The COP negotiators are slowly moving towards a final declaration; the British COP26 presidency has presented the first draft. It is good “that the text consistently breathes the spirit of more effort in climate protection”, said the German chief negotiator Jochen Flasbarth. But Flasbarth is also critical, though mildly, compared to what environmental organizations have to say about the paper. It is no more than an agreement “that we all keep our fingers crossed and hope for the best,” says Greenpeace. Read more about the draft in Lukas Scheid’s analysis.
COP President Alok Sharma also conceded that the climate pledges made by countries so far are not enough to achieve the Paris climate goals and called for more commitment on the last two days of negotiations. The two biggest greenhouse gas emitters showed the same commitment on Wednesday. The United States and China reached an agreement to increase cooperation on climate change, including cutting methane emissions, phasing out coal, and protecting forests.
A success for EU Competition Commissioner Margrethe Vestager, a defeat for Google: The European Court of Justice has rejected a complaint by the company against the decision in the Google Shopping case. As Till Hoppe reports, this could provide the impetus for further proceedings against the company. After all, there have long been numerous complaints that Google is abusing its search engine dominance for its own purposes.
The spheres of world climate conferences usually regard the few remaining hours before a decision has to be made as “still plenty of time”. Accordingly, several days are half an eternity. The fact that the British COP26 presidency already presented the first draft for a final declaration of the Glasgow summit on Wednesday is therefore perceived as an awfully early push. German Federal Ministry for the Environment Secretary Jochen Flasbarth welcomes this step. This makes the basis for the ministers’ further negotiations thus more concrete.
The draft explicitly mentions that the impact of climate change would be significantly lower with a 1.5-degree temperature rise compared to 2 degrees and that a “meaningful and effective action by all parties” is needed before the end of this decade. The paper acknowledges that achieving the 1.5-degree target will require a 45 percent reduction in global carbon dioxide emissions by 2030 compared to 2010.
Countries are to “revise and strengthen” their 2030 climate change targets (NDCs) as early as the end of next year. Originally, this update was not to take place until 2025. In addition, the text takes the findings of the IPCC’s Sixth Assessment Report into account. According to Flasbarth, such an orientation towards scientific data is a basis that is not always uncontroversial. It is good, he said, “that the text consistently breathes the spirit of more effort in climate protection.”
However, the German chief negotiator criticizes the fact that the draft does not explicitly place the onus on the main emitters – i.e. the G20 countries that ultimately have to make the emissions cuts. “We think that it needs to be a bit clearer here who has to act.” This is likely to mean China in particular, without mentioning the country by name. China is the world’s largest emitter, and its current climate protection target is considered very much unambitious.
What the draft does say, however, is to call on countries to stop subsidies for fossil fuels. However, no fixed date is mentioned. Such a formulation would be in direct contradiction to a still unpublished list of the EU Commission, which was leaked on Wednesday. The list of so-called “Projects of Common Interest” (PCI) includes cross-border infrastructure projects that could subsequently receive EU funding and go through faster approval procedures. This still incomplete list also includes several projects on fossil energy sources such as gas. Such a formulation in the final declaration of COP26 would therefore also have implications for the EU’s funding policy.
But back to Glasgow: In addition to phasing out oil and gas subsidies, the draft also calls for accelerating the phase-out of coal – also without a target date. That is why the draft does not go far enough for environmental organizations. Greenpeace expressed concerns that countries such as Saudi Arabia, Russia, and Brazil could insist on removing the two formulations on fossil fuels from the final declaration. The NGO assesses the paper so far not as a plan to defuse the climate crisis, but as an agreement “that we all cross our fingers and hope for the best.” It is a “polite request that states perhaps, possibly, do more next year.”
Environmental organizations and activists particularly miss clearer demands in the draft, which stipulate that industrialized countries compensate developing countries for loss and damage resulting from climate change and provide more funding for climate protection financing for countries most affected by climate change.
It is still completely open whether the rules of the Paris climate agreement will be finalized in Glasgow. There are still many “technical challenges” that the British Presidency has to get out of the way first, says Flasbarth. While he believes these are solvable, he stressed that there should be no “trade-off” between agreement on the rulebook and agreement on a final declaration. Both would have to be equally ambitious.
The General Court of the European Union (EGC) has handed EU Commissioner for Competition Margrethe Vestager a major success and at the same time opened the door for further antitrust claims against Google. The Luxembourg judges dismissed an appeal by the US company against the decision in the Google Shopping case. The Commission had imposed a fine of €2.4 billion in 2017 because the company had disadvantaged competing price comparison portals.
