Category: Law

Posts about law-making, the courts, and legal concepts in general

Shareholder activism and fossil fuel corporations

One argument routinely used against divestment from fossil fuels is that, as investors, institutions like universities and pension funds might be able to discourage the most wasteful and damaging new fossil fuel investments and encourage fossil fuel corporations to use their resources and expertise to advance decarbonization.

In the U of T divestment brief we explained our doubts about this justification. Nonetheless, it remains an approach that some are trying:

Bruce Duguid of Hermes Investment Management, who worked with bp on behalf of Climate Action 100+, says that disclosure will help investors understand if the billions which bp continues to spend on oil and gas creates too much risk. bp will describe how big new capital projects stack up against the Paris goal of keeping warming “well below” 2°C relative to preindustrial times. Equinor, Norway’s state behemoth, agreed to something similar in April. As with Shell, bp’s resolution does not require it to cut oil and gas output. Greenpeace, a combative ngo, blocked entrances to bp’s headquarters in London ahead of its annual meeting on May 21st.

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For the time being, though, Shell, bp and ExxonMobil remain members of the American Petroleum Institute, which has sought to ease rules on emissions of methane, a potent greenhouse gas. They also maintain links with the Western States Petroleum Association, which last year fought a carbon tax in Washington state. bp spent over $13m directly to help defeat a ballot initiative in favour of the levy.

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Others are beginning to question the value of shareholder engagement. The Church of England has said it will divest by 2023 if no advances are made. “Investors’ patience is not limitless,” says Mr Logan. “It’s going to be measured in years, not decades.”

There are many reasons to doubt how meaningful shareholder activism can be, and to ask whether it’s a “shadow solution” that creates the impression that action on climate change will happen, while really justifying the continuation of the status quo. These firms have an enormous financial interest in keeping the fossil fuel reserves they own usable, which in turn means blocking climate change action. Furthermore, neither executives nor shareholders can be expected to meaningfully support a transition to decarbonization which would make these firms irrelevant.

Highly detailed, well-sourced, powerful testimony from Jody Wilson-Raybould

“For a period of approximately four months between September and December 2018, I experienced a consistent and sustained effort by many people within the government to seek to politically interfere in the exercise of prosecutorial discretion in my role as the Attorney General of Canada in an inappropriate effort to secure a Deferred Prosecution Agreement with SNC-Lavalin. These events involved 11 people (excluding myself and my political staff) – from the Prime Minister’s Office, the Privy Council Office, and the Office of the Minister of Finance.”

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“In my view, the communications and efforts to change my mind on this matter should have stopped. Various officials also urged me to take partisan political considerations into account – which it was clearly improper for me to do. … We either have a system that is based on the rule of law, the independence of the prosecutorial functions, and respect for those charged to use their discretion and powers in particular ways – or we do not. While in our system of government policy oriented discussion amongst people at earlier points in this conversation may be appropriate, the consistent and enduring efforts, even in the face of judicial proceedings on the same matter – and in the face of a clear decision of the DPP and the AG – to continue and even intensify such efforts raises serious red flags in my view.”

Read the full text of Jody Wilson-Raybould’s statement to the House of Commons justice committee

The marriage of climate and economic justice

Something occurred to me as I was walking through the snow this morning. There’s an episode of Yes Minister (The Bed of Nails) in which the hapless minister Jim Hacker is charged with implementing an integrated national transport policy. His savvy and manipulative chief civil servant explains:

It is the ultimate vote loser… If you pull it off, no one will feel the benefits for ten years. Long before that, you and I will have moved on… In the meantime, formulating policy means making choices. Once you do that, you please the people that you favour, but infuriate everybody else. One vote gained, ten lost. If you give the job to the road services, the rail board and unions will scream. Give it to the railways, the road lobby will massacre you. Cut British Airways investment plans, they’ll hold a devastating press conference that same day.

