As the different Democrat candidates for President jockey for position, ESG is suddenly the hot button issue. The rigours of the US election cycle make it feel that the country is always mid-campaign. No more so than now. With Donald Trump stumbling in the polls, Democrat Party candidates are lining up to take his crown. ESG-related policy initiatives are capturing all the energy created by opposition to Trump – and channelling that electricity towards political change. It has become the lightning rod of the 2020 US presidential election.
Who is standing for President in 2020? It might be easier to answer who is not standing. At the time of writing, there are some twenty-two muted “serious” candidates, with plenty more yet to reveal their hands. Including outsiders, no less than 176 individuals have filed to run in the primaries. It is a wonderfully diverse field, with many women (including the first Hindu candidate -Tulsi Gabbard), the first openly gay candidate (Pete Buttigieg), and two African Americans who are frontrunners (Senators Kamala Harris and Corey Booker). It seemed at one stage as if we would also have the first Native American hat in the ring. Until Senator Elizabeth Warren was forced to undertake genetic testing which showed she was only 1/1024th Native American. That’s less than half the average US voter. Each candidate releases a declaration video, with its mandatory recital of the humbleness of the candidate’s origins, the hard struggle they have gone through to make it in life, and the very ordinariness of their current existence. At this stage real issues rarely feature, but it is different this year. The noisy presence off-stage of someone who is not standing, New York congresswoman Miss AlexandriaOcasio-Cortes (conveniently, abbreviated to “AOC” by her loving supporters) has dragged the Green agenda centre-stage. AOC is uber-charismatic, and suddenly ubiquitous. She certainly knows a thing or two about social media. She tweets more often than Donald Trump. She led a media offensive last week with a 14 page paper – The Green New Deal – calling for a complete switch to renewable energy by 2030, saying: “Small incremental solutions are not enough.” Not only does it call for closing every fossil fuel power plant, eliminating agricultural co2 emissions, ending petrol cars, and retrofitting the entire US property stock, all with job guarantees for the displaced. It also links preventing climate change to a broader ESG agenda – ending “race and gender differences,” while providing for “free Universal healthcare”, “free college education”, even a free guaranteed income for everyone. It stops short of a complete ban on fossil fuels and beef by 2030 because “we aren’t sure that we’ll be able to fully get rid of…cows and airplanes that fast.” But they do hope by then “air travel stops becoming necessary.” AOC managed to garner no less than 60 other congressmen to co-sponsor a resolution in the House, and within minutes of her press conference last week the Presidential frontrunners Kamala Harris and Corey Booker gave her strong support. They are seeking to ride a popular wave. The Yale/Mason survey recently showed the most dramatic shifts in public sentiment about global warming since it began. 73 percent of Americans now believe global warming is happening, an increase of 10 percentage points from March 2015.
Let us pause a minute and reflect. AOC is rather “green”
herself. She is only 29 years old, and has barely thirty days experience in Congress behind her. It is quite an achievement to have not just captured the news cycle so completely, but to have effectively set the agenda for the 2020 Presidential election. Watching her stand with Massachusetts Senator Ed Markey (73) and other veterans at her press conference, only made her look even younger. Thanks to the “silo-ism” of the US these days, where each side only talks to itself, examination of the Green New Deal has been lamentable. AOC gave interviews only to favourable journalists, who low-balled questions. The hardest it got was asking her what she thought of climate change initiatives in France, and the Yellow Vests pushback. Her response (failure is because “we have let corporations take over who bears the burden of carbon adjustment)” would have been interesting to explore. Maybe even challenge? But no chance of that at present.
The right wing media were not so forgiving. Fox news said “the party of science, forgot to consult the scientists.” Kimberley Strassel writing in the Wall Street Journal was positively derisive “by the end of the Green New Deal resolution …..I was laughing so hard I nearly cried. If a bunch of GOPers plotted to forge a fake Democratic bill showing how bonkers the party is, they could not have done a better job.” All while “spending trillions and trillions more tax money.“Senator Markey sought to sweep aside this last criticism. “No specific costs” were calculated. Others filled the gap for him, and came up with….. $7 trillion. All apparently from Government which of course would mean higher taxation. And this might not be so popular. Another survey (from AP) showed that while Americans want to fight climate change, they don’t want to pay for it – ideally just $1 per month. If it reached $10 a month, 68 percent would be opposed.
In seeking to make the greening of America a solely Government initiative, these Progressive Democrats are throwing away the very real progress made by previous Democratic incumbents, Obama and Clinton, to engage the private sector in change. Thanks to clean burning natural gas, US Power generation has cut emissions by 28% since 2005. Indeed, in 2017 US carbon emissions reached a 67 year low, the same level as 1950. AOC doesn’t really seem to see any role for businesses. She was even asked in one interview if she believed in Capitalism at all, and grudgingly said well “maybe in consumer goods. “
And this is why the Green New Deal will ultimately fail. AOC will likely succeed in getting her party to back her resolution and in making these issues central to 2020. But in pushing such an ill-thought-through, old-style, “tax and spend” wish list, she may just offer Donald Trump a way back to the White House. She will certainly not help the fight against climate change. Shame on her.
Christopher Walker is a writer on business and politics. He has worked for many areas in the area of institutional investment and ESG.