A tiny number of persons produce the same level of carbon emissions as of entire France’s population, says a new climate report – Carbon billionaires The investment emissions of the world’s richest people (Nov. 22, 2022, https://oxfamilibrary.openrepository.com/bitstream/handle/10546/621446/bn-carbon-billlionaires-071122-en.pdf?sequence=14)
The study, published by Oxfam, an international NGO, found that the investments of 125 of the world’s richest individuals have a carbon footprint equivalent to the emissions of France.
The report was published to coincide with COP27, the climate conference underway in Egypt, where discussions on climate finance and resilience are expected to take center stage.
The report said:
Extreme Inequality
- Extreme inequality and wealth concentration undermine the ability of humanity to stop climate breakdown. Very rich people emit huge and unsustainable amounts of carbon and have an outsized influence over our economy. Unlike with ordinary people, 50% to 70% of the emissions of the world’s richest people are the result of their investments. They hold extensive stakes in many of the largest and most powerful corporations in the world – large enough stakes to influence the actions taken by these corporations.
3.1 Million Tonnes Per Billionaire
- The true scale of the investment emissions of these individuals is not systematically calculated or reported. However, using new analysis based on publicly available data, Oxfam calculates that the annual carbon footprint of the investments of just 125 of the world’s richest billionaires in our sample is equivalent to the carbon emissions of France, a nation of 67 million people. This represents an average of 3.1 million tonnes per billionaire, which is over one million times higher than 2.76tonnes – the average for someone in the bottom 90% of humanity.
Million Times Higher
- Emissions from billionaire lifestyles, including their private jets and yachts, are thousands of times the average person’s, which is itself unacceptable and unsustainable. But if we include emissions from their investments, then their carbon emissions are over a million times higher.
Billionaires’ Investment
- Our analysis also found billionaires had an average of 14% of their investments in polluting industries, such as fossil fuels and materials like cement. This is twice the average for investments in the Standard and Poor 500 group of corporates. Only one billionaire in the sample had investments in a renewable energy company.
- Investments billionaires make help shape the future of our economy, for example by backing high carbon infrastructure, locking in high emissions for decades to come. Our study found that if the billionaires in the sample moved their investments to a fund with stronger environmental and social standards, it could reduce the intensity of their emissions by up to four times.
- The role of corporates and investors in making cuts to carbon emissions that are needed to stop global warming of more than 1.5°C will be a hot topic at the upcoming 27th Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) in Egypt. Yet despite the corporate spin, their actions fall far short of what is actually needed to stop catastrophic climate breakdown.
- Governments should tackle this issue with data, regulation and taxation. They must systematically report on the emissions of different income groups in society, instead of relying on averages which obscure carbon inequality and undermine effective policy making.
Tax The Rich
- Governments must regulate investors and the corporate sector so that long-term sustainability and the reduction of inequality are put ahead of delivering ever higher returns to wealthy shareholders. They should compel corporations and their rich investors to systematically cut their carbon emissions far more drastically if we are to avoid climate breakdown. Governments must tax rich people more to radically reduce inequality and wealth concentration, to reduce unsustainably high emissions by rich people and to reduce their power and influence over our fossil fuel-fired economy. This could also raise trillions of dollars for nations hit hardest by climate disaster. The revenue could also help advance a green and fair transition at the global level. Further, additional top-up taxation should be levied on wealth generated from polluting industries and fossil fuels to deter investments in these industries and drive a faster transition.
- There is a growing body of analysis looking at the relationship between economic inequality and climate change – specifically, at the role of the richer sections of every society in generating the carbon emissions that are contributing to climate breakdown.
Richest 1%
- The research conducted by Oxfam and the Stockholm Environment Institute (SEI) revealed that the richest 1% (around 63 million people) alone were responsible for 15% of cumulative emissions and that they were emitting 35 times the level ofCO2e compatible with the 1.5°C by 2030 goal of the Paris Agreement. Similar findings have been reported by economists Thomas Piketty and Lucas Chancel. Another study drew on public records to estimate that in 2018 emissions from the private yachts, planes, helicopters and mansions of 20 billionaires generated on average about 8,194 tonnes of carbon dioxide (CO2e).
The Poorest 1 Billion
- By contrast, any individual among the poorest one billion people emits around 1.4 tonnes of CO2 each year.
- More recently, Twitter accounts tracking private jet travel have brought the issue of carbon inequality to public attention with revelations that, in a matter of just minutes, billionaires are emitting more CO2 than most people will emit in a year.
Stake Of The Rich: $2.4 Trillion
- The study looked at the investments by billionaires in 183 corporations and found that their stakes added up to $2.4 trillion. These investments alone are responsible for emitting 3 million metric tonnes of carbon dioxide each year, exceeding the average emissions of an individual who does not make up the wealthiest 10% by a million times.
Billionaires’ Polluting Industries
- The findings suggest that 14% of the investments owned by the billionaires fell under “polluting industries,” including fossil fuel and cement. Only one of the billionaires in the pool that was studied had renewable energy investments.