Ultimately, the minister and his permanent secretary conspire to be freed from the job, first by proposing a service-slashing approach to transport reorganization, in which they deliberately alert the prime minister about unpopular changes it would imply for his constituency, and then using Sir Humphrey’s second strategy:

We now present our other kind of non-proposal… The high cost, high staff kind. We now propose a British National Transport Authority with a full structure, regional board, area council, local office, liaison committee, the lot. 80,000 staff, billion-a-year budget. The Treasury will have a fit! The whole thing will go back to the Department of Transport.

What occurred to me in the snow is that while Hacker and Humphrey may have been using these approaches as a dodge, one could say metaphorically that those calling for strong climate change policies have in some ways pressed the same two strategies.

First there was the dream of an economically efficient solution via a carbon tax. All the most sophisticated and credible economic analyses projected that the best way to solve climate change was to put a rising cost of carbon across the entire economy and then let individuals and firms make their own economic choices to adjust. This policy was favourably contrasted with trying to reduce fossil fuel use and the resultant greenhouse gas (GHG) emissions through regulation. It was also tailored to appeal to people on the political right: rather than imposing particular technological choices it relies on the free market to adapt naturally to the increasing cost of a previously-neglected factor of production, just as they do every day as commodity prices like oil and copper spot prices do.

What seems to have sunk this strategy is the willingness of those on the political right to play Russian roulette on climate change, assuming the damage we do won’t be that bad or that some future technology will solve the problem painlessly. Coupled with that is the unreasoning hostility to taxes that has been embraced by some right wing populist figures, movements, and political parties. Proposing an environmental policy that can be given the derogatory label “a tax on everything” is challenging in a climate where such figures are influential, and can make it easy for an incoming right wing government to scrap on the basis of “giving money back to [insert name of jurisdiction] families”.

The carbon tax idea was always an awkward fit for the “social greens” to use Clapp and Dauvergne’s terminology. In Paths to a Green World they differentiate between four broad streams within environmentalism: market liberals, institutionalists, bioenvironmentalists, and social greens:

If your analysis is that our system is beset by an ever-destructive capitalism which must be deconstructed, the virtues of a carbon mitigation measure designed to function through efficient capitalist markets was never likely to appeal. Perhaps it speaks to the climate justice dimension when carbon tax revenues are put to purposes that aid the disadvantaged, as with refunds to those with low emissions under a cap and dividend scheme or proposals to use carbon tax revenues to fund a basic income system.

That’s the second set of policies that occurred to me in the snow, corresponding to Humphrey’s “high cost, high staff” straw man. That’s the mainstream media criticism consensus on proposals like the Green New Deal: that they can’t see the rational connection between proposed elements like a job guarantee and climate change, and that the set of new government benefits being proposed seems unreasonably costly.

We surely can’t know what strategies will succeed on climate change. There has never been a problem sufficiently similar to serve as a credible model, so we can never say with complete confidence that one or another past movement suggests the best activist strategies in the world today. We’re going to need to keep trying multiple strategies, especially if we’re committed to democracy. Under a democratic system the populace must ultimately begrudge and tolerate any burdensome actions their society is undertaking for the sake of a stable climate. It has to be akin to the general tolerance of taxation, and be an expected and embedded norm to be part of a society progressively moving away from carbon fuels.

It’s great that social greens are so passionate and able to turn a belief that they’re fighting for justice into enthusiasm and motivation. It probably helps to have a comprehensive vision for societal reform, as opposed to the rather abstract and unemotive “what strategies for decarbonization can work, if we put it ahead of all other priorities?”.

The monarchy and Canada’s Indigenous relationships

John Fraser, former head of Massey College, has an article in today’s National Post: Canada’s First Nations and the Queen have a kinship like no other.

I’d like to see a rebuttal from someone like Pamela Palmater. Personally I think it’s rather questionable to be upholding the idea that the crown has behaved honourably less than four years after the Truth and Reconciliation Commission of Canada finished its work.

Redwater Energy Supreme Court decision

A bit of good news: Supreme Court rules energy companies cannot walk away from old wells.

