Making Pensions Carbon Zero

a granny-friend carbon-free transition (photo by roblisameehan)
Earlier this week, BP announced that it has already spent $3 billion on the Gulf Oil cleanup. Along with the $20 billion fund that the company has promised Obama, the total cost of the oil spill is building dramatically.

Most experts say that this is just the beginning. The Exxon Valdez led to a $4 billion settlement but affected a small fraction of the people that the gushing gulf spill will ultimately effect.  The price tag for this cleanup and the subsequent settlement may rise to the point where people have begun to ask whether or not BP might go bankrupt fixing this egregious environmental disaster.

Some of these people include those who administer the pension plans of millions of ageing workers. It turns out that a significant number of private and public pension funds in the US and the UK hold BP stock. It therefore begs the question: how do we decarbonize our economy if entire generations of retirees are dependent on carbon-intensive industries?

The idea of divesting from controversial stocks is not new. During the 1980s there was enormous (and successful) pressure todivest funds from companies with interests in South Africa's apartheid government. Many modern funds have divested from companies that deal with tobacco and arms. But even so-called 'ethical' funds today are invested in coal, oil and gas companies.

And why shouldn't they be? Despite their effect on the climate, fossil fuels are still the source of the majority of energy that fuels our economy. To label them unethical is pretty much tarring the entire human race and the economy that has produced so many amazing modern innovations in science, technology, medicine and art. And even those companies most concerned about climate change, like insurance companies, are still reliant on returns from oil and gas companies to meet their financial responsibilities to their clients.

To truly address the climate we must recognize how deeply we are connected with the economics of carbon-intensive fuels. And we're going to have to be as innovative in rebuilding our non-technological systems as we need to be with our technological ones. So in addition to engineering solutions for electric cars, we need to find financial solutions for pension plans, mutual funds and insurance companies as well.

After all, saving the world for our children isn't worth much if we end up sacrificing grandma and grandpa in the process.