203: Tomfoolery! Red Herrings!
About this episode
Welcome to another episode of Outrage + Optimism, where we examine issues at the forefront of the climate crisis, interview change-makers, and transform our anger into productive dialogue about building a sustainable future.
With anti-ESG action hitting the headlines across the ‘puddle’ (as Christiana would say), our hosts begin this week by walking us through the origins of the anti-ESG movement which we covered in our Season 6 episode: ESG: Facts are not Political, before moving us on to explore the current spate of legal cases being brought by certain Republican groups, designed to intimidate members of net zero alliances.
We were very fortunate to speak to Maurits Dolmans, attorney and partner of Cleary Gottlieb Steen & Hamilton LLP, and a rising star of the Net Zero Lawyers Alliance, who helped us understand the baseless allegations and coordinated propaganda employed by Republican groups (such as Consumers’ Research and the State Financial Officers Foundation) to delay and obfuscate meaningful climate action, while putting voters’ pensions, investments and livelihoods at risk. Expect high octane outrage from this episode!
Relief in the form of our talented musical number comes this week from Constant Follower and their track “The Merry Dancers on TV”. Check out their links below.
Also, don't forget we’re hosting a live Q+A session on Monday 12 June with Paul, Fiona, Dylan, Tom and Christiana to cover all those burning questions unearthed by the Lifelines vs Deadlines mini-series. Details about how to register your place can be found here.
Please don’t forget to let us know what you think here, and / or by contacting us on our social media channels or via the website.
NOTES AND RESOURCES
Don’t miss our LIVE Online Podcast Recording & Q+A on Monday, June 12, 2023. Click the link to register and save your spot!
Letter from 23 Attorney Generals to the Net Zero Insurers Allianz that Paul mentioned in the episode.
Constant FollowerHelp Musicians
Clay: [00:00:00] Okay folks, Clay here, producer Outrage + Optimism. You, yes, you listening to this right now. You are invited to an online live podcast recording of Outrage + Optimism happening this Monday June 12th. Um, only a couple of days away, where we'll be taking questions about Paul's latest mini series, Lifelines Versus Deadlines. Now, along with Christiana, Paul and Tom, both co-hosts Fiona Macklin and Dylan Tanner will be joining us. It's going to be a party. We know it's impossible to walk away from two podcasts over an hour and not have something to say, so we want to hear it. This will be a time where we can meet together, discuss issues and questions that you have. Our hosts and co-hosts will be taking them, and that podcast recording will go out later the same week on Thursday, like normal. So will you join us? All the information and a link to save your spot is in the show notes. That's a really important detail. You have to save your spot ahead of time. So go click the link, save your spot. Really looking forward to seeing you there. And I did hear that Paul is trying to get more people to show up to this one than when Tom had a Q&A after his mini series came out. So you're not going to want to miss whatever happens. Okay. Looking forward to seeing you there. Hearing your questions, links in the show notes. Here's the episode.
Tom: [00:01:41] Hello and welcome to Outrage + Optimism. I'm Tom Rivett-Carnac.
Christiana: [00:01:43] I'm Christiana Figueres.
Paul: [00:01:45] And I'm Paul Dickinson.
Christiana: [00:01:47] So, Tom, I'm trying to learn from you and therefore I will step in and do the intro this week. This week we talk about what's behind the backlash against ESG in chapter two that has now spread to the antitrust law. We speak about it to the very distinguished attorney, Maurits Dolmans, and we have music from Constant Follower. Thanks for being here.
