In The Value of a Whale: On the Illusions of Green Capitalism, Adrienne Buller, director of research at the British think tank Common Wealth, draws from many similarly egregious examples to investigate this contradiction. Companies across polluting sectors tout their green investments, portraying themselves as sustainable and future-oriented. If corporate action on climate has indeed ballooned, then why does the crisis continue to deepen? Buller reveals not just how “green capitalist” corporate strategies from both heavy-hitter polluters and the institutions that finance them fail to meaningfully address the climate crisis but also how they allow environmental destruction to continue unencumbered.
We spoke with Buller about the methods economists and asset managers use to quantify environmental value, the financial industry’s stake in climate response, and the ways that corporate governance is not democracy.
CAL TURNER: In your discussion of how green capitalism arose, you begin with the decline of outright climate denialism. You write that the story is well documented about how fossil fuel companies — and the politicians they pay off — sow doubt in science. How and why was there a shift away from this outright denialism towards green capitalism?
ADRIENNE BULLER: I’ll start with a brief caveat, which is that the response to Ukraine has changed those terms a bit. While outright denial remains relatively on the fringes, in many places there has, in response to the crisis, been a resurgence of vocal support for fossil fuel expansion and criticism of green energy. The green capitalism train has thus had some setbacks. But taking a longer-term perspective, the fact remains that outright climate science denial has become broadly untenable as a private sector strategy. Increasingly, climate change is in fact being recognized as a branding opportunity by oil majors and financial firms, and to address it as such is proving a much smarter strategy than to deny or outright ignore it.
We’ve seen this strategy snowball over the past few years, with oil companies publishing lots of glossy statements on their nature-based solutions. Even Exxon is now investing in algae and biofuels. Finance is one of the places where that transition to ostensibly green solutions happened earliest, mostly because of this industry’s preoccupation with evaluating risk.
SARA VAN HORN: You discuss in your book how economists abstract environmental concerns into models that fail spectacularly to capture the climate crisis, often in ways that are detached from material reality and run roughshod over how scientists are discussing these concerns. Can you describe some of the frameworks that economists use to quantify and supposedly predict the future of the climate crisis?
AB: These frameworks start from the premise that climate change is a “market failure” and needs to be addressed as such by internalizing the cost of emissions or environmental damage within the market itself. In order to do that, you need to have some way of arriving at a “price” — the price of carbon, for instance.
My book starts with a discussion of how you would put a monetary value on a whale in order to contribute to its conservation. A group at the IMF based that value on how much whales contribute to carbon sequestration or ecotourism. To a lot of people, that is quite obviously divorced from what whales actually do, why they are valuable, and how they might be valuable outside of something that you can put a dollar sign on. But in today’s world anything that can’t be valued in monetary terms tends to be excluded from those calculations and therefore pushed to the sidelines of how we decide what policies are worth pursuing. When we do a cost-benefit analysis, things like intrinsic or social or spiritual value to communities aren’t necessarily taken into account.
Ecological systems are phenomenally complex and can’t really be broken down into their constituent parts. But efforts are very much underway to do that by trying to evaluate stocks of natural capital: those things that ecosystems provide to us freely, like disease resistance or clean water. If you only focus on specific elements of what ecosystems do that are deemed valuable to the economy at a particular moment in time, then you end up in an ecologically nonsensical position, because you’re attempting to disaggregate elements of a whole that can’t be picked apart without significant implications for the integrity of those ecosystems to begin with.
CT: You discuss several ways in which green capitalism produces and reproduces colonial exploitation. How do colonial dynamics affect global economic responses to climate change and become manifest in green capitalist practices like carbon offsetting?
