By Chris Lang
To describe Mark Carney as a member of the global financial elite would be an understatement. He spent 13 years working at Goldman Sachs. From 2008 to 2013, he was governor of the Bank of Canada, and from 2013 to 2020 he was governor of the Bank of England. From 2011 to 2018, he was chair of the Financial Stability Board.
As director of the Bank of England, Carney was a director at the Bank for International Settlements. He’s a member of the Group of Thirty and he’s on the board of trustees of the World Economic Forum.
Here’s a quick overview of Carney’s work over the past year relating to the climate crisis:
- In December 2019, the UN Secretary-General António Guterres appointed Carney as UN special envoy for climate action and finance.
- In January 2020, Boris Johnson, the UK’s prime minister, appointed Carney as finance advisor for COP 26, due to take place in Glasgow in November 2021.
- In September 2020, Carney launched the Taskforce on Scaling Voluntary Carbon Markets.
- In October 2020, he joined Brookfield Asset Management Inc., one of the world’s largest money managers with about US$550 billion in assets under management. Carney’s job is to “marry social and environmental outcomes with strong investment returns”. No doubt he will be investing in corporations that want to be seen as “climate-friendly”.
- In November 2020, Carney’s Taskforce put out a “Consultation Document” on scaling voluntary carbon markets. The 98-page document doesn’t even go through the pretence of addressing the climate crisis – it’s just about promoting carbon trading. The consultation document mentions the word “offset” 238 times, but mentions “fossil-fuel energy” only once.
- In December 2020, Carney was quoted in the Financial Times, calling for a “$50-100bn per annum market” in carbon offsets.
And here’s REDD-Monitor’s take on Carney’s Taskforce on Scaling Voluntary Carbon Markets. Spoiler alert, the Taskforce is madness:
This week, the Green Finance Observatory sent an open letter to Mark Carney pointing out what’s wrong with carbon markets and why we need “environmental policies mandating a reduction in greenhouse gas emissions and a public debate on how to allocate carbon budgets and share costs fairly”. REDD-Monitor will post letter in full tomorrow.
This post looks at the conflicts of interest in Carney’s Taskforce, in both the funding and the membership.
Conflict of interest number 1: The funding
The Consultation Document states that High Tide Foundation, The Children’s Investment Fund Foundation, and Quadrature Climate Foundation fund the Taskforce. Bloomberg Philanthropies and ClimateWorks Foundation coordinated the funding.
Carney sits on the board of Bloomberg Philanthropies. In January 2020, Curtis D. Ravenel, founder of the Sustainable Business & Finance Group at Bloomberg LP, joined ClimateWorks Foundation as a distinguished fellow.
In 2015, Carney set up the Financial Stability Board Taskforce on Climate-related Financial Disclosures (TCFD). Revenel co-led the TCFD and Michael Bloomberg was chair. Bloomberg was then the UN special envoy for climate action.
Tim Stumhofer of the ClimateWorks Foundation is a member of the Consultative Group of the Taskforce on Scaling up Voluntary Carbon Markets.
Richard and Dee Lawrence founded High Tide Foundation. Richard Lawrence is the Executive Chairman of Overlook Investments Group, a Hong Kong-based fund management company. (Overlook manages two funds registered in the tax haven of the Cayman Islands: The Overlook Partners Fund, L.P.; and Overlook 3G Investments, L.P.) Lawrence is also the founder of Cool Effect, a company that sells carbon offsets. Richard and Dee Lawrence set up Proyecto Mirador, an efficient stove project in Honduras aimed at reducing the amount of wood being cut for fuel. Dee Lawrence is a member of the Consultative Group of the Taskforce on Scaling up Voluntary Carbon Markets.
Chris Hohn and his ex-wife Jamie Cooper set up The Children’s Investment Fund Foundation. Hohn is the managing partner of the London-based hedge fund, The Children’s Investment Fund (TCI). (While the company TCI Fund Management Limited is registered in the UK, the corporate structure is complicated. TCI manages a series of funds in the tax haven of the Cayman Islands. The parent company is The Children’s Investment Fund Management (Cayman) Ltd.)
In November 2020, Carney backed Hohn’s campaign to force companies to submit their climate change strategies to annual shareholder votes. The first company to do so was Spanish airports operator Aena. Shareholders voted in favour of a plan to make Aena’s airports “carbon neutral” by 2026 with a target for “net-zero emissions” by 2040. Reuters reports that “the carbon compensation mechanisms [are] yet to be decided”.
Quadrature Capital Limited is a quant hedge fund. In 2019, Quadrature launched the Quadrature Climate Foundation. The Foundation funds Nature4Climate and Woods Hole Research Center, both of which support carbon trading and offsets.
Taskforce conflict of interest number 2: The corporate members
The Institute of International Finance (IIF) sponsors the Taskforce on Scaling Voluntary Carbon Markets. The Taskforce website is part of the IIF website. The IIF describes itself as “the leading voice for the financial services industry on global regulatory issues”. The Institute organises a series of meetings each year which are “considered the foremost gatherings of the international financial industry”.
The chair of the Taskforce is Bill Winters, Group Chief Executive at the banking and financial services company, Standard Chartered.
The Operating Lead for the Taskforce is Annette Nazareth, a partner at the international law firm Davis Polk.
McKinsey & Company is providing “knowledge and advisory support” for the Taskforce. A decade ago, McKinsey had a spectacularly incompetent role in promoting REDD. Greenpeace described its advice as “fundamentally flawed”. Simon Counsell, then-Executive Director of Rainforest Foundation UK called McKinsey’s REDD advice “junk economic theory”.
McKinsey is looking to repeat its REDD failure, by promoting carbon offsets on behalf of the Taskforce.
This week, McKinsey put out a report together with the World Economic Forum, titled, “Consultation: Nature and Net Zero”. Predictably, there’s nothing about the lessons learned from McKinsey’s previous involvement in REDD, just Panglossian optimism about the future of REDD.
Bill Winters of Standard Chartered, chair of Carney’s Taskforce, wrote the foreword. Winters tells us that,
Natural climate solutions are crucial tools in this transition process, provided they are underpinned by internationally accepted principles and rules to ensure that they genuinely deliver emission reductions/sequestration, and to increase public acceptance of carbon offsetting as a vital element of the climate transition.
CME Group is a member of the Taskforce Consultative Group. On its website, the company describes itself as, “The world’s leading and most diverse derivatives marketplace”. On 26 January 2021, CME Group announced that it will launch a Global Emissions Offset (GEO) futures contract on 1 March 2021.
The GEO futures contract will use carbon offset standards developed by the International Civil Aviation Organization (ICAO) and is based on the airline industry’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
CME Group’s press release states that, “GEO futures will allow for delivery of CORSIA eligible voluntary offset credits from three ICAO approved registries”.
On 27 January 2021, Mark Carney and Taskforce members Annette Nazareth and Bill Winters will take part in a conversation about carbon markets with Bill Gates as part of this year’s World Economic Forum. No one in that conversation is going to point out the spectacular failure of carbon markets over the past decades in meaningfully addressing climate change.
The membership of Carney’s Taskforce include Big Oil, Big Finance, and Big Airlines, along with a generous sprinkling of carbon traders. Shell, BP, Total, Easyjet and Etihad all have a vested interest in appearing to address climate change, while continuing business as usual for as long as possible. And that is precisely why carbon offsetting exists.