Tom: [00:02:19] Okay, friends. So we're now returning to a very consequential and important topic that we have covered on this podcast before. But certainly it merits another look and a lot has been happening recently. So just very quickly to recap, some months ago we covered a story on this podcast about some strange organization called the State Financial Officers Foundation. Now this is a group of state based leadership in the United States. And what it does is it drafts legislation for attorneys general and state treasurers to help them put into law rules that limit the ability of financial organizations, institutions, to utilize any other kind of metric in their decision making apart from making money. And there has been a proliferation of these kinds of laws at state level across the US over the course of the last couple of years. And in that episode we dug into who the SFOF are, where did they come from, who's funding them, which corporations are giving them cash. And it was very revealing. But since then this issue has continued to grow and grow to the point where we covered last week that some of the world's largest financial institutions are now pulling out of global commitments, part of the Glasgow Financial Alliance for Net Zero, in particular the Net zero Insurance Alliance. Now the question that we're coming into this episode with, are these rumblings of a transformative change, the world is now fundamentally remaking itself. Finance is going to be part of the future, and these are just the little blips that you're bound to go through before change. Or is this the beginning of the unravelling of the attempt of financial institutions to deal with climate. And we're now going to see a falling back and finance will no longer try to be part of the solution. This is the challenge which I'm bringing to you two. Paul, you've spent your whole professional life focused on this issue. Christiana, you have been right at the heart of this, pushing the finance sector for a long time. Let's dig into this and help people understand it. Who wants to kick off?
Christiana: [00:04:19] Okay, so so, Tom, thanks for that. But honestly, I have this need to dig in a little bit deeper here, maybe because I have a poor memory and I have no idea how our listeners are tracking this conversation. So just to go into this a little bit more, some listeners may remember that way back in October 2022, we interviewed Jesse Coleman, who is a senior researcher with investigative watchdog and journalism project called Documented, and we interviewed him about what we were seeing at that point in time, which was this anti ESG, ESG standing for environmental, social and governance issues. And there was a huge attack on these ESG issues being incorporated into financial institution decisions. The attacks at that time were coming from two places, the State Financial Officers Foundation and the Texas Public Policy Foundation. Now, let us be very clear that both of those are what in the United States are called 501(c)(3) organizations. They are private organizations. They're not public regulatory entities, which is what they would like to sound like, but they're not. They're actually Republican led NGOs bent on derailing the progress of the financial shifts that we're already seeing from dirty and risky investment portfolios to clean and much more stable assets. So we had that conversation way back in October, and listeners may want to listen to that and Clay will put that in the show notes so that you can find that that episode easier.
Christiana: [00:06:10] But now we have chapter two of this campaign, because apparently they felt that their impact was not as deep as they wanted. So now we have chapter two from the very same actors, small fringe NGO, Republican led with a very clear political political agenda. And now the chapter two is no longer attacks on individual financial institutions and their fiduciary duty. No, now we've escalated it to collaborations, alliances of financial institutions that are doing their very darndest to live up to their fiduciary duty and protect their beneficiaries, protect global citizens against the threats of climate change. But in order to go to that collaborative level versus the individual, that was their chapter one. Now, for their chapter two, the attacks on collaborative efforts. Now they have pulled in the antitrust law and they're saying that the collaboration of these financial institutions infringes the antitrust law, which, as will be explained by the guest that we have, is actually meant to protect citizens and customers. And so they have completely they have turned the table completely upside down. They they are bluffing their way in to the public's attention and are accusing these, especially now very specifically insurance companies of infringing the very law that they're actually acting according to, outrageous as that is.
Christiana: [00:08:07] Now, in the meantime, yes, there are some institutions, insurance institutions that have pulled out because they're concerned about these attacks, stupid and unfounded as they are. But very interestingly, there are also some Republican pension fund managers that are pushing back saying, whoa, whoa, whoa, it's going to cost our pensioners, our beneficiaries, billions of dollars in fees because pulling in and out of pension funds is very costly. But more importantly, in the long run, that's the short term cost. In the long run, we in the United States, if our businesses, if our economies, does not invest in climate positive technology and and measures to reduce emissions, we're going to be out of business. We are going to severely curtail our competitiveness because other countries, such as China and other regions, such as the European Union, are investing seriously, and that is the flavor of the future economy. So if we're pulling out now, we do it at our own peril. So they are actually pushing back against this outrageous campaign. So just just to get that very clear And then over to you, Paul, because you have much more to say on this. Load More
Paul: [00:09:40] Yeah, that's true. But there's something really profound going on here and deeply bizarre. So for example, last week we did talk about the fact that an organization similar one to the one you just described called Consumers Research, has sent vans to the offices of insurance companies with warnings on the side saying stop the collusion. You might find it interesting to look at the Consumers Research website consumersresearch.org, if anybody's interested. It says it was established in 1929, but I personally think this website was put up just a little while ago by somebody who wrote a cheque to a company to achieve something. I've worked in an NGO for the last 23 years and I can tell you this doesn't look like a normal NGO website. This looks to me like something that was created for a very specific purpose. And as I pointed out, they got 12 million from Donors Trust who had revenues of 350 million and 422 in unrestricted assets. And no one knows where Donors Trust money comes from. So let's just trace it back, like what's really going on here? It's since 2010. That's what Senator Sheldon Whitehouse said in the mini series that we just ran. In 2010, the Citizens United Rule was suspended and corporations and financial interests got the opportunity to spend without limit. Remember that! Without limit and without oversight to interfere and to subvert the democratic process. And so right now, democracy, I would argue, in the United States, is being threatened by some extremely strange actions. So, for example, if we think about these insurance companies, I've read in detail the letter from the 20 or something attorneys general who've said that there's collusion or suggested there's some kind of collusion.