AB: A useful term that I borrow from the academic Servaas Storm is the idea that capitalism is an “externalizing machine.” If you try to internalize the cost of carbon emissions into the market, then the machinery of capitalism will be incredibly effective at finding ways to cut costs elsewhere. Carbon offsets are a perfect example of that, and they have increasingly become a mechanism through which colonial dynamics are reproduced. They have become a means through which businesses can continue business as usual while creating new externalities in different places: buying up, consensually or otherwise, huge tracts of land in the Global South and often displacing subsistence farmers or Indigenous communities in order to service the demand within the Global North for ever-escalating carbon offsets, which often, rather than actually contributing to reducing emissions, are a mechanism for the Global North to continue emitting at scale while having a fancy calculation that makes it seem as though its actually curbing and cutting emissions. That is, in its essence, quite a colonial concept, insofar as it says that, rather than having an uncomfortable-to-think-about but very necessary redistribution in resource use and wealth and waste around the world, we’ll just take up as much space as possible for the comparatively affluent lifestyles of those in the Global North and not leave space for communities in the Global South to even reach basic standards of healthy, thriving living.
SVH: You talk a lot about the development of asset management as an industry, both in terms of its relatively short history and its central role in shaping green capitalism. Can you talk about how asset management differs from traditional banking in its operation and strategies? Why is asset management so central to both the economic logics and actual practices of green capitalism?
AB: To a lot of people it might seem slightly strange that I focus on asset management as an industry. There are several reasons why I do, one of which is that they have an outsized role, at least within the United States, the United Kingdom, and Europe, in shaping how policymakers think about crises, whether it’s the pandemic or climate and nature crises.
Asset management does what it says on the tin: they manage assets on behalf of anyone, from individual savers to big pension funds or university endowments. Asset management was born out of elite wealth management and then found its way into the pension system, which became ever more tangled in financial markets. It’s an over-100-trillion-dollar industry in terms of the assets under management globally, which is massive.
But importantly, 20 percent of that global industry is managed by just three US-based companies: BlackRock, Vanguard, and State Street, which together control about 20 trillion dollars in assets. The result is that these three have consolidated a huge amount of power and political influence. Many BlackRock alumni have prominent positions in the Biden administration. That’s not new to the Biden administration. The imprints of that influence are very visible, particularly in US climate policy.
Up until the Inflation Reduction Act (and indeed, even within it), instead of climate bills focused on strong regulation and public investment to build new public infrastructure, there has been an increasing interest in leaning on public-private partnerships or other mechanisms that use public power to “derisk” or backstop new areas for investment and profit for the private sector. For instance, in the highly fraught Infrastructure Deal, one of the big wins for Wall Street was “asset recycling,” which is a vehicle for privatizing public infrastructure.
SVH: Has the financial industry shaped the recently passed Inflation Reduction Act? If so, how?
AB: In some respects, the IRA contains genuine breaks with previous consensus. Namely, it jettisons a prior fixation with the price mechanism and with carbon in favor of public investment to achieve emissions reductions. That’s a shift that shouldn’t be understated.
In other respects, the fingerprints of green capitalism and the finance sector–led “Wall Street Consensus” discussed in the book are clearly visible. In brief, it seems that US climate politics has moved from pricing to derisking — using the public sector’s capacity to shepherd private capital into climate-friendly investments while ensuring private investors are handsomely and securely rewarded for “doing the right thing.”
Without question, this strategy can direct urgently needed new investment flows toward certain low-carbon alternatives. But it has clear limitations. Ultimately, it’s a program based on the idea that to be worth pursuing, any low-carbon infrastructure should and will be more profitable than fossil fuel–driven alternatives. Moreover, this is supposedly not only necessary but also desirable. In truth, there are lots of areas in which, with respect to both necessity and desirability, the optimal systems and solutions that can deliver a decarbonized future are not based around maximum profit — like, for instance, replacing a culture of mass private vehicle ownership with affordable and accessible public modes of transport.
The question that hangs over the IRA is to what extent we’re willing to accept the compromise of handing control over investment in our collective decarbonized future to a handful of investment giants because we are desperate enough to get something — anything — that can cut through the quagmire of US climate politics.