In their first ruling on the competition proceedings against the company, the judges largely followed the Commission’s argumentation. The Commission had considered the prominent presentation of Google’s product search hits to be an abuse of market power. In its reaction, Google pointed out that it had already changed the type of presentation in response to the decision.
However, other price comparison providers such as Foundem or Kelkoo have complained to the Commission that the changes did not eliminate discrimination. They are likely to be happy with the dismissal. The verdict does not eliminate the significant harm caused by Google’s anti-competitive behavior over more than a decade, Foundem co-founder Shivaun Raff said. The commission had launched the investigation back in 2010.
According to antitrust lawyers, Google is also threatened with new troubles. Several competitors have already sent complaints to the Commission, claiming the company is abusing its market power to push into specialized markets such as travel search. “It is possible that the Commission may now take up these complaints and Google faces new fines,” says Silvio Cappellari, a partner at law firm SZA Schilling, Zutt & Anschütz.
The Director-General of the consumer association BEUC, Monique Goyens, called on the Commission to do just that: The authority should ensure that Google “does not abuse its dominance as a search engine by giving its own services preference in other areas”, she said.
Cappellari, therefore, expects Google and its parent company Alphabet to appeal to the EGC. Especially since Google could also further postpone possible claims for damages by the affected competitors by taking such a step. The company announced that it would review the verdict first.
Google’s defense strategy before the EGC was based in particular on the argument that its search engine should have been considered an “essential facility”, like railway infrastructure, for example. “Then, the Commission would have had to prove that access to this infrastructure would have been indispensable – a very high hurdle,” says Cappellari.
However, the court did not follow this line of argumentation: although it saw a clear similarity between the Google search platform and an “essential facility”, it then applied the general prohibition of discrimination, which Google had violated.
The ruling also indirectly confirms the planned legislation to regulate large platforms, in particular, the Digital Markets Act. The bill provides for a ban on so-called self-referencing for large gatekeeper platforms, as the EGC has now deemed illegal in the shopping case.
With the DMA, the EU will ensure that the Commission can intervene earlier next time, even before such enormous damage occurs, said the responsible rapporteur of the European Parliament, Andreas Schwab (CDU/EPP). The principles of fair competition should apply to companies from all over the world. Today’s ruling by the EU court proves that the European Union is capable of enforcing these principles.
In the UK, on the other hand, Google was able to achieve a legal success: There, the Supreme Court stopped a €3.75 billion class-action lawsuit against the company for breach of data protection laws. The judges upheld Google’s claim and likely made lawsuits against companies like Facebook and TikTok more difficult as well. The plaintiffs accuse Google of improperly accessing the data of more than five million iPhone owners between 2011 and 2012 by tapping into search histories and using them for commercial purposes.
This summer, the Intergovernmental Panel on Climate Change (IPCC) released its latest report, and the most startling thing about it is how unsurprising its contents were. Preventing the worst, the report says, is still possible, but only if humanity shifts to a carbon-neutral economy as soon as possible. “This report,” says United Nations Secretary-General António Guterres, “must deal the death blow to coal and fossil fuels before they destroy our planet.”
And yet, with the planet on fire, institutional finance is fanning the flames. Many of the world’s most powerful financial actors continue to invest in the fossil-fuel industry, even as its actions predictably lead to massive economic disruption, ecological catastrophe, and social injustice. Until now, they have gotten away with it. But a new trend in the law is forcing institutional investors to decarbonize their portfolios – or be held legally accountable.
Harvard University is a case in point. For a decade, Harvard’s leaders had ignored calls from students, faculty, and alumni to divest the university’s $53 billion endowment from the fossil-fuel industry. But, recognizing scientific and financial reality, in September Harvard finally pledged to divest from companies whose business models, by relying on sustained carbon extraction, are incompatible with a livable future. “Given the need to decarbonize the economy and our responsibility as fiduciaries to make long-term investment decisions that support our teaching and research mission,” wrote university President Larry Bacow, “we do not believe such investments are prudent” (emphasis added).
Prudence, in the statute governing Harvard’s endowment and many other institutional funds, is a fundamental legal concept that establishes the care, skill, and caution with which a fund’s investments must be administered. Prudence guides how a fund must be managed in order to serve its beneficiaries’ interests, and there are significant penalties for violating it. Harvard’s statement acknowledges the impossibility of complying with such a duty while investing in fossil fuels.