Paul: [00:11:21] That's the phrase that's on the side of the Consumers Research van regarding their behaviour. One thing I'd just like to point out is it's so important to Consumers Research that they've sent a van to insurance company's head offices. It's not that important that they've written anything about it on their website. Right. Okay. That's quite interesting is it. Why would you send a van somewhere? Because you were terribly upset about something, but you didn't put anything on your website about it. It's because these people, they're just kind of front organizations, in my opinion. They don't actually care about anything. They're just sort of propaganda. So my point is that we have to recognize that something profound is happening in US democracy, which is, I think it is incredibly unlikely personally, that state's attorneys general, 20 of them, came up with this idea themselves. I think it was promoted to them by front organizations. I think states attorneys general received money to get elected into office. And frankly, US democracy is in peril. I would argue that there's an election in 2024 between the Democrats and the oil industry or the fossil fuel industry, I think, in 2016, there was our first election between the Democratic candidate and the fossil fuel industry candidate, Donald Trump. He won the election. He withdrew the United States from the Paris Agreement. He made the chief executive of ExxonMobil, the Secretary of State. That happened.
Paul: [00:12:42] It's a matter of historical record. Then President Biden won. And now I think we're seeing Republican candidates cozying up to the kind of fossil energy industry. For example, Ron DeSantis. He's made anti ESG the centerpiece of his campaign. So we can talk more about the details of this. But I think fundamentally what's what I find pretty extraordinary, having read the letter, which is available on the website, on the Internet, if you look at it, the suggestions of collusion amongst insurance companies are, in my own opinion, kind of rubbish. They're the they're the complaints the fossil fuel industry would make. And they have made life impossible for insurance companies stating that this is some kind of abuse of state law. But I don't think it is an abuse of state law. I think fundamentally this is a case of legal means being used to defend the fossil fuel industry against rational actions by insurance companies. And the last thing I'm going to say on this, sorry for the rant is, you know, you can say a lot of bad things, for example, about the political system in China. Many people would criticize the way Xi Jinping is held accountable, but he is not at risk from his oil industry, his gas industry. He's not at risk from the fossil fuel industry. And that's probably why China is investing as much in electric vehicles and renewable energy as the rest of the world combined. I think this is about the integrity of the democratic process in the democracies that are threatened by fossil fuel industry expenditure.
Christiana: [00:14:14] Paul, you mentioned a letter several times. Can you just explain what letter you're referring to?
Paul: [00:14:19] The letter is from 23 states attorney general, and it's from May the 15th 2023, and it was sent to the Net Zero Insurance Alliance in Geneva. The specific complaint is that insurance companies, by threatening, for example, to withdraw cover from, for example, organizations that don't decarbonize, they are acting in a way that is unfair. That word is repeatedly used. They reference that Louisiana courts interpret the provision to forbid insurers from engaging in any discrimination that is not based on underwriting risk. So, for example, I guess Louisiana law would mean that those insurance companies have to insure Al-Qaeda or Nazis or whatever, or terrorists. The law apparently says you have to insure everybody unless it's based on underwriting risk. I mean, it's full of, I think, cartoon errors. It says, for example, that these emissions reduction targets are environmental conditions, are not actuarial ones. I mean, I've spent a lot of time with the actuarial profession. I can tell you actuaries are absolutely fascinated by climate change, spend all their time thinking about it. What this campaign has successfully done is weaponized the legal offices of 20 states in the US and turned them into a mechanism to terrify insurance companies. And the question is how we, as the climate movement, show up in defense against that attack.
