Food for thought on U.S. climate politics; plus the two hottest ESG funds

Welcome to Callaway Climate Insights, and especially to our new columnist, Bill Sternberg, former editorial page editor at USA Today.

If last year was the year of the corporate climate pledge, made from the pandemic safety of at-home marketing departments, then 2021 is certain to be the year of the “greenwashing” fine, when shareholders, media and other watchdogs start to hold companies — and countries — more accountable for their promises.

Improved disclosure rules and reporting standards will lead to better scrutiny of who is actually working to decarbonize their operations and who is simply washing their mission statements with green soap. Just this week, France said it would start fining companies for falsely marketing themselves and their products as green. The British government was accused of understating emissions estimates on a national roads plan by more than 100 times, and The Nature Conservancy said it’s reviewing its carbon-offset program after claims many of the offsets were false.

The U.S. Justice Department fined Toyota Motor (TM) $180 million earlier this year for a decade of failing to comply with the Clean Air Act reporting requirements, and Bloomberg reported that Saudi Arabia understated its emissions by about 50% by not including emissions from its international holdings. Against that backdrop, Saudi Arabia’s stated plan to build a $500 billion mega-city (above) called The Line, or NEOM, to run entirely on renewable energy in coming years, seems even more over the top.

Investor money is pouring into green projects worldwide, so this type of corruption can be expected. But unlike a few years ago, investors now have the tools to call them as they see them, even if they’re green.

More insights below. . . .

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Food for thought about U.S. climate politics

(This column introduces Bill Sternberg, former editorial page editor at USA Today, to our growing stable of writers at Callaway Climate Insights. We provided an early look to our paying subscribers on Monday and are now presenting it for everybody to enjoy. Please welcome Bill to our community).

WASHINGTON D.C. — Nearly 30 years ago, Russell Batson, a former congressional aide with a tongue-in-cheek sense of humor and a lot of chutzpah, wrote the book on freeloading at Washington receptions. Batson’s slender paperback volume, “Eat Free in D.C.: A Guide to Budget-Neutral Dining in Our Nation’s Capital,” quickly became must-reading for impoverished interns on Capitol Hill and moochers elsewhere.

Among the key takeaways: Crash events thrown by deep-pocketed interest groups like the oil and gas lobby (featuring top-shelf booze and fresh seafood) and avoid those sponsored by environmental groups (featuring club soda and cheese cubes on toothpicks). What does this have to do with climate finance and the fate of the planet? Quite a bit, actually.

Decades after Batson was foraging for free food, three things are still true in Washington: Money talks. Fossil fuel interests raise and spend more of it than environmental groups. And there’s no climate super lobby to do for Earth what the NRA does for guns, AARP does for seniors and AIPAC does for Israel.

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Tuesday’s insights: King Coal (aka Trump) no match for gang green; and why investors prefer green bonds to equities

. . . . For a president so focused on financial markets, Donald Trump sure missed the supply and demand side of coal and renewable energy. While promising to save coal mines and coal jobs, he was simply overwhelmed by the market forces of falling solar and wind costs, according to a new report. Read more here. . . .

. . . . With all due respect to electric vehicle SPACs, institutional investors looking to establish credentials in environmental, social and governance investing prefer the fixed-income safety of green bonds, according to a new report. The fixed-income market has always been larger than corresponding equity markets, and in ESG that’s no different. But as a new niche in catastrophe bonds develops, investors can see it’s not short on creative offerings. Read more here. . . .

. . . . Not to be outdone by bonds, ESG exchange-traded funds outperformed the S&P 500 Index last year, in what was one of its strongest performances in years, according to S&P Global Market Intelligence. In the 12 months to March 5, 2021, which would include the steep market selloff after the pandemic lockdowns began, 19 of 26 funds with more than $250 million in assets gained more than the S&P’s 27.1%. Parnassus Investments' Parnassus Endeavor Fund led the pack, climbing 55%. The Nuveen ESG Small-Cap ETF came in second with a 51.5% increase. . . .

. . . . In media news, congrats to the staff of the former Greentech Media, who have re-emerged under another corporate umbrella as Canary Media, operated by clean energy non-profit RMI. Good to see you back in action. . . .

News briefs: U.S. and Arab Emirates get sunny about solar

Editor’s picks:

  • U.S., UAE cooperate on new investments to decarbonize

  • Soy, coffee and cocoa consumers are driving deforestation 

  • Oil patch fixture Baker Hughes bets big on hydrogen

Read all of today’s news briefs.