There are plenty of reasons why this might be the case. For starters, fossil-fuel companies face existential uncertainty. A tide of market shifts, regulations, and litigation poses fundamental risks to the industry’s interests, while many of the carbon assets from which it derives its value will be rendered unburnable and stranded to meet international climate goals. In addition, the idea of seeking to profit from businesses whose dependence on carbon dioxide emissions serves to hasten climate change is repugnant to the notions of public purpose and social duty that responsible investors claim to uphold, and would seem reason enough to seek broad decarbonization.
In other words, the fossil-fuel industry’s business model is now so misaligned with scientific and financial reality that betting on these companies (or, more broadly, on the sort of businesses that materially depend on CO2 emissions) is not just misguided. It is negligently wrong as a matter of law. Moreover, the concept of prudence applies in a similar form to any investor subject to the fiduciary standard, thus binding essentially every academic endowment, charitable fund, and public and private pension fund. That means trillions of dollars stand to be affected by Harvard’s recent divestment precedent.
In fact, Harvard’s decision is already having ripple effects. In the weeks since the announcement, a number of other influential investors – ranging from the endowments of Boston University, the University of Minnesota, and the MacArthur Foundation to the ABP public pension fund in the Netherlands (Europe’s largest) – have likewise acted to align their money with the demands of prudence and climate action. In doing so, they join investors worth over $39 trillion – many of whom, evidence from markets suggests, are already reaping financial gains from shedding fossil-fuel stocks.
By basing Harvard’s decision on prudence, Bacow may well have intended to generate the sweeping impact that the university’s divestment from fossil fuels predictably will achieve. Or perhaps it was a timely defensive move. When Bacow announced the decision, the Massachusetts attorney general was weighing whether to act on a legal complaint filed by students and other members of the Harvard community, along with the nonprofit Climate Defense Project, asserting that the university’s fossil-fuel investments represented a breach of its charitable obligations.
Whatever the reason, Harvard has given voice to a doctrine that, befitting the urgency of the climate crisis, should spread swiftly around the world and hasten similar decarbonization decisions by fiduciaries everywhere. It took a decade of struggle to get Harvard to this point. But now that it is finally taking steps toward living up to its global reputation as a leader, other institutional investors must take notice. In an age of climate crisis, these actors’ mandate is to stand with the future, or else risk ending up not just on the wrong side of history, but also on the wrong side of the law.
In collaboration with Project Syndicate.
The COP negotiators are slowly moving towards a final declaration; the British COP26 presidency has presented the first draft. It is good “that the text consistently breathes the spirit of more effort in climate protection”, said the German chief negotiator Jochen Flasbarth. But Flasbarth is also critical, though mildly, compared to what environmental organizations have to say about the paper. It is no more than an agreement “that we all keep our fingers crossed and hope for the best,” says Greenpeace. Read more about the draft in Lukas Scheid’s analysis.
COP President Alok Sharma also conceded that the climate pledges made by countries so far are not enough to achieve the Paris climate goals and called for more commitment on the last two days of negotiations. The two biggest greenhouse gas emitters showed the same commitment on Wednesday. The United States and China reached an agreement to increase cooperation on climate change, including cutting methane emissions, phasing out coal, and protecting forests.
A success for EU Competition Commissioner Margrethe Vestager, a defeat for Google: The European Court of Justice has rejected a complaint by the company against the decision in the Google Shopping case. As Till Hoppe reports, this could provide the impetus for further proceedings against the company. After all, there have long been numerous complaints that Google is abusing its search engine dominance for its own purposes.
The spheres of world climate conferences usually regard the few remaining hours before a decision has to be made as “still plenty of time”. Accordingly, several days are half an eternity. The fact that the British COP26 presidency already presented the first draft for a final declaration of the Glasgow summit on Wednesday is therefore perceived as an awfully early push. German Federal Ministry for the Environment Secretary Jochen Flasbarth welcomes this step. This makes the basis for the ministers’ further negotiations thus more concrete.
The draft explicitly mentions that the impact of climate change would be significantly lower with a 1.5-degree temperature rise compared to 2 degrees and that a “meaningful and effective action by all parties” is needed before the end of this decade. The paper acknowledges that achieving the 1.5-degree target will require a 45 percent reduction in global carbon dioxide emissions by 2030 compared to 2010.
Countries are to “revise and strengthen” their 2030 climate change targets (NDCs) as early as the end of next year. Originally, this update was not to take place until 2025. In addition, the text takes the findings of the IPCC’s Sixth Assessment Report into account. According to Flasbarth, such an orientation towards scientific data is a basis that is not always uncontroversial. It is good, he said, “that the text consistently breathes the spirit of more effort in climate protection.”