Tom: [00:15:42] So so thanks, Paul. That's that's really helpful to sort of like hear that. And I think we should get to the part of this podcast where we talk about what we as the climate movement need to do to step up and actually try and defend or prevent these attacks from being successful. But I just want to I'd love to ask you both a few questions. From what I've understood, from what you've said, this is a legal argument about collusion that has no fundamental grounds. And so it will work its way through the courts. Courts have been stacked, of course, by a Republican president at national and state level. What level of certainty or what's our prediction about what happens next? Do we feel any level of confidence that the conclusion we're reaching here will be reached through the courts? Or do we actually think the courts might be now so politicized that actually they are going to find in favour of the collusion argument and undermine the ability of that particular group of insurers to do what we know they need to do?
Christiana: [00:16:38] Well, that's a very good and important question, Tom, that I feel I am completely unprepared to answer because that's looking into the crystal ball precisely because the courts have been stacked. If we had objective, objective judiciary, then we could have more confidence there. But do you mind if we step back a little bit?
Tom: [00:17:06] Sure.
Christiana: [00:17:06] I would like to pose a theory here that I'm very willing for both of you to to cut down. I'm wondering if this which we are seeing, which started with an anti ESG campaign. That was the first chapter, right. Then we went into chapter two, which is what we have now, which is now an attack on alliances of financial institutions, in this case insurance companies, where there is a red herring that has been thrown in about antitrust threats and invoking litigation. And this is definitely a step up, right. It is chapter two of the same campaign by the same people. The consequences are that the first part of the campaign made some financial institutions begin to go either silent or or not so public about their pro climate investment decisions. That's now being called green hushing as opposed to greenwashing. And the question is now the second part of the campaign, which is no longer against individual institutions, but against alliances of financial institutions, because it is based on antitrust law, supposedly. And we will hear from our guest whether this actually stands any test in the antitrust law. But but it is a second chapter. Now, here is the question that I wanted to pose to you. Do you think that both of these chapters of this assault against financial responsibility and against fiduciary responsibility of financial institutions. Is this a reaction against the passing of the IRA law in the United States, are we seeing an organized attack on the fact that we have a successful IRA bill in the United States that has been moving investments, has been motivating investments into infrastructure, into renewable energy? Et cetera. Et cetera. Is this a very cunning attack on the fact that we are progressing on climate change in the United States?
Tom: [00:19:50] No, it's a great question, Christiana. And I mean, I think that inevitably the success of the passage of the Inflation Reduction Act must have created a heightened level of anxiety amongst those who have an invested interest in the status quo, right. So it's kind of not surprising. And I think it's an interesting observation that actually we're seeing this massive pushback tied in with a huge push towards the future and creating the future in massive amounts of money, you know, sort of being being unblocked to help create that. So there must be some correlation. I would also point out, however, that this strategy of just delay, delay, delay, buy us more time, sow discord, is decades old.
Christiana: [00:20:34] Yes, very true. Very true.
Tom: [00:20:37] So in one way, yes, I think it is true. In another way, I think it's just the latest version of of something they've been doing for a long time.
Christiana: [00:20:46] Yes.
Tom: [00:20:46] And I think one thing that we should take from this is these groups that you've so well pointed out that are now the target of this attack, starting with the Net Zero, Net Zero Insurance Alliance. But there'll be others. They've got a lawyer up very quickly to really put in place the legal defence of all of their members. And that could well become a, you know, a sort of almost like a primary role for these groups going forward, which is new.
