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Climate change and Canberra’s fossilised ‘functional realities’

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In the pause that followed, you could hear the collective agony of the scientists who have begged politicians the world over for decades for meaningful climate action.

“But if carbon pricing was the most effective mechanism to achieve the outcome, then shouldn’t the government take advice from the independent body whose sole purpose is to provide that advice?” responded Frimberger after a beat or two.

“If the majority of the political spectrum has already made a determination that it is not prepared to go down that path, then it is meaningless in some ways,” said Zimmerman, ceding no ground.

Frimberger tried again: “But shouldn’t the majority of the political spectrum take expert advice?”

At this point the chairman stepped in and put the debate out of its misery, with Zimmerman presumably still certain of the primacy of “functional reality” and Frimberger still apparently more concerned with, well, reality.

Functional reality has retarded climate action in Australia – longer than it has in comparable nations – in large part because we create our wealth not just by the use of fossil fuel but by its export. But around the world, functional reality is being rapidly overwhelmed by climate reality.

Scott Morrison goaded the Labor Party with a lump of coal in Parliament in 2017.

Scott Morrison goaded the Labor Party with a lump of coal in Parliament in 2017.Credit:Alex Ellinghausen

Capital markets are abandoning fossil fuels and turning to green technology. Governments in Europe, Asia and now the United States are supercharging the shift with net-zero targets.

Last week the world’s largest investor, BlackRock, with more than $10 trillion in funds under management, reaffirmed that climate change and associated risk management would remain at the heart of its investment strategy.

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Since then the London-based asset management group Aviva announced that not only would it divest from carbon-heavy businesses, it would no longer provide credit to them. It set a three-year timetable for companies to announce net-zero targets and strategies.

In an opinion piece published in the Financial Times over the weekend entitled Wall Street’s new mantra: green is good, the financial journalist and author Gillian Tett writes she has identified a significant shift in attitudes towards so-called environmental, social and governance (ESG) criteria – the standards companies set for their operations that can be tested and measured by the market.

Not long ago ESG was ring-fenced from general operations, used as a tool to signal good intentions to investor activists who wanted to change the world.

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Capital markets are abandoning fossil fuels and turning to green technology. Governments are supercharging the shift with net-zero targets.

Today, argues Tett, it is at the heart of operations, used by companies seeking to “avoid reputational risks, retain customers and employees, and sidestep losses”.

Tett quotes Anne Finucane, vice-chair of Bank of America, who estimates that of $US110 trillion in assets under professional management today, about 40 per cent have some sort of ESG consideration.

If green is now good according to global financial markets, how long will both parties back brown industries at the cost of rapid emissions reduction?

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The support for Steggall’s bill suggests that, outside Parliament, the desire for rapid reductions is broad. It has been backed not just by groups such as the Clean Energy Council – which represents Australia’s renewable energy industry – but by the Australian Industry Group, the Business Council of Australia, the Planning Institute of Australia and the Property Council of Australia.

This attitude is reflected in polls, such as that conducted by the Lowy Institute in 2019 which found that six in 10 Australians believed global warming is “a serious and pressing problem” about which “we should begin taking steps now even if this involves significant costs”.

Despite this, both major parties remain home to supporters of old industries that scientists – and markets – believe must be abandoned.

Announcing a new climate spokesman in Chris Bowen, Labor plans to focus on the message that addressing climate change will prove to be a boon rather than a burden to the economy. It is betting that this message will be echoed in the markets too.

It is hoping that the functional reality – which is to say the political reality – and the scientific reality have finally converged.

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