May 21, 2021 Reading Time: 6 minutes

When I was young, idealistic, and deep in the weeds of the social justice movements of my time, our strategy meetings and political planning events often included the word “mainstreaming.” The term didn’t mean what it means in, say, special needs education, nor what a philosopher of science or historian of economics may refer to when talking about different schools of thought. Instead, we meant “to make normal” – and naturally as a verb, as we were active activists with an ax to grind. 

It meant to insert, and assert, our goals into every conceivable arena. To make our goals (climate, social, inclusivity, or diversity) a conversation and serious agenda point in every boardroom and political assembly. It meant that we – with articles in newspapers and protests or behind-closed-doors lobbying – pulled every string we had such that our cause occupied every bureaucrat’s mind, elected or non-elected.

We tried, failed, tried again, and failed again. The organizational forms changed, from outright political parties to one-time projects, to decentralized grass-roots movements, and everything in between. Nothing really seemed to stick. Religious organizations campaigned for eco-justice; well-funded groups with varying degrees of scientific expertise made popular documentaries; political hawks monitored the UNFCCC (the UN organ that organizes the climate summits every year); and students demanded that their universities sell assets that were even remotely connected to the fossil fuel industry, echoing campaign strategies from the 1960s civil rights movements, or the 1990s ones directed against South Africa’s apartheid. 

Talk about taking the moral high ground.

It was never quite obvious that students pushing their universities to divest even meagre endowments from fossil fuel companies were connected to the larger ecological questions about climate change. Reshuffling who owns the instruments that finance the physical assets that emit the byproduct CO2 doesn’t change anything about their emissions: the CO2 enters the atmosphere whether you, me, Warren Buffett, or Russian oligarchs own the facilities. Practically speaking, us activists would have made a bigger impact by not driving or flying to the meetings where we so passionately argued our case than by actually achieving our stated aim. 

In the early 2010s when these morally high-flying campaigns took off, the vast majority of the world’s oil reserves and production (this is prior to much of the shale gas boom) was owned and operated by non-listed and/or foreign government-backed companies like the Russian (Gazprom and Rosneft), Iranian (NIOC), Brazilian (Petrobras) or the Arab (Aramco, ADNOC, KPC) industry giants. Even if you could get powerful institutions like university endowments (and later pension funds, and asset managers) to avoid, divest, or shun Western companies like BP, Chevron, Exxon, or Royal Dutch Shell, your total sum impact on the world’s oil production would amount to a big fat zero. (Actually negative, since you had to move around and use resources to organize your efforts).  

Why? It’s not that hard for competing companies and states to replace whatever production cuts into which a successful student campaign may bully Western companies. Absent tariffs or targeted taxes all your efforts amount to nothing since neither CO2 emissions nor the world’s internationally traded and shipped oil respects national boundaries. 

Then again, it was never about the stated aims – which we openly admitted when so challenged. It was about “taking away the moral license from the fossil fuel industry” and similar such quips. It was about mainstreaming the unidimensional idea that fossil fuel equaled bad and nature equaled good. It was a greenwashing springboard from which we could launch further ideological attacks. 

Around 2013-2014, I grew up: slowly, gradually, and then suddenly – the way that all-encompassing ideologies usually crumble. I studied some economics, both the formal kind and its historical (and heretical!) offshoots. I grasped the concept of trade-offs and opportunity costs. I learned how global financial markets operate (at least to the extent that anybody does). I grew distrustful of political agencies as forces for progress; I read The Not So Wild Wild West and Crisis and Leviathan, and learned that not everything is what is commonly believed. I read Alex Epstein’s The Moral Case for Fossil Fuels and judged that emissions weren’t evil, and human impact on the planet was sometimes even desirable – a far cry from someone who just a few years before adored the No Impact Man and even tried to emulate him in practice (with a heavy dose of moralizing). 