However, the German chief negotiator criticizes the fact that the draft does not explicitly place the onus on the main emitters – i.e. the G20 countries that ultimately have to make the emissions cuts. “We think that it needs to be a bit clearer here who has to act.” This is likely to mean China in particular, without mentioning the country by name. China is the world’s largest emitter, and its current climate protection target is considered very much unambitious.
What the draft does say, however, is to call on countries to stop subsidies for fossil fuels. However, no fixed date is mentioned. Such a formulation would be in direct contradiction to a still unpublished list of the EU Commission, which was leaked on Wednesday. The list of so-called “Projects of Common Interest” (PCI) includes cross-border infrastructure projects that could subsequently receive EU funding and go through faster approval procedures. This still incomplete list also includes several projects on fossil energy sources such as gas. Such a formulation in the final declaration of COP26 would therefore also have implications for the EU’s funding policy.
But back to Glasgow: In addition to phasing out oil and gas subsidies, the draft also calls for accelerating the phase-out of coal – also without a target date. That is why the draft does not go far enough for environmental organizations. Greenpeace expressed concerns that countries such as Saudi Arabia, Russia, and Brazil could insist on removing the two formulations on fossil fuels from the final declaration. The NGO assesses the paper so far not as a plan to defuse the climate crisis, but as an agreement “that we all cross our fingers and hope for the best.” It is a “polite request that states perhaps, possibly, do more next year.”
Environmental organizations and activists particularly miss clearer demands in the draft, which stipulate that industrialized countries compensate developing countries for loss and damage resulting from climate change and provide more funding for climate protection financing for countries most affected by climate change.
It is still completely open whether the rules of the Paris climate agreement will be finalized in Glasgow. There are still many “technical challenges” that the British Presidency has to get out of the way first, says Flasbarth. While he believes these are solvable, he stressed that there should be no “trade-off” between agreement on the rulebook and agreement on a final declaration. Both would have to be equally ambitious.
The General Court of the European Union (EGC) has handed EU Commissioner for Competition Margrethe Vestager a major success and at the same time opened the door for further antitrust claims against Google. The Luxembourg judges dismissed an appeal by the US company against the decision in the Google Shopping case. The Commission had imposed a fine of €2.4 billion in 2017 because the company had disadvantaged competing price comparison portals.
In their first ruling on the competition proceedings against the company, the judges largely followed the Commission’s argumentation. The Commission had considered the prominent presentation of Google’s product search hits to be an abuse of market power. In its reaction, Google pointed out that it had already changed the type of presentation in response to the decision.
However, other price comparison providers such as Foundem or Kelkoo have complained to the Commission that the changes did not eliminate discrimination. They are likely to be happy with the dismissal. The verdict does not eliminate the significant harm caused by Google’s anti-competitive behavior over more than a decade, Foundem co-founder Shivaun Raff said. The commission had launched the investigation back in 2010.
According to antitrust lawyers, Google is also threatened with new troubles. Several competitors have already sent complaints to the Commission, claiming the company is abusing its market power to push into specialized markets such as travel search. “It is possible that the Commission may now take up these complaints and Google faces new fines,” says Silvio Cappellari, a partner at law firm SZA Schilling, Zutt & Anschütz.
The Director-General of the consumer association BEUC, Monique Goyens, called on the Commission to do just that: The authority should ensure that Google “does not abuse its dominance as a search engine by giving its own services preference in other areas”, she said.
Cappellari, therefore, expects Google and its parent company Alphabet to appeal to the EGC. Especially since Google could also further postpone possible claims for damages by the affected competitors by taking such a step. The company announced that it would review the verdict first.
Google’s defense strategy before the EGC was based in particular on the argument that its search engine should have been considered an “essential facility”, like railway infrastructure, for example. “Then, the Commission would have had to prove that access to this infrastructure would have been indispensable – a very high hurdle,” says Cappellari.
However, the court did not follow this line of argumentation: although it saw a clear similarity between the Google search platform and an “essential facility”, it then applied the general prohibition of discrimination, which Google had violated.
The ruling also indirectly confirms the planned legislation to regulate large platforms, in particular, the Digital Markets Act. The bill provides for a ban on so-called self-referencing for large gatekeeper platforms, as the EGC has now deemed illegal in the shopping case.
With the DMA, the EU will ensure that the Commission can intervene earlier next time, even before such enormous damage occurs, said the responsible rapporteur of the European Parliament, Andreas Schwab (CDU/EPP). The principles of fair competition should apply to companies from all over the world. Today’s ruling by the EU court proves that the European Union is capable of enforcing these principles.
