Would Google’s Carbon Emissions Actually Double Overnight?

The temperature in parts of Antarctica was seventy degrees Fahrenheit above normal in mid-March. Pakistan and India have had their hottest March and April in more than half a century, and the temperature in parts of the subcontinent is above 120 degrees this week. Temperatures in Chicago last week exceeded those in Death Valley. But on Tuesday, three nonprofit environmental groups jointly released a report containing a different set of numbers that look almost as scary. They indicate that the world’s largest corporations – and, indeed, any business or individual with cash in the bank – have inadvertently fueled the climate crisis. This cash, left in banks and other financial institutions that lend to the fossil fuel industry, build pipelines and fund oil exploration, and in the process produce truly immense amounts of carbon. The report raises deep questions about the sanity of our financial system, but it also suggests a potential realignment of business actors who could act decisively to shift the balance of power that has so far thwarted swift climate action.

To grasp the implications of the new numbers, consider Google’s parent company, Alphabet. It has worked hard to control emissions from its products. Last year, for example, Google Sustainability published an account the work he did to get case suppliers to switch from using virgin aluminum to recycled aluminum for Google’s new Pixel 5 phone, a huge effort involving all members of the metallurgy team – which, according to the company, “studied the chemical compositions of different recycled aluminum alloys and grades, looking for an optimal combination of alloying elements to meet our performance standards” – to the leaders who had to “going far upstream in the supply chain to the source that supplied our aluminum, and then negotiating a new kind of deal that they had never done before. This was all done, Google said, in order to” reduce the carbon footprint of case manufacturing by 35%. This is the kind of grinding work that goes on day in and day out at companies that are taking the climate crisis seriously.

But, according to the new report, those efforts may have missed the most important source of corporate emissions: the money that these companies earn and then store in banks, stocks and bonds. The consortium of environmental groups – the Climate Safe Lending Network, the Outdoor Policy Outfit and BankFWD – looked at companies’ financial statements to find out how much money the world’s biggest corporations had on hand, then calculated how much carbon that every dollar was in finance. system may have generated. According to these calculations, Google’s carbon emissions would indeed have increased by one hundred and eleven percent overnight. Meta’s emissions would have increased by one hundred and twelve percent and Apple’s by sixty-four percent. For Microsoft in 2021, the report states that “emissions generated by the company’s $130 billion in cash and investments were comparable to the cumulative emissions generated by manufacturing, transporting and using all Microsoft products. in the world “. Amazon has also worked to reduce emissions; it plans to run its delivery fleet on electric trucks, for example. But in 2020, according to the report, its “$81 billion in cash and financial investments still generated more carbon emissions than the emissions generated by the energy purchased by Amazon to power all of its facilities around the world – its distribution centers, its data centers, its physical stores”. Also according to the report, in 2021, Netflix’s annual money shows would have been ten times larger than what was produced by everyone in the world broadcasting their programming, i.e. Netflix and the heat.

The authors are quick to note caveats. The companies mentioned do not disclose banking arrangements; some of their cash is in big banks, but some would be held offshore, and some is in sovereign debt, like treasury bills, or other assets that can be quickly sold, like stocks. So the numbers, while accurate, are extrapolations based on averages and emissions estimates. The report is based on research and analysis by South Pole, an international climate finance consultancy that has worked with companies such as Nestlé and Hilton on emissions reporting. South Pole argues that “the carbon intensity figures for the asset classes analyzed in this report are conservative estimates that constitute an indicative understatement of the actual emissions that banks generate through their financial services” – and that , if you add the company pension and insurance arrangements, it “would generate a larger financial footprint calculation than just cash and investments”. While these numbers are raw, they are the first of their kind we have seen, and as such they offer unique analysis.

Since the global warming alert was first publicly raised in the late 1980s, activists have pushed countries and companies to catalog their emissions. Starting in 2001, companies that want to monitor their progress – including the companies mentioned in the new report – have used a set of “greenhouse gas protocols” that are overseen by the World Resources Institute, a global non-profit organization. Under the protocols, a company can report its Scope 1, Scope 2 and Scope 3 emissions. Scope 1 includes direct emissions from operations that a company controls or owns: boilers in a factory; fuel tanks of a delivery fleet. Scope 2 emissions come from energy purchased by a business, such as that a local utility produces when generating electricity for the business. And Scope 3 emissions are the indirect emissions that “occur in a company’s value chain”, like, for example, the carbon produced by the companies that make the aluminum casings of Google’s phones.

Scope 3 emissions could also include indirect downstream emissions, such as those produced by a company’s cash held in banks. In the official accounting framework that the World Resources Institute has provided to companies since the launch of its emissions protocols, there has been a space for carbon emissions from cash in hand – category 15, under scope d ‘application 3. But in the past, most non-financial companies left it blank, because there was never a good method to calculate these emissions. “There’s nothing more essential for a business than making money – that’s what it exists for,” said Paul Moinester, executive director of Outdoor Policy Outfit, a think tank. “So the fact that we can’t factor in the role their money plays in their carbon emissions, there’s nothing more important than that.” Vanessa Fajans-Turner, who heralded a race for Congress in upstate New York, is the executive director of BankFWD, which members of the Rockefeller family founded in part to track carbon emissions from the financial system . She noted, “It’s part of a company’s supply chain. They need to find financial resources and products. They need loans, they need places to keep their money, they need interest rates, they need international transfers. These are things they buy through a partner. This is the definition of a supply chain.

The effort to develop the new calculations began with conversations between James Vaccaro, a former European banker who heads the Climate Safe Lending Network, and Moinester. “We started doing rough calculations on how much carbon their money was producing,” Vaccaro told me. “And we were, like, ‘That must be wrong. Surely we’ve transposed one decimal place. That must be an order of magnitude too big. “The biggest banks, especially in the United States, provide huge amounts of capital to keep the fossil fuel industry growing.According to Banking on Climate Chaos, an annual report of the Rainforest Action Network and other environmental organizations, JPMorgan Chase, Citigroup, Bank of America and Wells Fargo have together spent more than $1 trillion to industry in the years since the Paris Climate Accord was passed in December 2015. This includes companies developing new projects that scientists, Indigenous leaders and climate activists have decried , Keystone and Dakota access pipelines and new drilling fracturing fields in areas of the newly melted Arctic.

Environmental groups stress that the companies singled out in the report shouldn’t be embarrassed by the numbers, which aren’t exactly their fault. Instead, they say, the numbers should allow them — and any other operation or individual who makes money and stores it in the U.S. financial system — to insist that banks stop lending money. money to finance the expansion of the fossil fuel system. And if they relied on them as effectively as they do, say, aluminum suppliers, the results could be remarkable. Google, for example, is one of the biggest renewable energy buyers. But, the report says, if it could reduce its “financial footprint by 43%, the reduction in emissions would be equivalent to the carbon savings Alphabet generated” with all that solar and wind power. And maybe it will – after all, when Google worked on its aluminum enclosures, the company noted that its suppliers had agreed to make recycled aluminum “available to the automotive industry. consumer electronics as a whole”, because “it is a fundamental principle of Google”. to try to lift all the boats.

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