The fossil fuel industry has huge future cleanup costs, including the UK’s North Sea platforms, and of course Canada’s bitumen sands. The CBC story notes:

Alberta has been dealing with a tsunami of orphaned oil and gas wells in the past five years. In 2014, the Orphan Well Association listed fewer than 200 wells to be reclaimed. The most recent numbers show there are 3,127 wells that need to be plugged or abandoned, and a further 1,553 sites that have been abandoned but still need to be reclaimed.

The industry functions by socializing costs and privatizing profits: for instance, imposing climate change on everybody while directing revenue to shareholders, staff, and executives. The post-productive phase for oil, gas, and coal projects can be a major opportunity to divert costs that should legitimately be borne by the corporation onto the public.

Open thread: climate lawsuits

People are making use of nearly every possible mechanism to try to cajole, convince, pressure, or force governments into adopting plans that are ambitious enough to avoid dangerous climate change.

One possible avenue of remedy is lawsuits, like when the Urgenda Foundation convinced a Dutch court to require the government to tighten its 2020 emission reduction target.

In October, The Economist reported:

The state of New York filed a lawsuit against ExxonMobil, claiming that it misled investors about the risk that regulations on climate change posed to its business. The suit alleges that the oil company “built a façade to deceive” how it measured the risk and frequently did not apply the “proxy cost” of carbon, which accounts for expected future events, to its decisions.

There are attractive and unattractive features to using the courts. On the plus side, they may be more open to evidence than politicians, who are generally loathe to do anything that might threaten jobs or economic growth in the near term. The biggest limitation is probably the courts aren’t policy-makers and defer to legislatures to actually design government policy. Also, because both the causes and the effects of climate change are spread across space and time it’s impossible to say that emissions from source X caused consequence Y. Also, since the people harmed are all around the world and largely in the future there is no court that can hear petitions from all of them.

That said, there is cause for hope that lawsuits will be part of an effective path forward and a means to hold governments to account when they want to claim to be climate champions while simultaneously favouring and protecting emitting industries.

Related:

Global wealth disclosure as a step toward redistribution

It’s a fantasy to imagine that today’s governments would confront the wealthy in this way, but it’s nonetheless of some value to think about some of the barriers to major global redistribution and potential means through which they might be surmounted.

As with other major global challenges like nuclear proliferation there is a coordination problem in establishing more redistributive policies. People say that if one country starts taxing wealth, or land, or otherwise working to rebalance income and wealth across their society, those with the most will simply move elsewhere, either physically or legally for tax purposes.

As a preliminary step, there may be some value is simply compelling ‘high net worth’ individuals to disclose their worldwide financial dealings to any country where they want major government benefits, from the protection of their intellectual property to government contracts and support for their businesses. Remember that private property is a fiction that governments choose to uphold, not a fact of the universe or something that individuals can meaningfully assert for themselves. Every major country could agree on a financial disclosure standard that is (a) intended to capture a person’s economic activity all over the world and (b) designed to overcome deliberate obfuscation through corporations, trusts, and other legal mechanisms which can conceal who owns and benefits from what.

Governments have many potential levers to compel compliance, from visa rules to the tax system, and it’s especially plausible that the rich would comply if most appealing jurisdictions to live in acted simultaneously: say, the EU (including poor muddled Britain), the US and Canada, Japan and China, Australia and New Zealand, and a few others to start with. Doubtless such a reporting obligation would drive a flurry of new consulting activity to help rich people avoid it or minimize what they disclose, but it would nonetheless be a step toward transparency and an important reminder that even those with the freedom to travel and live wherever they like ultimately derive much of their wealth from countries with capable bureaucracies and that they aren’t immune from the sovereignty of those states.

What it’s like to hear but not see the Toronto Air Show

A tweet of mine, written in a moment of irritability aggravated by the sound of jets roaring overhead, has gotten some attention by virtue of being incorporated into some news articles about social media commentary on the Toronto Air Show.