In the UK, on the other hand, Google was able to achieve a legal success: There, the Supreme Court stopped a €3.75 billion class-action lawsuit against the company for breach of data protection laws. The judges upheld Google’s claim and likely made lawsuits against companies like Facebook and TikTok more difficult as well. The plaintiffs accuse Google of improperly accessing the data of more than five million iPhone owners between 2011 and 2012 by tapping into search histories and using them for commercial purposes.
This summer, the Intergovernmental Panel on Climate Change (IPCC) released its latest report, and the most startling thing about it is how unsurprising its contents were. Preventing the worst, the report says, is still possible, but only if humanity shifts to a carbon-neutral economy as soon as possible. “This report,” says United Nations Secretary-General António Guterres, “must deal the death blow to coal and fossil fuels before they destroy our planet.”
And yet, with the planet on fire, institutional finance is fanning the flames. Many of the world’s most powerful financial actors continue to invest in the fossil-fuel industry, even as its actions predictably lead to massive economic disruption, ecological catastrophe, and social injustice. Until now, they have gotten away with it. But a new trend in the law is forcing institutional investors to decarbonize their portfolios – or be held legally accountable.
Harvard University is a case in point. For a decade, Harvard’s leaders had ignored calls from students, faculty, and alumni to divest the university’s $53 billion endowment from the fossil-fuel industry. But, recognizing scientific and financial reality, in September Harvard finally pledged to divest from companies whose business models, by relying on sustained carbon extraction, are incompatible with a livable future. “Given the need to decarbonize the economy and our responsibility as fiduciaries to make long-term investment decisions that support our teaching and research mission,” wrote university President Larry Bacow, “we do not believe such investments are prudent” (emphasis added).
Prudence, in the statute governing Harvard’s endowment and many other institutional funds, is a fundamental legal concept that establishes the care, skill, and caution with which a fund’s investments must be administered. Prudence guides how a fund must be managed in order to serve its beneficiaries’ interests, and there are significant penalties for violating it. Harvard’s statement acknowledges the impossibility of complying with such a duty while investing in fossil fuels.
There are plenty of reasons why this might be the case. For starters, fossil-fuel companies face existential uncertainty. A tide of market shifts, regulations, and litigation poses fundamental risks to the industry’s interests, while many of the carbon assets from which it derives its value will be rendered unburnable and stranded to meet international climate goals. In addition, the idea of seeking to profit from businesses whose dependence on carbon dioxide emissions serves to hasten climate change is repugnant to the notions of public purpose and social duty that responsible investors claim to uphold, and would seem reason enough to seek broad decarbonization.
In other words, the fossil-fuel industry’s business model is now so misaligned with scientific and financial reality that betting on these companies (or, more broadly, on the sort of businesses that materially depend on CO2 emissions) is not just misguided. It is negligently wrong as a matter of law. Moreover, the concept of prudence applies in a similar form to any investor subject to the fiduciary standard, thus binding essentially every academic endowment, charitable fund, and public and private pension fund. That means trillions of dollars stand to be affected by Harvard’s recent divestment precedent.
In fact, Harvard’s decision is already having ripple effects. In the weeks since the announcement, a number of other influential investors – ranging from the endowments of Boston University, the University of Minnesota, and the MacArthur Foundation to the ABP public pension fund in the Netherlands (Europe’s largest) – have likewise acted to align their money with the demands of prudence and climate action. In doing so, they join investors worth over $39 trillion – many of whom, evidence from markets suggests, are already reaping financial gains from shedding fossil-fuel stocks.
By basing Harvard’s decision on prudence, Bacow may well have intended to generate the sweeping impact that the university’s divestment from fossil fuels predictably will achieve. Or perhaps it was a timely defensive move. When Bacow announced the decision, the Massachusetts attorney general was weighing whether to act on a legal complaint filed by students and other members of the Harvard community, along with the nonprofit Climate Defense Project, asserting that the university’s fossil-fuel investments represented a breach of its charitable obligations.
Whatever the reason, Harvard has given voice to a doctrine that, befitting the urgency of the climate crisis, should spread swiftly around the world and hasten similar decarbonization decisions by fiduciaries everywhere. It took a decade of struggle to get Harvard to this point. But now that it is finally taking steps toward living up to its global reputation as a leader, other institutional investors must take notice. In an age of climate crisis, these actors’ mandate is to stand with the future, or else risk ending up not just on the wrong side of history, but also on the wrong side of the law.
In collaboration with Project Syndicate.
