Investors Must Resist Anti-green Lobby

Barack Obama’s former Deputy Treasury Secretary warned investors against “intellectual surrender” to fossil fuel sector and climate change deniers.

Investors should expect a wave of lobbying from the fossil fuel sector as the switch to cleaner energy sources gathers pace, a former senior US Treasury official in Barack Obama’s administration has warned.

Sarah Bloom Raskin, who was US Deputy Treasury Secretary from 2014 to 2017, said investors must help policymakers resist this barrage of lobbying, cautioning against what she called “intellectual surrender”.

“As the transition proceeds, there will be a crescendo of even more intense lobbying meant to deter policymakers from taking on the work necessary to manage the effects of the transition on people and communities,” Raskin said to an audience of investors and financial services professionals at the City Week 2024 conference in London on Monday.

“The vested energy interests are loath to see demand for fossil fuels be substituted for cleaner energy forms, and they apply intense pressure to keep demand high – all at significant risk and cost,” she said.

“We need to urge policymakers to not succumb to a static, frozen, unyielding vision of an energy mix that is not reflective of a necessary transition.”

Green backlash

Her comments come as support for climate policies in key jurisdictions is under threat. In the EU, farmers’ protests against environmental regulations have succeeded in watering down legislation, while polls predict a swing away from environmentally-minded candidates in next month’s European Parliament elections.

In the US, the ongoing backlash against ESG has seen asset owners and managers pull back from their pro-climate advocacy. And while President Joe Biden’s administration has introduced ambitious climate laws, including the Inflation Reduction Act (IRA) a victory for Donald Trump in the November presidential election would likely result in a weakening of climate policies.

Raskin, now a law professor at Duke University and Co-chair of the UN Net Zero and Accountability Framework Review, said ideology was holding back the clean energy transition.

“In the US, we already see a language problem where we can’t call out climate change as ‘climate change’,” she said. “We see heavy denial evolving from ‘climate change isn’t real’ to ‘climate change isn’t solvable’. This denial keeps people from asking questions and exploring solutions.”

She highlighted three key areas where more effort was needed to boost the clean energy transition. The first was better “policy scaffolding” to give investors and businesses certainty; the second was reimagining collaboration at every level, from international relations to grassroots communities; and the third was to resist the fossil fuel sector’s lobbying efforts.

French touch

Although Raskin praised the federal-level IRA, which has already started to deliver positive outcomes for the US, she said more was needed at the state level to replace funds that traditionally come from fossil fuels revenues.

“There is some urgent unfinished business for fiscal policymakers as they recognise the need to manage the effect of declines in fossil fuel production,” she said. “One such effect will be the need to ease the consequence of people who reside in fossil fuel-dependent economies.”

Lost fossil fuel revenues that fund essential services such as schools, roads and bridges, for instance, will need to be replaced. Raskin recommended creating state-managed funds for reinvestment purposes, and of independent citizen councils – similar to the Citizens’ Assembly on Climate launched in France in 2019.

Made up of ordinary citizens rather than politicians, those entities could make the decisions to invest renewable energy revenues into essential services.

“There’s something irresistibly refreshing in this way of thinking about the decarbonisation transition,” Raskin said. “[Using] an independent management council as a cross-section of community voices set up to steward the effects of changes in the energy mix, to inclusively think about how to engage rural Americans in deciding how to increase reliance on renewable revenues, and decrease reliance on non-renewable revenues.”

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