Market Thinking

making sense of the narrative

COPs and Robber Barons

Print Friendly, PDF & Email

As COP26 turns into a sort of Glastonbury for ESG funds, nobody seems to have noticed that all the big energy users have already committed to ‘new nuclear’ already and thus it is the collection of Robber Barons from Finance, tech, industry and the Green Industrial Complex who are all busy lobbying government ministers for a share in the huge Green Tax revenues that should be coming undur scrutiny for their sustainability. The fact that most ESG funds are restricted from investing in Uranium or Copper mines or anything to do with nuclear energy and are thus withholding capital from the very people whom governments have already acknowledged are providing the actual solution to Climate change would have blown up the irony meter, if 30,000 people flying in from all over the world instead of using Zoom hadn’t already done so.

The media onslaught heading into what some are referring to as McDavos this coming weekend has been pretty relentless, as what is the only efficient part of the British Government at the moment – its media and propaganda machinery – has succeeded in turning what was going to be just, yet another, Climate Conference into some sort of ESG Glastonbury. Presumably Boris Johnson has drafted in the same team that did the 2012 Olympics when he was Mayor of London and, like then, has co-opted the Royal Family into presenting  ‘Britain as a Global leader on Climate’ or some such. And, just like the Olympics, the corporates are also being brought along to join the circus. Seemingly, every large Investment Management company (especially the tracker funds) has been spending huge amounts recently on adverts about ESG and how they are ‘committing to net zero’ and they will doubtless be making the pilgrimage north this weekend to sit around and agree on the necessary restrictions to be made by other people and the need to raise taxes. Almost certainly however these will be the executives and the marketing departments looking to raise new funds, for almost every real investor will admit in private that from an investment point of view, the whole structure is riddled with contradictions.

What Carbon Footprint?

Meanwhile, we have to presume that  the experiment of doing Davos online this year wasn’t so successful and the fact that tens of thousands of people are, once again,  flying in, many by private jet, to discuss how everyone (else) should reduce their carbon footprint ought to send the irony meter off the scale. That is, if it hadn’t already been long since broken by the same crowd at COP25, 24, 23 etc. And, of course, at Davos every year.  Even so, the pictures of Airbus A380s unloading Rolls Royces to ferry the Saudi delegates (presumably with a stop off to see Newcastle), or the fleet of Teslas being assembled but requiring diesel generators to recharge them overnight, or the fact that the Japanese sent an empty plane to and from Tokyo a week early, just to check out the landing facilities in Glasgow do appear pretty egregious in their hypocrisy. Meanwhile, the fact that while the Police seem unable to prevent some eco extremists from disrupting ordinary people going about their business by blocking roads in the South of England, they  themselves are blocking off roads to allow the Eco Glitterati to travel between the Conference and their luxury hotel/golf retreats simply highlights the ‘Zil Lane’ mentality of the Globalists.

For, unlike the G7 meeting in Cornwall, which took place all of four months ago, when all they could talk about was, also, ‘The Climate’, this one is much more about the Globalists, the real power brokers driving the whole agenda of McDavos. In addition to the ubiquitous Bill Gates, the high profile presence of financiers like Larry Fink and Mark Carney simply add to the message that Wall Street is coming armed with its own ‘solutions to the crisis’, which will doubtless involve the introduction of new, tradeable and taxable frictions into the system.  Moreover, while Larry Fink is feted by politicians for the trillions Blackrock has under management, in reality Blackrock, Vanguard etc are simply custodians for the massive ETF industry, an intermediary between the companies and the real, underlying owners, the ordinary savers. Thus the fact that these custodians and index trackers are now declaring that they will be insisting on sustainable initiatives from the companies they ‘own’ is exactly what we described 6 months ago when talking about our concerns about how ESG will be used as a Trojan horse for Politicians and political activists to take control of private sector savings (see Trojan Horses and Slippery slopes). In effect the political lobbying machine that drives US policy making has now been transferred to the world of investing, meaning that, henceforth, investment policy for millions of people will be set to meet the requirements of people other than the actual owners of the savings. The problem is of this arrangement is that,

so far this year, ‘Clean Energy’ has underperformed ‘old energy’ by 50%. Which is fine, so long as it’s not your savings we are talking about.

Blackrock Global Clean Energy ETF versus Global Energy ETF,

What is most curious is that, as noted previously, the biggest energy users on the planet – China, India and the US – have all effectively already committed to ‘new nuclear’ for their base-load energy  – a decision that not only makes sense , but makes the whole conference little more than theatre – at least from a climate policy perspective. Even the Saudis are in talks with the Chinese to build small nuclear plants, while ‘Global Britain’ with its 1% of total greenhouse gas emissions has also now committed to new nuclear. And yet, none of Larry Fink’s ETFs will invest in anything to do with the nuclear industry. ESG policies are effectively withdrawing capital from the very industry that the politicians have already decided is the solution to Climate change!

ESG won’t invest in the very companies that are providing a sustainable solution.

The (non ESG) market of course knows this already. Uranium and nuclear related stocks have been roaring ahead (see A NICE future for Uranium ) in the last few months. Bill Gates certainly knows, given he and Warren Buffet are building their own reactor in Wyoming . and doubtless he will be lobbying for his projects. Copper, also continues higher since, whatever the source of the power, electrifying the world requires that the electricity needs to be transmitted and copper is (still) the best solution, even if some ESG funds exclude mining companies! It is a curious world indeed when forced selling by ESG funds of the types of company that are actually going to provide the actual materials for climate policy – Uranium and Copper – leaves them yielding something close to double digits, while savers are simultaneously being told to ‘reduce their risk’ by owning government bonds with negative nominal, yet alone real, yields.

Gazprom too, has doubled this year as the only feasible short term solution for base load has squeezed dramatically higher in price, which is probably why President Putin isn’t coming to Glasgow to be ‘told off’ by Eco Activists. Similarly with President Xi, although in making concessions to Climate pledges recently by cutting coal imports he also just reminded the west that one reason why China’s emissions are so much higher is that the west has out-sourced a lot of its energy intensive production to China. There is a bigger point though about why Xi wont be coming (one worthy of a fuller post) which is that, even though China is a one party state, there are different factions within the party that are always vying for power and influence. The date of Xi’s third (and then open ended) proposal for leader is November 2022 and the preparation for that election starts now. China is going nuclear, it is helping others go nuclear, it is investing heavily in high speed rail and electric vehicles and it is forcing companies to literally clean up their act. Xi understands his priorities and going to the Robber Barons ball isn’t one of them.

Share this article