In addition to my standard gripes about the wastefulness of jet engine use, the undesirability of unwanted background noise, and the militarism embodied in combat aircraft development, I suggested that there are people in Toronto who find the experience of being a bystander during the noise as troubling or a reminder of trauma, having heard military jets operating at close quarters during any number of recent conflicts, from Gaza to Afghanistan to Yemen, or during interception flights carried out by domestic air forces.

A disturbing amount of the response on Twitter expressed anti-immigrant sentiment, particularly an assertion that (a) people who have experienced conflict and now live in Toronto now live in preferable life circumstances and therefore (b) they owe certain moral obligations to people who previously lived in the place they now inhabit, to wit just lumping it and not complaining while these acrobatic displays are put on. To some extent my interpretation of the comments was inevitably coloured by Twitter’s reputation as an especially hostile and personal platform, but I think even when viewed with as much objectivity as can be mustered they brought unnecessary hostility to a discussion ultimately about public policy, specifically whether such spectacles should continue.

It’s entirely fair to criticize me for assuming what somebody else’s life experience would mean, in terms of their experience of these noises. That being said, the basic parameters of something like post-traumatic stress disorder are publicly known and it seems plausible to me that anyone who has traumatic memories of being close to combat in which jets operated (whether as a soldier or a civilian) would have some chance of being triggered by the sound of an air show. Given the population of Toronto, it’s plausible that hundreds of people with PTSD are within earshot of each loud noise made by flying aircraft. It’s much more speculative, but I have also wondered about the number of people who can have panic attracts triggered by a stimulus like a jet engine sound find it triggering due to associations they have made through fiction, specifically quasi-realistic military computer games and films which realistically depict violence like Saving Private Ryan. Statistically very few people, even during times of mass conscription, faced intense combat of the kind depicted in the film, but probably a majority of the adult population has now seen multiple detailed immersive representations, whether through films like Spielberg’s or depictions like HBO’s Generation Kill or Band of Brothers.

I don’t want to suggest that it’s the same thing at all, but I have my own negative associations with hearing but not seeing military jets at low altitude nearby, as I lived in North Oxford within earshot of at least some of the approaches to RAF Brize Norton and we used to listen to Vickers refuelling aircraft and B-52s flying in at all times of day and night (familiar eventually in their shrieks and rumbles) and speculate about whether they were coming back from Iraq or from Afghanistan, maybe carrying coffins.

I don’t think social media griping is going to lead to the abolition of the airshow, but I do think it’s a good thing to have a public dialog about what people in the city are going through in terms of their mental health and the choices we make together affecting it.

Those with any opinions on the matter are invited to comment, anonymously if you like.

The question of control

The question of control is a touchy one. No segment of the population feels powerlessness more acutely than Downtown Eastside drug addicts. Even the average citizen finds it difficult to question medical authority, for a host of cultural and psychological reasons. As an authority figure, the doctor triggers deeply ingrained feelings of childhood powerlessness in many of us—I had that experience even years after completing medical training when I needed care for myself. But in the case of the drug addict, the disempowerment is real, palpable and quite in the present. Engaged in illegal activities to support her habit—her very habit being illegal—she is on all sides hemmed in by laws, rules and regulations. It occurs to me at times that, in the view of my addicted patients, the roles of detective, prosecutor and judge are grafted onto my duties as a physician. I am there not only as a healer, but also as an enforcer.

Coming most commonly from a socially deprived background and having passed through courts and prisons repeatedly, the Downtown Eastside addict is unaccustomed to challenging authority directly. Dependent on the physician for her lifeline methadone prescription, she is in no position to assert herself. If she doesn’t like her doctor, she has little latitude to seek care elsewhere: downtown clinics are not eager to accept each other’s “problem” clients. Many addicts speak bitterly about medical personnel who, they find, impose their “my-way-or-the-highway” authority with arrogance and insensitivity. In any confrontation with authority, be it nurse, doctor, police officer or hospital security guard, the addict is virtually helpless. No one will accept her side of the story—or act on it even if they do.

Maté, Gabor. In The Realm of Hungry Ghosts: Close Encounters with Addiction. 2012. p. 48–9