We are delighted to welcome Jamie Plotnek who joins Hawthorn as a Director. Jamie is a sustainability, climate and ESG specialist, with more than 15 years of experience advising companies and charities on confronting environmental challenges. He joined Hawthorn from the international non-profit Climate Group, where he developed and led a global campaign on zero emission vehicles. Jamie’s previous roles included leading communications on climate and energy at Unilever and heading up business and public sector engagement for one of Britain’s biggest climate change campaigns.
Sarah Sands moderates a roundtable discussion with Greta Thunberg, Vanessa Nakate and UK newspaper editors and broadcasters ahead of COP26
The last time I was in a room full of newspaper editors it was to discuss press regulation, so naturally all ended in mutiny. On Friday, before Greta Thunberg and Vanessa Nakate headed off to protest against investment in fossil fuel projects, and then onto Glasgow, I introduced them to media decision makers in a private, round table discussion hosted by the Natural History Museum.
This time there was a wholly different spirit and purpose. Greta has remarkable convening power, but as moderator I had wondered whether the journalists would feel they were being lectured. They didn’t. Here was huge media influence coming together in one room, abandoning cynicism, ready to listen and to take responsibility for informing the public and holding government to account.
Greta was also ready to listen, facts at her fingertips but never hectoring. Her faith is in the people rather than the politicians and thus she turns to the media. This slight figure, remarkably composed, speaking perfect English, can hold a room of media leaders who reach millions. Alongside her was a figure of comparable charisma, the Ugandan activist Vanessa Nakate, talking of the moral responsibility towards the global south, which is responsible for a tiny percentage of the world’s carbon emissions, yet pays the highest price in loss and damage.
The media leaders talked, under Chatham House Rule, of their commitments and challenges. How to keep readers interested in a story both existential and urgent without overwhelming and alienating them? How to balance short-term gains – energy security – with medium term destruction?
The climate scientist Professor Simon Lewis, who joined Greta and Vanessa at the meeting, does not mince his words about the scale of the threat to “human civilisation”. Lewis claims in his book The Human Planet, that human kind is a geological force, changing everything, forever.
Greta and Vanessa wanted to meet the media decision makers because galvanising public opinion and keeping pressure on governments are crucial if we are going to get to net zero. The media are good at that. Indeed, Greta has said of the media: “You are our last hope.” There was honest self-examination during the session. One editor raised the rule of journalism that you cannot keep doing the same story and keep reader attention, but then observed that coverage of Covid had shattered that rule.
We discussed the lessons from the pandemic, during which media played an important role in informing the public and persuading them to get vaccinated.
There were further insights: television was thought to have an advantage over print in covering climate because of the power of images. Our senior journalists agreed that humanising and personalising the issue helped with engagement. They also emphasised that hope was important.
Audiences, particularly for financial media, like reading about technological solutions. Can journalists discriminate between aspiration and realistic achievement? Can even scientists be sure of what is going to work?
The editors talked about representing climate stories through entertainment or graphics or on the weather pages, in order to keep audiences engaged. It can be a tough sell: according to George Marshall’s book Don’t Even Think About It, our brains are tragically hard wired to avoid thinking about climate change.
Friday was a thought provoking session from a group of media leaders who have power and recognise responsibility. The final words came from Vanessa Nakate, who had found herself erased from media photographs when she spoke at the youth forum in Milan, an editing decision that seemed symbolic of the lack of attention paid to the global south in discussions about climate change. “Whose story are you telling?” she asked.
Then Greta headed off for her next protests, a small, self-contained figure, immediately mobbed by her supporters. An 18-year-old activist who has become a world figure.
Sarah Sands spoke to The Rt Hon Caroline Flint about managing change in business and politics.
Given her former position as Shadow Secretary of State for Energy and Climate Change and her current role as co-Chair of the “Getting to Zero” project for the “Onward” think tank, Caroline spoke about how businesses formulate and deliver their ESG strategies.
Listen to the replay of Sarah Sands in conversation with the Rt Hon Caroline Flint.