Paul: [00:21:12] So building on your point, Tom, I think it's absolutely correct that this is a sort of a need for lawyers to get involved. But I think we can be quite strategic also as a movement if we have confidence. And I personally do have confidence that essentially the fossil fuel industry, it may be big public oil and gas companies, it may be smaller oil and gas companies or their owners have been putting money into these campaigns. We need to be crystal clear. We need, for example, shareholders who are worried about climate change, big shareholders, to go directly to all the oil and gas companies, all the major energy companies, coal companies, particularly those remaining coal companies, and say point blank, have you been involved in any attempt to influence states attorney general? Have you been trying to use legal process to interfere with what I consider to be, you know, leading work by the United Nations in partnership with insurers. One thing that the states attorney general letter does, if you read it, is it keeps talking about concerns about higher prices and driving inflation. At no time is there any recognition of the catastrophic financial impacts of climate change. This is a real kind of tomfoolery. But as you as you've pointed out, it's it's it's effective and it's frightening for financial actors. We need to stand up to it. And I'd love to to see if anyone can use the public domain to ask states attorneys generals, did, will any of them say that this was their idea? Is there a single state's attorney general say, yeah, this is my idea and I encouraged other states attorneys general to follow me, because if none of them are willing to say it was their idea and they encouraged others to follow, that would be a de facto proof that this was pushed at them by a lobbying group.
Tom: [00:22:56] Yeah, I think definitely calling it real tomfoolery is is a good description of what's going on here. So that's possibly a good episode title. I know we have to go to our guest in a minute who will give us a really good assessment of the legal risks that are truly involved here. So that's going to be fascinating. I'd like to ask you just both one more question, and I realize that there's so much in this from a legal perspective, from a financial strategy perspective, that we're sort of raising questions as much as being able to answer them. But it's, this is so far a uniquely US issue. It's a structured issue to do with the political and the legal situation in the US and the laws, as you've said, Christiana, and that's bad, but at least it's not a global issue that we're trying to grapple with. Do we see any threat that this will spread to other countries? It's kind of spread in a sort of cancel culture kind of way, but it hasn't spread as true legal jeopardy.
Christiana: [00:23:47] Well, that is actually on my little list to ask our guest today, because he is an anti trust law expert, but he sits in London. And so I would love to ask him, is this bleeding over into Europe? Is it bleeding into Europe? And and and if so, how so? Because, it is evident and has always been the case that the financial institutions that are headquartered in Europe, because there is much more public demand for responsibility in Europe than in the United States, those institutions are definitely have been historically been taking the lead in financial responsibility. So I would love to hear from him. Is it is it migrating over the pond?
Tom: [00:24:38] Yeah, for sure. Paul, anything to add before we go to the interview?
Paul: [00:24:42] Yeah. My my belief is that that actually will be impossible because these are not political offices. Christiana, you are specific about the Inflation Reduction Act. I've got to tell you that this letter, the states attorney general require the insurance companies and here I'm quoting the letter, what if any steps have you taken to support personal motor vehicle insurance clients in their efforts to go green by transitioning to electric vehicles, using other forms of low or zero emissions transportation and reducing their vehicle use. So there is a specific accusation.
Christiana: [00:25:19] Gun, smoking gun.
Paul: [00:25:21] Smoking gun.
Christiana: [00:25:22] Smoking gun.
Tom: [00:25:25] There you go. Yeah.
Christiana: [00:25:25] Okay. So, Tom, I'm very sorry that you're not able to be with us for our next interview, so let me introduce our incredible guest, Maurits Dolmans, who has been so, so generous and jumping in here in the last minute to explain what is going on here. And Maurits is an attorney and a partner at Cleary Gottlieb Steen & Hamilton LLP based, he is based in their London office. Maurits' practice focuses on the EU, UK and international competition law, which is why we reached out to him and he also practices in the field of online regulation, intellectual property law and sustainability. He is an antitrust legal expert and he is a rising star of the Net Zero Lawyers Alliance, a relatively new alliance of lawyers who understand that they have a very important role to play in our net zero future. So Paul and I, Tom, in your absence, Paul and I caught up with him to help us unpack the legal wrangling around the anti ESG movement, chapter one and chapter two, this antitrust threat that is now erupting in the United States and has been making a lot of news, certainly in the United States and also coming across the puddle.
