68 Business The Economist June 11th 2022
TheCommittee to Save the Planet
I
n 1999 Timemagazine put three heavyweights from America’s
Federal Reserve and Treasury Department on its cover, calling
them “The Committee to Save the World”. They were Alan Green
span, Robert Rubin and Lawrence Summers. Their accomplish
ment was stopping economic upheavals from Russia to Brazil
causing mayhem in the global financial system. Big stuff, for sure.
But nothing compared with the task facing those who today could
be called “The Committee to Save the Planet”. They are Mark Car
ney, former governor of the Bank of England, Larry Fink, boss of
BlackRock, the world’s largest investment firm, and Jamie Dimon,
ceo of JPMorgan Chase, America’s biggest bank.
Their aims are no less than to stop global warming and create a
fairer, more enlightened form of capitalism. In just a few years
they have marshalled to the cause more than 100 central banks,
tens of trillions of dollars of investors’ cash and bank finance, and
the bosses of America’s biggest firms. Their ambitions are not just
big. They are epochal. So why are they suddenly figures of mockery
in the war on “woke” capitalism?
Mr Carney was the first global policy wonk to raise his cuf
flinked fist. In 2015 he focused attention on the systemic risks to
banks and insurance companies as a result of climate change. In
doing so, he set in motion a blitzkrieg of regulatory activity to
press firms and their lenders to disclose their exposure to the risks
of global warming. But he has also stirred a backlash. During a po
lemical presentation last month Stuart Kirk, hsbcAsset Manage
ment’s head of responsible investment, attacked the “unsubstan
tiated, shrill, partisan, selfserving, apocalyptic warnings” about
the risk a changing climate poses to financial markets. There was
no mistaking the target of the dig: it was Mr Carney. Conservatives,
including the Wall Street Journal, smelled red meat. They ridiculed
central bankers’ focus on the longterm effects of climate change
while missing more immediate risks such as inflation.
Mr Fink has brought big money to Mr Carney’s climate cru
sade—and done well out of it, too. BlackRock, with $9trn of
client assets, is a big force behind a surge in environmental, social
and governance (esg) investing in recent years, with which it has
wooed investors. For asset managers esghas been a highfee gravy
train. But it is an unholy muddle for investors. Returns have beenshrivelling as tech stocks, a favourite of esgfunds, swoon, and oil
stocks soar. Since the war in Ukraine, the sustainability mantra
has switched from shunning oil and defence stocks to embracing
them. There is an emerging whiff of scandal. Last month dws,
Deutsche Bank’s assetmanagement arm, was raided by German
police over esg“greenwashing” allegations, which it has denied.
And esgfinds itself in the trenches of America’s culture wars. Ted
Cruz, a senator, talks of a “Larry Fink surcharge” when people fill
up their petrol tanks. Texas, which he represents, threatens to
keep state money from funds that boycott oil and gas. No wonder
Mr Fink now says: “I don’t want to be the environmental police.”
Mr Dimon is the architect of the corporate corollary to this fi
nancial dogoodery. As chair in 2019 of the Business Roundtable, a
ceolobby group, he led efforts to change its creed from prioritis
ing the interests of shareholders to putting them alongside those
of customers, employees and others. Stakeholder capitalism has
given rise to the activist ceo, speaking out on issues ranging from
voting laws to education on sexual orientation. Questions about
whether such concerns are relevant to a company’s bottom line, or
agreed upon by all stakeholders, are mostly brushed aside. It may
be tested if rising interest rates choke off the economic recovery,
leading firms to fire some of the stakeholders whose interests they
claim to serve. It is already costly. JPMorgan has been largely ex
cluded from the Texas municipalbond market since last Septem
ber, when a law was passed stopping the state from doing business
with companies that have antigun policies. And it is widely mis
understood. “I am a redblooded freemarket capitalist and I’m
not woke,” Mr Dimon said in a defiant outburst this month.
For all the pushback, the triumvirate can point to a few genuine
reasons for using the bully pulpit. Governments are abjectly fail
ing to take steps, such as high and coordinated carbon taxes, to
tackle climate change. Companies have got away for too long with
out taking account of—or paying for—their externalities, espe
cially their impact on the natural world. Consumers, employees
and investors are increasingly motivated by threats to the envi
ronment, as well as to social welfare, and gravitate towards firms
that want to make a difference.Missionary creep
Yet there is a ring of truth to some of the criticisms, too. Take the
accusations of mission creep. In tackling climate change, Mr Car
ney has urged central banks out of their comfort zones, though so
far with little evidence that financial systems are being destabil
ised by the costs of the energy transition. Though Messrs Fink and
Dimon are bound by fiduciary constraints to serve the interests of
their assetowners and shareholders, esgand stakeholder capital
ism make such duties harder to define. The second valid criticism
concerns the tendency towards sanctimony. Until recently the
private sector was a sanctuary from political partisanship and
moral crusades. Bosses should speak out when events occur that
materially impact their businesses, rather than pontificate about
all manner of extracurricular concerns.
Third, critics have a point when they note that it is govern
ments’ responsibility to solve societal problems. This may be a
world bereft of inspiring political leadership. But that is some
thing voters must fix at the ballot box, not billionaires smuggling
in their political views via the backdoor at annual general meet
ings. Saving the planet is one thing. Savingit by committee
smacks of elite overreach. Sadly, that appears tobepartof the fu
ture Messrs Carney, Fink and Dimon have in mind.nSchumpeter
Anti-woke warriors attack three juicy targets