The Rt Hon Caroline Flint, during twenty-two years as the Labour MP for Don Valley, Caroline Flint served six as a Government Minister and five years in the opposition Shadow Cabinet before joining the Commons Public Accounts Committee and the Intelligence & Security Committee. A familiar voice on news and current affairs programmes, Caroline has made numerous appearances on Question Time and Radio 4 Any Questions and is a regular political and policy commentator. She chairs the Advisory Board of the Institute for Prosperity, is an Advisory Board member for public service think tank Reform and an Associate for Global Partners Governance. Caroline co-chairs the ‘Getting to Zero’ project for the Onward think tank.
Sarah Sands is a Board Advisor at Hawthorn. Prior to this she was editor of the Today programme, Radio 4’s flagship news and current affairs programme. She was previously editor of the London Evening Standard, the first woman to edit The Sunday Telegraph and deputy editor of The Daily Telegraph. Sarah is an honorary fellow of Goldsmiths College, University of London, Lucy Cavendish College Cambridge and a visiting fellow to the Reuters Institute. She is chairwoman of the political think tank Bright Blue, a patron of National Citizen Service and was chair of the Women’s Prize for Fiction.
The other transition deal, stage set for surge of sovereign lawsuits and the man reshaping Treasury’s tools
Policy Preview: The UK’s other transition deal
On 14 December, the UK Government released its much-awaited Energy White Paper, laying out a simultaneous pledge to seek a net-zero basin for the UK Continental Shelf by 2050 and the pioneering of “a new British industry dedicated to (carbon) capture and return under the North Sea”. No mean feat by any measure, and the debates on how to achieve this remains very much under wraps. Yet, the paper did give the Government one deadline, agreeing a ‘North Sea Transition Deal’ in the first half of 2021.
A more bankable date arguably is 1 November 2021, when the UN Climate Change Conference in Glasgow kicks off – a key event that Prime Minister, Boris Johnson, believes can be used to recast his global image. Regardless of timing, however, what the White Paper and other recent government statements have made clear is that the transition – deal or no deal – will be painful.
One area of hope has been the Government’s spending plans, particularly the £1 billion fund Johnson announced last month for establishing carbon capture, utilisation, and storage (CCUS) facilities in four “SuperPlaces” (the Government’s term). However, only one will be in Scotland, the hub of the UK’s existing offshore energy industry. The outlook for support for legacy industries there is poor. The White Paper explicitly states that, “Government support is in the context of our net zero target”. The only policy directly tied to the offshore fields is Government’s commitment to seeking the North Sea Transition Deal include an end all routine flaring by 2030.
The sole opportunity it discusses in depth, is making the UK oilfield services sector a leader in the decommissioning of offshore facilities, positively spinning the expectation the UK will “become the largest decommissioning market globally over the next decade”. Greenfield development is not on the cards, and just two days prior to the paper’s launch Johnson laid out plans to end state export financing for new crude oil developments. Nonetheless, the paper claims to recognise that any North Sea Transition deal will be a ‘quid pro quo’ between industry and Government.
Previous Conservative governments have already cut oil and gas taxes, including effectively eliminating the petroleum revenue tax and slashing the supplementary charge (SR) in 2015 and 2016, but there is little room to go. Cutting the SR would be ineffective at stimulating investment in the current environment. The white paper indicates that only non-fiscal support will be on offer, and that this will only be for those transitioning heavily away from their previous area of business. Whether the Government can extract such a hefty quo for such a potentially meagre quid, remains to be seen, however.
Dollars and sense: stage set for surge of sovereign lawsuits
The difficulty of pursuing foreign governments in domestic courts has long been a major hindrance to developing hard currency capital markets for emerging markets. But the idea of sovereign immunity in such spats has been steadily eroded – while over the last eight years, ever-riskier countries have been able to borrow dollars, euros and pounds out of London and New York. Infamously recalcitrant Argentina even issued a 100-year dollar bond in 2017, only to default again earlier this year. Sovereign credit markets have nonetheless remained frothy, with investors scouring opportunities for any real yield as Western interest rates are expected to remain at or near zero.
Advances in the enforceability of funds owed by uncooperative government creditors are rare, but often quite meaningful. The intervention of the late Judge Thomas Griesa in a group of hedge funds attempts to secure payment from Argentina following a previous dispute kept Buenos Aires frozen out of Western markets for years.