CT: In the book, you also discuss sustainable or ethical finance and investing, which often take the form of ESGs, or environmental, social, and corporate governance investing. Could you talk about the development of sustainable finance? What are the actual impacts of these purportedly ethical investments?
AB: About a year ago, sustainable finance was enjoying an unprecedented and relatively uncriticized boom. The pandemic was the first moment — the first test case, as it were — when the ESG sector seemed to be outperforming mainstream finance, and so people arrived at this takeaway: that you can do well by doing good, and that investing in line with environmental and social concerns is good for the planet and good for your portfolio. This amounted to a kind of triumphalist thinking around the idea that we just need private investors to act rationally, and in their own self-interest, by investing in decarbonization and a greener, more sustainable future.
In the months since the book was written, there’s been a really interesting proliferation of criticisms of ESG and of sustainable finance from both sides of the political spectrum. You have Fox News talking about “woke capitalism,” and people on the left talking about “greenwashing,” the marketing of sustainable finance products as climate-friendly and free of fossil fuels when in fact these are smokescreens.
But from my perspective, neither of those criticisms constitutes the fundamental problem. Greenwashing is a problem in and of itself — it’s bad for people to be misled, and there are lots of egregious examples in sustainable finance of clear greenwash. For example, in my previous work at InfluenceMap, a civil society watchdog on climate lobbying and finance, we tracked a number of funds being marketed explicitly as “fossil fuel-free” that contained not only oil and gas companies, but also companies involved in thermal coal mining. But it’s often more subtle than that — one of my favorite recent studies on ESG found that, statistically speaking, when comparing a set of ESG funds to their mainstream equivalents, the single biggest difference was that the ESG funds favor companies with few or no employees. A strange finding, until you realize it’s perfectly congruous with the ESG logic of minimizing risk for investors. A firm with no workers brings no risk of labor disputes — which is great from the perspective of investor returns, and less so from the perspective of driving real-world improvement in workers’ conditions.
But I think what’s much more fundamentally problematic with sustainable finance is that their concern is not necessarily, “What is my role as a financial entity in actually driving the climate crisis?” Their concern is, rather, “How can I minimize my exposure to risks from this transition?” — whether those risks are constituted by climate regulations, actual climate impacts, or labor disputes if we’re talking about the “S” in ESG. The driving logic or motivating factor for investors, in other words, revolves around financial risk rather than their role in creating material damages.
There are some great examples. One of the cases I cite in the book is Vanguard, which is the world’s second-largest asset manager. It has a flagship US ESG fund, and it’s basically just the S&P 500: a basket of the biggest US corporations, tweaked slightly. If you look under the hood, the top holdings are Amazon, Google, Microsoft, two different share classes of Apple, and Tesla. Effectively, the fund is more than 40 percent tech and financials. That’s something that isn’t unique to this fund. It’s motivated by an across-the-board logic. This isn’t about, “How can I invest in a renewable energy company?” or “How can I invest in other kinds of solutions in battery technology?” It’s really just, “How can I slightly reduce my risk exposure to the impending climate regulation that might be coming down the line, which could be bad for my investments in fossil fuel companies?”
The real risk to my mind is that it’s created this triumphalist impression that the huge explosion in sustainable finance equates to “Wow, the private sector is working; it’s doing its job.” There are all sorts of figures to buttress this impression: the trillions of assets dedicated to reaching net zero, for instance. It creates this veneer of action where there’s really very little, and that’s a distraction for which we don’t have time.
The second implication, from my perspective as someone who cares a lot about a just and democratic transition, is this: even if green capitalism were working, do we want ultrapowerful and wealthy corporate actors determining the shape of this decarbonized future? Or do we want a much more democratically accountable and equitable approach to this transition? Personally, I favor the latter.
Cal Turner is a writer living in Philadelphia.
Sara Van Horn is a writer based in Ilhéus, Brazil.