“The role of the super-rich in super-charging climate change is rarely discussed,” Sriskandarajah said. “These billionaire investors at the top of the corporate pyramid have huge responsibility for driving climate breakdown. They have escaped accountability for too long.”
People from low- and middle-income backgrounds have little choice in carbon consumption. But Oxfam argues that the wealthier sections of the population are well-positioned to make climate-conscious choices.
The report also found that aside from wealthy individuals, many corporations were steering off track in their climate transitions by setting unrealistic near-term goals while promising to achieve net zero emissions by 2050.
“We need COP27 to expose and change the role that big corporates and their rich investors are playing in profiting from the pollution that is driving the global climate crisis,” Oxfam’s Great Britain chief, Danny Sriskandarajah, wrote in a statement.
The report recommends that a hefty tax be levied on investments made in polluting industries. Oxfam estimates that such a tax could raise close to $1.4 trillion a year, which can then be used to finance the climate-related efforts of developing nations with fewer means to take action.
It also highlighted a few billionaires as examples of investors can who contributed to benefit the environment, such as Yvon Chouinard, outdoor sportswear company Patagonia’s founder, who placed the company’s ownership in a trust to fight against climate change.
Billionaires’ Space Race
The report said:
- The billionaire space race has highlighted how a single space flight can emit as much CO2 as a normal person will in their lifetime. Adding fuel to the fire, this same group of people have the resources to avoid the consequences of climate change, which will be felt most heavily by the poorest people.
The report added:
“These findings are important because the relationship between inequality and climate change has major implications for climate policy making. To meet the globally agreed target of keeping global warming to less than 1.5°C, there need to be very significant cuts to the carbon emissions that humans produce. This will require profound changes to economies worldwide and dramatic changes in public policy.”
“All public policies have distributional impacts, which are felt differently by different income groups. This is equally true for policies to reduce carbon emissions. It follows that if we want to reduce emissions fairly, then policies need to be designed that at the very least do not unfairly penalize low-income groups but, more importantly, are designed to ensure that those who emit the most carbon also do the most to reduce those emissions.”
“However, the major and growing responsibility of wealthy people for overall emissions levels is very rarely considered in climate policy making. For example, the standard debate about carbon taxes has been about a flat rate for everyone, which would automatically mean that those with the least income pay a higher proportion of their resources, unless they are compensated in some way for the higher costs.”
The Richest In U.S.
The report said:
- Corporates are predominantly owned by the richest in society. In the U.S., the richest 1% account for 54% of household equity wealth. In South Africa, the richest 1% own more than 95% of bonds and corporate shares, with the richest 0.01% owning 62.7%. In the UK, the wealthiest 10% own 46% of all pension wealth, while the poorest 10% own less than 1%.
- We also know that global wealth is highly concentrated among billionaires: the top 10 billionaires own more wealth than the bottom 40% of humanity. As a percentage of global gross domestic product (GDP), billionaire wealth increased to 13.9% in 2021. In our study, the sample of 125 billionaires collectively own $2.4tn in company equity. By comparison, the total value of 2,000 of the largest corporates in the world is $76.5tn, the market capitalization of all listed corporates is $93.69tn, and $23.4tn is invested in corporates by pension funds in seven countries.
- Billionaires as individuals also hold large stakes in businesses – often larger than some of the world’s largest asset management companies, which manage the investments of millions of people. With the exception of large institutional investors, it is rare for institutional investors to own more than 10% of any given company. Of the 199 investments tracked in our dataset, 68 had ownership stakes of above 50%, giving the owners a controlling stake.
- Given the scale and concentration of billionaire investment in the corporate economy, and the influence that investors can have over company strategies on climate change, there is a strong rationale for examining the investments that billionaires currently hold and their impacts on the environment.
The study analyzed the dataset based on the total scope 1 and 2 carbon emissions of the corporates, the intensity of these emissions relative to the size of investment, the sectors the investments are in, and how many of them are taking action to transition from a carbon-based economy. Where data were available, we benchmarked this with indices such as the S&P 500 (an index of the largest US corporates), which are popular guides for individuals investing in the stock market, and pension funds by way of comparison.
Major Findings
Total Emissions
- The billionaires in our sample fund 393m tonnes of CO2e per year, and the average emissions for each billionaire’s investment are 3m tonnes of CO2e. By way of comparison, the average UK pension pot funds 23 tonnes of CO2e.
- For every million dollars invested by the billionaires in our sample, 162.34 tonnes of CO2e are emitted each year. By comparison, for every million dollars invested in a fund that tracks the S&P 500, 86 tonnes of CO2e are emitted.
Sectors
- 24% of billionaire investments in our sample are in the consumer discretionary sector, with 18% in consumer staples and 11% in financials. In terms of high-polluting industries, 7% of investments are in energy and 7% in materials. By comparison, energy corporates make up 4.7% of the S&P 500 and materials make up 2.5%.
- There is one renewable energy company in our sample.
The Paris Agreement, adopted at COP21 in 2015, set a target to limit global warming to below 1.5 degrees Celsius.
A UN report last month found that the efforts of countries that signed the agreement were helpful but insufficient. They could put the world on the path of a 2.5-degree Celsius increase in temperatures.
