Price the E in ESG, otherwise it's one more climate con | Assaad Razouk | TEDxESSECAsiaPacific

Summary

The video addresses the urgent crisis of climate change, highlighting the environmental destruction caused by fossil fuel consumption and its impact on vulnerable populations, such as climate refugees. It critiques the failure of governments and corporations to take responsibility for their role in exacerbating the climate crisis. The script also challenges the shortcomings of ESG practices, which often fail to reflect the true environmental costs of business. The need for genuine accountability and the immediate pricing of environmental destruction is emphasized as a critical solution to shift towards sustainability and mitigate the global impact of climate change.

Takeaways

• 😀 The world is facing an imminent climate crisis with millions of people forced to flee their homes due to climate change impacts like tsunamis, floods, droughts, and sea level rise.
• 🌍 Major regions such as Indonesia, Latin America, Africa, South Asia, and the Mediterranean are experiencing waves of climate refugees seeking shelter and resources from countries like Singapore, Australia, Europe, and the United States.
• 💡 Despite the progress made in human development over the past 200 years, much of it has been achieved through unsustainable means, primarily burning fossil fuels like coal, oil, and gas.
• 📉 The impact of climate change was known by scientists decades ago, yet significant action has been delayed due to corporate and governmental interests denying and downplaying the risks.
• ⚠️ Emissions continue to rise, and industries continue to sidestep accountability through tactics like ESG (Environmental, Social, and Governance) which, although well-meaning, often serve as a tool for greenwashing and inaction.
• 📊 ESG investments are growing rapidly but often lack real substance, with many companies merely rebranding their funds without meaningful changes in environmental impact or sustainability efforts.
• 🚫 ESG's limitations include a lack of clear standards, rampant greenwashing, and companies not addressing real environmental costs, such as deforestation, plastic pollution, and carbon emissions.
• 💰 The financial impact of climate destruction is staggering, with companies globally responsible for trillions of dollars in environmental damage, costs which are never reflected in their earnings statements or executive compensation.
• 📉 Big corporations like Exxon, BASF, and Toyota are significantly understating their financial earnings by ignoring the true environmental cost of their operations, which leads to misallocation of capital toward more polluting industries.
• 🔋 If environmental destruction were properly accounted for, we could have already made the transition to cleaner technologies, such as electric boilers, hydrogen energy, and electric vehicles, at no additional cost to consumers.
• 🌱 Merging progress with sustainability is essential for the future, as countries and communities facing climate displacement do not want to leave their homes but need a climate-safe environment to remain there.

Q & A

What is the central issue discussed in the transcript?

The central issue discussed is climate change and its environmental impact, particularly the role of fossil fuel consumption in driving global warming, and the lack of effective action to mitigate these consequences.

What are the consequences of unchecked climate change mentioned in the transcript?

The consequences include climate refugees, with millions of people forced to flee due to rising sea levels, tsunamis, floods, droughts, and other natural disasters. This will lead to geopolitical challenges as countries like Singapore, Australia, Europe, and the U.S. will have to decide how to respond to the influx of refugees.

What is ESG, and why does the speaker criticize it?

ESG stands for Environmental, Social, and Governance risks, which companies report to investors. The speaker criticizes ESG because it is often used as a marketing tool for greenwashing, with no clear standards or meaningful environmental impact measures. It allows companies to avoid responsibility for environmental destruction while appearing to invest in sustainability.

What are the problems with ESG as outlined in the script?

The four problems with ESG are: 1) lack of standardization in reporting risks, 2) failure to address significant issues like deforestation, 3) widespread greenwashing where companies falsely claim environmental responsibility, and 4) the environmental aspect (E) being treated separately from financial considerations, leading to undervaluation of environmental destruction in company earnings.

How does the speaker explain the role of fossil fuels in historical progress?

The speaker acknowledges that fossil fuels contributed to significant progress in the past 200 years, such as doubling life expectancy, reducing infant mortality, and advancing technology. However, this progress came at the cost of environmental destruction, particularly through the burning of coal, oil, and gas.

What is the impact of ignoring environmental destruction in financial statements?

Ignoring environmental destruction in financial statements leads to distorted earnings reports and misdirected investments. It allows companies to avoid paying for the environmental damage they cause, which results in a failure to invest in sustainable alternatives and prolongs the climate crisis.

What example does the speaker use to explain the hidden environmental costs in company earnings?

The speaker uses Exxon as an example, stating that Exxon’s reported profits do not account for the 730 million tons of CO2 it emits annually. When factoring in the social cost of carbon, Exxon’s environmental impact is valued at $36.5 billion, which is not reflected in their financial statements or earnings.

What does the speaker suggest would happen if environmental costs were accounted for in financial statements?

If environmental costs were properly accounted for, the green premium would disappear, making sustainable technologies like electric boilers, green hydrogen, electric planes, and boats much cheaper. This would accelerate the transition to a sustainable economy.

Why does the speaker claim that ESG has led to a false sense of progress?

ESG has led to a false sense of progress because it allows companies to market themselves as sustainable without making significant changes. It diverts attention from the actual environmental destruction companies are responsible for and creates a misleading narrative of corporate responsibility.

What is the ultimate solution proposed by the speaker to address the climate crisis?

The speaker proposes merging progress with sustainability by properly accounting for environmental destruction in financial systems. This would redirect investments towards sustainable technologies and accelerate the transition to a climate-safe future, allowing people in affected regions to remain in their homes rather than becoming climate refugees.