What all these organizational efforts, of which I was a small but devoted part, amounted to wasn’t clear. While they only gradually had success in their stated aims, their more subtle aims of mainstreaming climate bore more fruit. Yes, many large and influential universities have declared for the divestment campaigns, and even BlackRock, the world’s largest asset manager, has moved in that direction. Others, like pension funds and sovereign wealth funds, have moved some of their funds away from owning shares in oil and gas companies, but more as a gesture of good faith and for market-risk reasons than activist persuasions. Other financial giants have remained in ownership positions, explicitly in order to lobby that company into greener pastures. 

Still, none of the mainstreaming structures we had built over decades turned the tide as much as did an iconic, blonde, white(!) girl with Asperger’s. Then again, maybe she couldn’t have succeeded had we not toiled in the background for years and decades, mainstreaming climate to the be-all-and-end-all topic it now is. Following her popular success, the most powerful institutions in our fiat world – the central banks – have not resisted the pull of this inane black hole. They “want to become the guardians of the environment as well” begins Simon Clark’s recent article in the Wall Street Journal, identifying an eerie trend of mission creep and central bank activism. They can’t hit their own targets very well, but still wish to dabble in everybody else’s:

“Potential risks posed to the financial system by climate change include losses on loans or a decline in the value of assets, such as waterfront property and property repeatedly exposed to wildfires. Commercial banks and investors lend billions to companies that produce significant amounts of carbon dioxide, such as operators of coal power plants.

Such a move would mean central banks would be influencing which parts of the economy get credit. Shifting in that direction would go against the long-held belief by central banks that they should avoid influencing lending decisions and could embroil them in political disputes over the extent of climate change.”

Every woke central bank, from the Riksbank to the ECB and Singapore’s MAS, are on the bandwagon citing flash floods and disasters and credit risk in banks’ portfolios. In the middle of a pandemic, with central banks more aggressive than ever, the ECB launched a Climate Change Centre even though it was still unsuccessful in achieving its sole aim of price stability. The announcement reads

“The climate change centre will shape and steer its climate agenda internally and externally, building on the expertise of all teams already working on climate-related topics at the bank.”

How about you focus on your stated goals instead? If you’re done with those by lunchtime, maybe we can talk about you taking the afternoon off to focus on banking-related risk factors from climate change.

What’s so weird about this is that it’s not clear that those climate change risk factors aren’t already accounted for. CAT-bonds (‘catastrophe’ bonds) are growing faster than the crypto economy; Global reinsurance companies like Münich Re or Swiss Re, which provide tail-risk insurance for ordinary insurance companies, are all over accurately assessing the financial risks from climate change. Insurance companies can price fire and flood risks, with or without the added layer of climate change. Years ago I suggested that climate activists pool their funds and go into the (re)insurance business, specifically to address their concerns about financial climate risk. With a longer time horizon and lower required rate of return, you might even have an edge over financial incumbents. 

This is the lean-or-clean debate of central banking on steroids: central banks have magic wands with which to improve private sector outcomes – never mind that those private markets may already be doing what you say you can improve on. What could politically swayed central bankers possibly bring to the table that professional actuaries, with full skin in the game, could not? Can financial markets not price bonds according to the best available information about what a changing climate may or may not do to the operation of our economies?

Mainstreaming any important topic means to single-mindedly put everyone’s efforts in one basket and ignore all other important issues. That was my mistake ten years ago: not seeing the bigger picture. Now the world has caught up, keen on making that same mistake, central banks more so than most. 

Don Quixote de la Mancha sends his regards.

Joakim Book

Joakim Book

Joakim Book is a writer, researcher and editor on all things money, finance and financial history. He holds a masters degree from the University of Oxford and has been a visiting scholar at the American Institute for Economic Research in 2018 and 2019.

His work has been featured in the Financial Times, FT Alphaville, Neue Zürcher Zeitung, Svenska Dagbladet, Zero Hedge, The Property Chronicle and many other outlets. He is a regular contributor and co-founder of the Swedish liberty site, and a frequent writer at CapXNotesOnLiberty, and

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