(I wrote this piece for a magazine in the UK called Consented) It is hard to imagine reading the latest Intergovernmental Panel on Climate Change (IPCC) report and feeling energised and excited. After all, the report, published in October 2018, warned that we are on a path to catastrophic climate change, way beyond the maximum 1.5 degrees temperature increase goal made three years ago at the United Nations climate conference in Paris. It leaves me with a sinking feeling of dread. Yet, strange as it may seem, some who read the IPCC report may well have reacted with joy. Yes, at the chance to make money. The dark side of capitalism is that disruption, change and scarcity all provide avenues of profit for those willing to speculate on its consequences.
The seemingly shameless capacity of some people to seek profits in the most desperate of situations was brought starkly home recently when I read about a financial investor in Dallas who as Hurricane Harvey approached the US east coast realised that investing in short-term housing in Houston and South Florida would be profitable as people fled their homes and looked for anywhere to stay. “We saw occupancy go to 100 percent in a lot of those hotels,” says the Dallas investor. “We didn’t crush it. But we made 25 percent, 30 percent, pretty quick.”
I guess that’s the great ‘American’ entrepreneurial spirit at work, but it’s not an isolated case. There is a growing global industry gearing up to profit from climate change. In his book, Windfall, journalist Mckenzie Funk travels the world meeting some of the corporations already starting to profit from sea level rise, floods, fires, and food and water scarcities in different regions. They include private firefighters in California dealing with ever more intense wildfires, land speculators betting on where crops will be forced to move as temperatures change, ag-tech companies offering genetically-engineered crops that can cope with extreme heat, Dutch firms providing sea wall infrastructure, and even, perversely, energy companies who think that the extremes of climate change will actually lead to increased energy use – as people for example turn on their air-conditioners more frequently.
Trump’s electoral victory may ride on a sea of climate denial, but his backtracking on climate commitments has helped this industry profit from climate change. His inaction makes the gamble of these companies, that things will get worse, an ever more secure bet.
Most controversially, Trump is also providing a fillip to the business of geo-engineering companies that promise technological fixes for climate change that either counteract the increased heat from global warming or remove carbon dioxide from the atmosphere. They include proposals as bizarre as launching trillions of tiny sunshades into space to reflect back sunlight. It may seem counterintuitive that Republicans who deny that human actions cause climate change would then invest in unproven technologies that deliberately change climate. Yet it is noticeable that Trump’s business allies and politicians with a history of climate change denial are often the biggest enthusiasts for geoengineering. And under Trump, they are being given more leeway to experiment despite an international moratorium on geo-engineering. Geoengineering advocates David Keith and Frank Keutsch hope to test spraying from a high-altitude balloon over Arizona, in order to assess the risks and benefits of deployment on a larger scale.
Behind these corporations speculating on our future is a sea of financial firms and insurance companies that underpin their work. They are already testing their investment strategies and their financing indicates where they expect climate change to deliver profits. Barney Schauble from the investing firm Nephila Advisors told Bloomberg magazine, “If you can see something that other people just refuse to see, and you can make decisions on that basis, I suspect over the longer term that is going to put you in good stead.” The result has been a boom in funds that seek to anticipate the industries of a climate-changed future. They include a growing insurance and reinsurance market that offer to protect house-owners, farmers and corporations from the growing number of climate-influenced events.
This market is not emerging in a political vacuum. It is assisted by politicians who, baulking at the potential costs of climate change impacts, are seeking to engage private finance. One of the ways they are doing this is by promoting catastrophe bonds – a type of reinsurance that rarely gets paid out but is theoretically available for the most extreme catastrophic events. These ‘cat bonds’ are being touted by the OECD, UN and World Bank as ways to protect against climate catastrophe. Yet between 1996 and 2012, investors only paid out $682 million of the $51 billion in cat bonds purchased. This is because the restrictions on what counts as a ‘catastrophe’ mean that only a small percentage of bonds come good. In other words, like many financial products today ‘cat bonds’ are more about creating a new profit stream for bankers rather than providing security for the vulnerable.
