Moscow in the 1930s, loyal supporters of the regime had to confess to crimes they had not committed to avoid this torture. A bullet in the back of the head was their only redemption. It is no longer lead that kills today, but the courts of the asocial networks apply the capital punishment in a very effective way.
TES. : What can be done to resist this phenomenon which now seems unstoppable? Do you think that some funds will emerge that can escape this new religion?
MR. : It is indeed an evolution of a religious nature because nothing can be opposed to a dogma. Resisting it seems presumptuous or worthy of Don Quixote. In fact, one can only submit to and be subjected to such mainstreams. The alternative is flight or oblivion, which amounts to the same thing. This is the practice of the vast majority of people who claim to be concerned about the state of the planet before they even think about it seriously. To oppose it individually, there are only guerrilla techniques left, scratching the elephant so that it remembers that it is a disturbing animal. Full-scale opposition is unthinkable. No ‘Party of Reason’ will emerge because the opponents lack the ideological discipline of activists. The Pied Piper of Hamelin is taking his human flock with him.
We will have to keep an eye on what happens to the companies that have been pilloried by ESG deficiency, above all because of the E in this acronym. However, their activities are indispensable because, for example, wind turbines cannot be built today without being supplied by 83% (world average) of fossil energy sources; and this will continue for many decades to come, which means that we must continue to invest in this sector, which we should abhor. If conflicts arise, and they most likely will, then adequate and ready armaments are essential; these are hardly ESG-compatible. Without access to public, open and [somewhat] transparent stock exchanges, it is likely that these activities will have to be financed by private investment, and free from the fear of the pillory. Whatever the political regime, conventional energy, minerals, basic chemicals, armaments, etc. are the pillars of any economy; the market hegemony that the green, red and rainbow lefts lament will then pass into truly uncontrollable hands. The roads to hell are paved with so-called good intentions.
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