Mark Carney Walks Back Brookfield Net-Zero Claim After Criticism
(Bloomberg) -- Mark Carney, a leading figure behind this year’s global climate talks, walked back remarks claiming the half-trillion-dollar asset manager where he works had neutralized pollution across its portfolio. The shift came in the wake of criticism from green advocates over comments by Carney calling Brookfield Asset Management Inc. a net-zero company
Carney is a former Bank of England governor who is currently advising U.K. Prime Minister Boris Johnson on the upcoming COP26 climate summit. He’s also a vice chair at Brookfield, and in a Feb. 10 interview with Bloomberg Live he said that Canada’s largest alternative asset manager had zeroed out emissions from its holdings.
“Brookfield is in a position today where we are net zero,” Carney said, referring to all of the company’s assets. “The reason we’re net zero is that we have this enormous renewables business,” he added, noting “all the avoided emissions that come with that” had compensated for the planet-warming toll of other investments. Brookfield’s operations have a small carbon footprint, measured at about 5,200 metric tons of carbon dioxide in 2019, but inside its $600 billion portfolio are investments in coal and other fossil fuels.
The backlash from climate experts hinged on Carney’s use of “avoided emissions,” in which a company takes credit for refraining from high-polluting actions. An investment in wind turbines might be claimed as avoiding an investment in the same amount of energy produced by coal. In a statement posted to Twitter on Friday, Carney said, “I have always been—and will continue to be—a strong advocate for net zero science-based targets, and I also recognize that avoided emissions do not count towards them.”
Carney did not say on Friday if he still considers Brookfield to be net zero. Experts had pushed back against his earlier comments for misrepresenting what’s required to cut an investor’s climate impact. “Most large asset managers have a renewable energy fund,” said Ben Caldecott, director of the University of Oxford’s Sustainable Finance Program. “Simply having one does not make you net zero.”
The Science-Based Targets initiative (SBTi), widely regarded as the gold standard for climate plans, does not count avoided emissions in its framework. “Avoided emissions accounting can be useful for some purposes, but using these avoided emissions to meet net-zero claims is not credible,” said Alexander Farsan, global lead on science-based targets at WWF, one of the SBTi partners.
SBTi does not recognize any investor at Brookfield’s scale that qualifies as net zero. “It’s virtually impossible for a company to be a net-zero company now,” Farsan said.
Brookfield said on Thursday that it stands by its net-zero claim. “We believe emissions avoided through renewable power generation are critical to the transition to net zero, given approximately three-quarters of global emissions today can be tied to the energy sector,” said spokeswoman Claire Holland. “We recognize that avoided emissions are only one element of the transition to a net zero global economy. We intend to go much further in supporting that transition.”
Oxford’s Caldecott, by contrast, argues for a more stringent standard that doesn’t rely on avoided emissions. “Such commitments are not credible and represent greenwashing,” he said. Climate advocates are concerned Carney’s influence will give weight to Brookfield’s approach.
Climate finance will be a central theme at the COP26 talks this November in Glasgow, Scotland. On top of advising the British prime minister, Carney is also a United Nations special envoy tasked with steering discussions on how finance can meet the Paris Agreement.
Three people involved in the planning of COP26 expressed concern Carney’s comments could undermine the meeting’s success. They asked not to be identified because of the sensitive nature of the issue.
“A topic of discussion going into COP26 is how do you define net zero,” said Emily Kreps, global director of capital markets at CDP, a leading nonprofit climate-disclosure platform. “Particularly for providers of capital, if they are in a position to say, ‘We are net zero because we bought offsets but don’t look at our dirty coal issues here,’ then the industry as a whole is potentially abdicating responsibility.” Brookfield is rated “F” by CDP because it does not report data to the platform.
During his seven-year tenure at the U.K. central bank, which ended in 2020, Carney also served as chairman of the Financial Stability Board and launched the Taskforce on Climate-related Financial Disclosures, a global benchmark for companies and financiers to assess climate risks. Michael R. Bloomberg, founder of Bloomberg LP, is the chairman of TCFD. Carney also set up the Taskforce on Scaling Voluntary Carbon Markets that aims to boost the market for carbon offsets.
At Brookfield, Carney is developing a $7.5 billion impact fund to invest in companies with pathways to net zero. Brookfield owns about 19 gigawatts of solar, wind and hydropower, with another 18 GW in development. If Brookfield was a clean-energy company, it would be on par with global giants such as Orsted AS and NextEra Energy Inc.
Still, Brookfield remains active in fossil fuels. Unearthed, Greenpeace’s investigative platform, identified several fossil-fuel projects where Brookfield is a major shareholder. The asset manager recently made moves to buy billions of dollars of gas and oil infrastructure in Canada, India and the Middle East. An investment in an Australian coal terminal operator and pursuit of a stake in Saudi Aramco’s pipelines have drawn criticism.
Ulf Erlandsson of the nonprofit Anthropocene Fixed Income Institute questioned if such moves can be part of an effective climate transition. “It won’t matter how many solar panels one installs,” he said, “if we don’t reduce actual CO₂ emissions.”
©2021 Bloomberg L.P.