Many bond investors argued that the ruling strengthened emerging country debt markets. However, for non-bond investors, the ability to recover funds from governments when financing agreements go awry is more limited. Such investment disputes are typically heard by arbitration panels rather than by New York State and UK judges, as is the case with most bond spats.
Yet a recent legal settlement involving Guatemala has likely shifted matters slightly in such investors’ favour. On 3 November Guatemala missed a payment on a US$700m bond. Although it transferred funds for the payment to its custodian, Bank of New York Mellon, the bank told bondholders it was barred from making payment due to a restraining notice issued by the New York State Supreme Court. The court issued the order in response to a request from Florida-based firm TECO Energy, which secured a US$35.5 million judgement in its favour from the World Bank’s arbitration institute.
Guatemala protested the court’s order but by 24 November agreed to pay TECO, although it has not exhausted all appeals, even with the spat in its eleventh year. Put simply, Guatemala wished to avoid any blot on its heretofore spotless bond payment record lest it affect its ability to tap capital markets in the future. The process TECO took was rather simple by the standards of sovereign litigation. It secured an order from a D.C. court upholding its arbitral victory, then registering that with New York State Supreme Court, resulting in the restraining notice.
While there are very few countries in default on their foreign bonds at present, Guatemala is one of many countries entangled in lengthy arbitration disputes. We expect the New York State Supreme Court will soon face a barrage of applications for restraining notices from investors hoping to mimic TECO’s success.
Power play: the man reshaping Treasury’s tools
US President-elect Joe Biden’s nomination of Adewale ‘Wally’ Adeyemo as Deputy Treasury Secretary signals the agency’s international role is only likely to grow more activist. Adeyemo has a low public profile, but is a stalwart of the Democratic elite. He most recently served as the first President of the Obama Foundation. Before that as Deputy Chief of Staff to Treasury Secretary, Jack Lew, before concurrently serving as Elizabeth Warren’s Chief of Staff at the Consumer Financial Protection Bureau and as Deputy National Security Advisor, holding the International Economics Brief. Towards the end of the Obama Administration, he also served as lead negotiator for the Trans-Pacific Partnership and as presidential representative to the G7 and G20.
Adeyemo is tasked with overseeing a review of sanctions policy and will oversee the elements of the US Treasury that relate to its role in international affairs. If confirmed by the Senate, Adeyemo will essentially be the Biden Administration’s point man for ‘geo-economic’ policies, or the use of economic policies to affect geopolitical goals.
Adeyemo’s experience and writings provide an indication of the course he is likely to take. In the negotiations for the TPP, it was Adeyemo who focused on the inclusion of currency manipulation rules, though this was largely abandoned even before US President, Donald Trump withdrew the US from the negotiations. He was a key figure in shaping sanctions both while serving under Lew at the Treasury and in liaising the effort to respond to Russia’s invasion of Ukraine in 2014 in his dealings with the G7 and G20.
Both in and out of the White House, he has also focused on China, and been an advocate of the argument that the biggest threat to Beijing’s rise is its still-maturing financial market. During his 2016 Senate confirmation hearing, he took a relatively soft line on China when asked about his view on the role of the Committee on Foreign Investment in the United States (CFIUS). But the Trump Administration has since thrown up far more barriers to Chinese investment, and it is unlikely the Biden Administration will reverse many of these, if any. Biden’s nominee for US Trade Representative, Katherine Tai, further supports the belief that the Biden Administration will continue to take a hard line on Chinese investment. Adeyemo will ultimately determine how the Treasury supports such policies.
Do not expect any major surprises from Adeyemo’s sanctions review. The new Administration is not going to reverse the Trump Administration’s acceleration of sanctions. It will instead adjust its focus, from unilaterally blacklisting individual firms to working with allies to target China’s relations with the global financial system. Policy will be slow to emerge, and measured, but Adeyemo’s focus will be on limiting China’s ability to become a lynchpin of the global financial system. Given Beijing’s expansive lending abroad in recent years, however, the effort will prove extremely challenging.