Two interesting headlines in the New York Times (NYT) today. I know, you serious business people and government wonks don’t get your fix there, but still, of interest: the Supreme Court allows greenhouse cost estimates to be used by the Environmental Protection Agency (EPA) when assessing the harms from emissions, and various states openly threaten Blackrock and other investment funds to back off supporting “woke” causes.
In the first story, essentially the EPA has had since the Obama administration, with an interlude during Trump’s, an interagency working group that created a framework to determine the costs of greenhouse emissions. That is, the cost to people, their communities, not the literal cost companies pay to emit greenhouse gases. Basically, when determining damages, or potential damages, there is a model to use for assessing the cost of the impact emissions had. Louisiana, along with other states, sued to block this.
The ruling isn’t a full endorsement. Basically it says, “the basic idea is sound and you can’t complain without an actual example to point at.” The door is open to states to object down the line to specific applications of this framework, so it’s not done and dusted yet. If an energy company applied to build a new refinery, and the EPA used this formula in their assessment of the impact, Louisiana could sue to block in that case alone. However, the general idea is sound, says SCOTUS.
In the other case, states similarly invested in fossil fuels and conservative politics have, in various ways, threatened financial investment companies for supporting causes the states do not like. For example, Texas has a law that prevents their retirement funds from doing business with companies that boycott fossil fuels, at least according to the state comptroller. Additionally, Utah and Idaho have kvetched about Standard & Poors using environmental factors when evaluating how creditworthy a state is. A hypothetical might run like this: a state that is cash-rich because they’ve gone all-in on reaping oil and coal from the ground, with no regulations on waste or emissions related to same, might not have the credit rating that a similarly rich state with pristine air and water might have.
To the first case, we have the power of government, along the lines of Congress having delegated rule-making expertise to the agency that might know what it’s talking about, saying that penalties will be measured in part according to damage from emissions. You have to do a better job of not building sludge factories next to high schools, my dear sovereign states.
In the second, we have private companies, wealth managers and the like, in some ways instigating but in other ways reacting to the idea that investments should be “clean”. There are some investors who want the peace of mind that comes from knowing their money is not tied to industries they do not support. In some cases, leaders of these wealth management funds have said, “we’re not going to invest in that” and keep on making money anyway. That’s the market. Bets are placed, winnings are collected, losses are left on the table.
Having studied finance and sat on a board or two with investments, I will repeat the common wisdom against so-called socially responsible investing, without advocating that wisdom. Generally the idea is that you should invest for max money, and then use that money to support the causes you like, rather than not invest in a wealth-generating asset class. I say, do whatever you want, and if that means avoiding fossil fuels, or companies with products or policies you do no support, fine. What’s curious to me is that rather than advocating for people to invest in these asset classes, states are seeking to punish wealth managers and other financial services companies.
That, as I think about it, is the current prevailing mood in conservative thought: punish, not reward. Which, by-the-by, is not an effective way to train people, or pets for that matter. Punishment may have a short-term positive effect: stop doing what you’re doing. However, it does not have long-term positive effects; it curtails free thinking, it stifles innovation. If you – a person, or an organization – are afraid to try something new because you were punished the last time you tried something new, you’ll become risk-averse, and less likely to grow and develop – as a person, as an organization, or as a whole economy.
This is not a sufficient outcome for the states. They want to punish companies for taking positions – bets – that they do not support. It’s not necessarily limited to the environment; they may not like whatever they see as “woke” causes, a phrase which is trending in conservative brains as shorthand for, “a thing I do not like”. I for one consider cold coffee to be woke. Coffee was meant to be served hot.
Anyway. What happened to freedom of speech, or markets, or whatever? Is this not an attempt at “cancel culture” in reverse? Thrashing for embargoes to stop the Evil Corporations from doing things you disagree with? It sounds like nothing so much as my middle school history teaching talking about boycotting of Nestle for their business in Apartheid-era South Africa.
