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Leaders
The Economist November 6th 2021
so, shamelessly, bringing Parliament into disrepute. This tawdry episode adds to a pattern set by the government of Boris Johnson. Having strode victorious into Downing Street as one of the architects of Brexit, the prime minister behaves as if laws are for other people. Lord Frost, the government’s Brexit negotiator, is demanding that the eu rewrite aspects of the with drawal treaty relating to Northern Ireland that Britain signed up to in a push to get Brexit done (see Charlemagne). In September 2020 Sir Jonathan Jones, the head of the government legal ser vice, advised that the government’s plan to override parts of the Brexit withdrawal deal would break international law. Mr John son ignored his advice, so Sir Jonathan felt obliged to resign. The prime minister is also seeking to undermine Britain’s precarious system of checks and balances. When offi cials re sponsible for holding ministers to account have tried to do their job, they are made to suff er. Two months after Sir Jonathan quit, an independent adviser on the ministerial code reported that Priti Patel, the home secretary, had bullied underlings. When Mr Johnson said he would ignore that report, too, the offi cial fol lowed Sir Jonathan out of the door. The government is neutering independent bodies supposed to hold it to account. It wants to put the Electoral Commission, a watchdog, under the thumb of a Conservativedominated com mittee of mps, and to strip it of the power to initiate criminal prosecutions. It is trying to parachute in Paul Dacre, a former editor of the Daily Mail, a tubthumping Brexiteer and allround
scourge of liberals, as the boss of Ofcom, the media regulator, even though the appointment panel concluded that his lack of impartiality made him “unappointable”. The mp who leads the parliamentary committee concerned with culture and the media has said publicly that, in choosing its next political editor, the bbc should pick a Brexiteer. The government is also trying to tame the courts. It wants to tighten rules governing judicial review of public bodies’ de cisions. An egregious proposal by the justice secretary, Dominic Raab, would make it easier and quicker to change court rulings that it deems to be wrong (see Britain section). Rather than de fending judicial independence, the attorneygeneral, Suella Bra verman, has joined the attack, implying that in some cases relat ed to Brexit proEuropean sentiment meant judges had entered the political arena. As we write this, the government was starting to have second thoughts about Mr Paterson. After a furious backlash and oppo sition threats to boycott the new committee, it pledged to seek crossparty support for changes to the system. It is not too late for Mr Johnson to learn the moral from this sleazy aff air. Brit ain’s constitution grants the executive great latitude. Having brought Britain out of the eu against the wishes of the “liberal elite”—by which they mean everyone from judges to journal ists—Brexiteers see themselves as beholden to no one. If the government continues to act as if rules are for losers, it will bring democracy itself into disrepute. n
Climate change and investing
The uses and abuses of green finance Why the net-zero pledges of financial firms won’t save the world
A
las, the cop26 summit in Glasgow is shaping up to be a dis trol the global assets that create emissions. Asset owners would appointment. The hope that emerging markets, which belch have both the motive and the means to reinvent the economy. The reality of green investing falls short of this ideal. The fi rst out much of the world’s greenhouse gases, would announce am bitious proposals is being dashed. The plans of China, India and problem is coverage. The Economist estimates that listed fi rms Brazil all underwhelm. There is no sign this will be the cop that which are not statecontrolled account for only 1432% of the kills coal, as Britain, the host, wanted. World leaders have still world’s emissions. Statecontrolled companies, such as Coal In dia or Saudi Aramco, the world’s biggest oil producer, are a big not agreed to stop subsidising fossil fuels. But one area where enthusiasm is growing is climate fi nance. part of the problem and they do not operate under the sway of in Financial institutions representing nearly $9trn in assets stitutional fund managers and privatesector bankers. A second issue is measurement. There is as pledged to uproot deforestation from their in yet no way to accurately assess the carbon foot vestment portfolios (see International section). Financial firms with net-zero targets, global total print of a portfolio without double counting. The most striking announcement has come Emissions from a barrel of oil could appear in from the Glasgow Financial Alliance for Net Ze 30 Nov 2020 the carbon accounts of the fi rms that are drill ro (gfanz), a coalition cochaired by Mark Car ing, refi ning and burning the stuff . Methodolo ney, a former governor of the Bank of England. Apr 2021 160 gies behind attributing emissions to fi nancial Its members, which include asset owners, asset Nov 2021 450+ fl ows are even sketchier. How should share managers, banks and insurers, hold about holders, lenders and insurers divvy up the $130trn of assets. They will try to cut the emis sions from their lending and investing to net zero by 2050. Can emissions from a coalfi red power plant, for instance? The third problem is incentives. Private fi nancial fi rms aim the fi nancial industry really save the world? In principle, it has a huge role to play. Shifting the economy to maximise riskadjusted profi ts for their clients and owners. from fossil fuels to clean sources of energy requires a vast reallo This is not wellaligned with cutting carbon. The easiest way to cation of capital. By 2030, around $4trn of investment in clean cut the carbon footprint of a diversifi ed portfolio is to sell the energy will be needed each year, a tripling of current levels. part of it invested in dirty assets and put the proceeds in fi rms Spending on fossil fuels must decline. In an ideal world the pro that never emitted much, such as, say, Facebook. Together, the fi t incentive of institutional investors would be aligned with re fi ve biggest American tech fi rms have a carbon intensity (emis ducing emissions, and these owners and fi nanciers would con sions per unit of sales) of about 3% of the s&p500 average.
