Big Banks’ Net Zero Pledge

makes net zero common sense

I was just grazing lazily today and I was thinking to tell you another story from my Brazilian friends. But then my owner was chatting with the neighbour. They were saying that the Six Hooves Ranch a mile away was closing down. It has not been bought by another rancher. Rather, it has been purchased by a company called White Rock and guess what they plan to do: they intend to rewild it. The pastures will be gone forever, or at least for as long as White Rock owns the place. They will be replaced by a ten square mile planted aspen grove. The horses there are losing their land and their grass. To what avail? I wanted to learn more about that and here is what I found.

Enjoying rewilded pastures? Image by Missi Koepf.

Rewilding seems to be a trend put in motion in the highest circles, aligned with the United Nations’ sustainable development goals. Its prima facie meaning is pretty obvious: make land wild again. So it implies that farms and ranches will disappear and that the land they used to occupy will return to its natural state again. Rewilding fulfills eco-activists’ grand romantic vision of returning the planet to mother Nature. Sounds great, if it weren’t for the fact that farms and ranches produce food and that we, humans and other animals, need to eat. So what is really driving the rewilding trend?

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As always, to understand events it helps to understand the financial forces behind them. Big banks around the globe have recently signed Net Zero pledges, see e.g. [1]. Net Zero means that they become carbon neutral. Now, as banks are involved in financial transactions, it is not straightforward to measure the carbon impact of their activities. So what they started to do is to require their corporate customers to achieve Net Zero when they write them a loan. Thusly, their customers are encumbered with the administrative burthen of estimating and reporting their carbon impact and with reducing the latter to (net) zero.

How are banks’ customers going to get to net zero carbon? This is where the vicious side of the equation surfaces. We have known for thousands of years that the universe can be very elegantly summarized by the yin and yang symbol and I will say much more to that in another story. Nature adheres to this principle, also in the carbon sense: it contains plants, who consume carbon dioxide, and animals and humans, who exhale carbon dioxide. Both need each other to exist. Since animals and humans are on the carbon dioxide production side of the equation, net zero carbon human activity does not exist. Human and animal life are not carbon neutral. Anything we do or produce leads to carbon emissions and we need food to survive. By consequence, most corporations have come to the conclusion that they cannot reduce their activities alone to net zero carbon. So they have come up with the alternative idea that they can offset their carbon dioxide production by investing in ‘carbon sequestration’. Hence, they become net zero carbon, rather than absolute zero carbon. Sounds good, maybe, but the devil is in the detail. The crux is what sort of activities are allowed to be accounted for as carbon offsetting. These rules turn out to be completely arbitrary and that is where the rewilding phenomenon comes in.

As it turns out, rewilding has become big business, because it counts as a form of carbon sink. Therefore, companies that rewild sell the estimated amount of carbon dioxide sequestered by their rewilded land as carbon credits. Other companies that try to achieve net zero targets are eager to buy these to offset their ‘carbon positive’ activities. So it turns out that natural asset companies, reported on before, would only have been the pinnacle on top of a financial framework of carbon offsetting that is already in place.

So just how arbitrary are the rules that determine which activities are carbon offsetting? I just came across an article that describes the impact of Net Zero carbon credit accounting along with some juicy examples: Area Twice the Size of California to be Allowed to Return to Nature, by Aleks Phillips.

The article’s title already states that an area twice the size of California has been rewilded. The article presents that as a virtuous thing. It doesn’t mention for a second that we have lost the food previously produced in an area twice the size of California. But it eventually shows the twisted logic in a sour, yet juicy example. The article cites carbon sequestration company Cultivo, who have reconverted “an area of Florida that had been used to grow citrus but was blighted by disease” into “reforestation” with pongamia trees and the article presents a picture or what looks like an orchard. Again, this is described as an event with positive environmental impact since it involves “rewilding natural land with plants that remove carbon from the atmosphere through photosynthesis”.

A citrus producing orchard in Florida, illustrating just how much of its surface is occupied by plants who capture carbon dioxide from the atmosphere.

Author Aleks Phillips’ motivation for rewilding may sound pseudo-scientific, but let’s hold our horses. Pongamia trees for sure perform photosynthesis. But so do citrus trees. Moreover, agricultural crops need to grow fast in each harvest cycle and therefore, consume more carbon dioxide than mature forest. In terms of carbon consumption, the old citrus plantation and the new pongamia grove sequester roughly the same amount of carbon. Then what is the motivator for the rewilding project? Well, according to phantom accounting rules set up by the United Nations, citrus farmers are not allowed to account for the carbon sequestration that their trees accomplish, because they are an ‘industrial activity’, whereas the owner of the pongamia grove is. Makes a lot of sense, right? A grove that produces food does not count, but if it does not produce food, it can be accounted for as a carbon credit. Too bad people need food to eat. And we expect less and less food on our tables, because as Aleks Phillips proudly announces: “the company hopes to see a further 31 [rewilding projects] in the U.S. in the coming years.” Yee-haw! How excited should we be!

The lack of quality of journalism in this article is striking, yet emblematic for present day mainstream reporting. The article is pure propaganda for carbon credit accounting. It does not stop to investigate if these measures really have an impact on climate change. Nor does it consider to take a look at severe collateral damages from rewilding to our food chain. No, what Aleks Phillips performs here, is an example of what is taught these days in elite journalism schools: activism journalism, that they deem better than objectively investigating sources.

While the article does give a glimpse of the financial driver of the carbon credit economy, it again pictures this in an entirely positive light. No matter that the same plants would consume the same amount of carbon dioxide regardless if carbon credits are being paid for or not. Also, it would have been welcome to mention the driver at a higher level, which is financials’ pledge to Net Zero. Well illustrated by this example, Net Zero investing makes Net Zero Common Sense and is the path to Net Zero Food on the table and Net Zero jobs in agriculture. And activism journalism makes for Net Zero quality reporting, but I guess that that is the only option if the target is to report nonsensical activities in a positive light.

I still wonder where my horse buddies from Six Hooves have gone. I hope they are doing well. But we need to stop this trend before there is no grassland left.

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[1] https://fortune.com/2021/03/09/wells-fargo-climate-carbon-neutral-net-zero/