It would be wrong to suggest that this means that all corporations are gearing up to profit from or even prepare for climate change. In fact, like many of today’s politicians most corporations are seemingly blinkered about the likely impacts of climate change on their business model. A KPMG report in 2017 found that three-quarters of companies in 49 countries do not even acknowledge climate risk in their financial reports. Of those that do, climate change is seen mainly as a risk to profits that could arise from changes in weather or regulation – and certainly not as an indication of a fundamental need to change the way of doing business.
This combination of short-sightedness and shameless speculation by corporations is dangerous given the immense political, economic and cultural power that corporations have grabbed in recent decades. It means we have had our keys taken by a driver that is heading straight towards a cliff – most likely not even thinking about it or at best working out how to make some money from the inevitable crash.
Which brings us to the last important group betting on the ‘crash’, and that is the military and the arms industry that supplies them. The military have consistently been one of the most active organisations when it comes to anticipating climate change impacts, with reports dating back to 1990 examining the consequences of climate change. In 2008, both the US and the EU identified climate change as a ‘threat multiplier’ in their security strategies, warning that climate change would intensify existing conflicts and tensions, as well as warning of various apocalyptic scenarios. One such war-gaming exercise in 2009 predicted the following: “As first thousands and then millions and then hundreds of millions of starving people begin flooding toward Europe, the EU will try to retreat behind high walls and naval blockades, a containment strategy that will be seen as morally indefensible and will provoke tremendous internal unrest and impoverishment, but also will be seen as a matter of survival.”
On the back of these scenarios it has not proven difficult for the military and accompanying arms and security companies to argue that the answer to this uncertain future is massive increases in military spending. In Europe we can see this in the way security has become ever more central to the EU’s priorities. From almost no spending in this area ten years ago, the EU will spend €11 billion between 2014 and 2020. The EU’s border agency, Frontex, has seen its budget go up by 3688% during this period. The winners are the big arms firms – Airbus, Finmeccanica, Thales and Safran – many of whom both export arms to the regions of existing conflicts (North Africa and Middle East) and thus contribute towards people fleeing and then win contracts to militarise EU borders to prevent them entering Europe.
In all of this, we can start to see a future sketched out by corporate strategists and military planners – one that assumes scarcity and conflict and promises security and ongoing profits for the wealthy. Our challenge is to wrest back control from these actors that are primarily responsible for the climate crisis and who should not be in charge of how we respond to its consequences.
This won’t be an easy struggle given the power we are up against. But there are moments when we can glimpse the possibilities and power of a different approach.
In the autumn of 2015, thousands of Europeans delivered food to refugees walking across Europe, manned rescue ships in the Mediterranean, organised welcome ceremonies in their towns for Syrians fleeing a hideous war – and succeeded temporarily in changing the discourse of hostility towards refugees.
Last summer (2018) in Kerala, India, an impressive women’s organisation, Kudumbashree, mobilised 400,000 of its members, after unprecedented flooding, to provide relief, clean up and rebuild homes, schools, hospitals, local government buildings and child care centres. 38,000 Kudumbashree members opened up their own homes to shelter families rendered homeless by floods.
Cuba, a resource-strapped country, frequently succeeds in protecting far more lives from hurricanes than its often hostile neighbour, the US, thanks to a system of highly organised local civil defense committees, backed by central government resources and great communications. When the impoverished country confronted its most powerful hurricane ever, Hurricane Irma in 2017, ten people died — in contrast to its far richer neighbor, the United States, where the same hurricane, although weaker in terms of wind speed, killed over 70.
The truth is the unprecedented scale of climate breakdown means that the future is very uncertain. We don’t know what challenges will be thrown up by a deeply unstable and changing climate. But if we are to bet on the future, these examples of solidarity, justice and resilience seem far better for our collective future than leaving the world in the hands of corporations and military. Our struggle is to turn that determined bet into a strategy for systematic political transformation.