May 20, 2022 - ESG and Climate News

Tech Companies are Bankrolling the Climate Crisis

A new report reveals that many of the world’s largest companies may be inadvertently financing the climate crisis with their investments. The Carbon Bankroll, a report published by NGOs including the Climate Safe Lending Network, shows how investments and cash held in banks are often the largest source of emissions for companies like Apple, Google, Meta, and Microsoft. 

How does this work? Tech companies are famously flush with cash (Apple alone reported sitting on $202.5 billion in cash and investments. That's 7.4% of all the S&P 500's cash), and banks lend this cash to fossil fuel companies to the tune of at least $4.6 trillion since 2015, as reported by Quartz. The new report uses publicly available data from companies’ financial statements to demonstrate how the financial industry undermines the net-zero efforts of their clients. This is a bit ironic, because many of these companies are leaders on decarbonization with ambitious goals for reaching net-zero emissions.

The Mounting Costs of Climate Change 

Last week we mourned the death of 1.5C. This week we saw records for sea-level rise, ocean temperatures, and daily CO₂ in the atmosphere. UN Secretary-General Antonio Guterres called these cascading milestones "a dismal litany of humanity's failure to tackle climate disruption," and identified the cash flowing to oil and gas - particularly in government subsidies to the tune of $11 million a minute - as the primary culprit. 

The side effects of our over-reliance on fossil fuels go beyond warming temperatures and higher sea levels. According to a recent Lancet report, of the 9 million deaths where pollution was a factor (1 out of every 6 deaths) in 2019 75% of them were the result of air pollution associated with fossil fuel production. This impact on health is higher than malaria, tuberculosis, HIV, drugs or alcohol (notably, the study was done in pre-pandemic times).

The Natural Resources Defense Council (NRDC), issued a study claiming the health costs from climate change and fossil fuel pollution topped $820 billion per year in the US alone. The expenses of extreme weather are piling up too. The viral video of beach homes bobbing in the ocean off North Carolina brought sticker shock for their unlucky owners. A new analysis shows that 40% of $10 Billion in damages caused by a 2019 typhoon that struck Japan were attributed to human-caused climate change. The primary researcher Sihan Li said, “Not acting against climate change will be much more expensive than reducing emissions and adapting to a warmer world.’’

"HOW much do we have to pay to report carbon?"

The proposed climate disclosure rule from the US Securities and Exchange Commission (SEC) and similar requirements from other capital market regulators have companies worried about the additional costs. Critics of the SEC’s proposal cite the costs of compliance as a reason to halt or scale back the rule. 

This week, the consulting firm ERM released a new study on the costs of climate-related disclosures, commissioned by Ceres and Persefoni. The study, based on a survey of 39 companies and 35 investors, verified the SEC’s original cost estimates - about $533,000 a year for an average company. The average cost for institutional investors came in at $1.4 million. It’s important to note that these costs are based on current practices, not the requirements of the proposed rule. Historically, many components of compliance costs drop in the wake of new rules due to standardization and automation. 

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Persefoni is the leading Climate Management & Accounting Platform (CMAP). The company’s Software-as-a-Service solutions enable enterprises and financial institutions to meet stakeholder and regulatory climate disclosure requirements with the highest degrees of trust, transparency, and ease. As the ERP of Carbon, the Persefoni platform provides users a single source of carbon truth across their organization, enabling them to manage their carbon transactions and inventory with the same rigor and confidence as their financial transactions.