Christiana: [00:26:52] So let's talk to Maurits. Maurits, thank you so much for joining us here on Outrage + Optimism. I must say that right now, at least at the beginning of our conversation, I am much more on the outrage side of this conversation because of what we are witnessing, especially in the United States, the anti ESG attacks and now the threats of antitrust. But let's see where we are. Maybe you will be able to accompany us on a journey from outrage to at least some basic optimism. But let's start with the outrage Maurits. Please explain to us how on earth is it possible that institutions such as recently, but not only but recently, the insurance companies in the United States are being accused or at least being threatened of jeopardizing their antitrust commitments because they have coordinated or they are consulting with each other in an alliance that is pre-competitive to address climate change issues, i.e. to move their investment portfolios from dirty and risky investments to clean and less risky and more stable. How on earth, from a lawyer's perspective, can this be an antitrust threat?
Maurits: [00:28:39] Well, the threat is because these firms cooperate. And so why are they cooperating? That's probably the first question we should ask. And then the second question is, okay, does antitrust law actually have any problem with that? Right. So as Lord Stern wrote, climate change is the result of the biggest market failure that the world has ever seen. And the reason is that the cost to society of weather events and global warming is not included in the price of goods, and the economists call this externalities. You've had this previously on your podcast. And because there is no price for these emissions, producers have no incentive to cut them right? Unless consumers insist and are willing to pay for that. But they mostly don't. And this leads to a tragedy of the commons, as it's called, beyond, we are living beyond the regenerative limits of our planet, and any business who wants to solve this is caught in a climate change prisoner's dilemma. If they are the first ones to switch to clean production or to avoid activities that have high emissions and that increases their cost, rivals will take their market share and they can't achieve scale and lower cost if everyone doesn't join.
Maurits: [00:29:57] And this is a collective action problem. I don't move because I think you are going to take advantage and you don't move because you think I'm going to take advantage. We may both want to move, but we don't dare. So how do you deal with that? Well, you deal with that by coordination, regulation, carbon taxation or cooperation. And Paul Polmann explained this nicely in a previous podcast. And so the net zero associations, they understand this, these insurance alliances, the banking alliances, and they agree to move to net zero together because that's the only way to deal with that. And that's where antitrust law kicks in because competitors aren't normally supposed to move together unless they have a very good reason to do so. So is antitrust law really a problem? I don't think so. And the the attorney general of Utah sent a letter on May 15th, 2023, that to me reads a bit like scare tactics. They say you are we are accusing you of collusion causing and I quote, record breaking inflation and financial hardship for the residents of our state. So in other words, these people are to blame.
Christiana: [00:31:14] I love that. Totally love that.
Maurits: [00:31:16] They are to blame for inflation. And it's an implicit threat of fines and damage claims and prison sentences. And that's what's happening. And we need to calm the waters.
Christiana: [00:31:26] So so so let's just unpack that a little bit Maurits. Let's unpack that, because it's particularly interesting that this threat through this letter has been has been lobbied against insurance companies because insurance companies are our risk gurus, aren't they? That's what we pay them money to do to assess the risks of anything in this case climate change, but majorly all of other risks as well. And then to figure out how to manage because they can't solve the risks, but they can manage the risks and how any insurance company individually would manage the risk of climate change is completely impossible. It is only done if they actually work together. Is that not correct?
Maurits: [00:32:23] Yes, I think that is correct. If you're an insurance firm and you get a particular project, then you're going to look at a physical risk to that particular project and perhaps also to the business risk and then maybe even a little bit the regulatory risk of that particular project. And you're going to price your premium on that basis. What you're not looking at and what's not included in the price of the premium is the emissions that come from that project and that caused damage to your project. Imagine you're also an insurance and you're doing the same to me. You're insuring a particular asset, an opportunity, and so you set a price. But that price doesn't include the damage that your project or that the insured asset is causing to my asset. So we are both causing damage to each other and this cooperation is the only way to resolve that.
Christiana: [00:33:16] So is that a breach of antitrust law?
Maurits: [00:33:20] I don't think so. I don't think so at all.
Christiana: [00:33:23] Why?
Maurits: [00:33:24] And why? Well, because let's keep in mind the goal of antitrust law. The goal of antitrust law is to ensure that consumers get the best deal. But with climate change, they don't actually get the best deal because there are hidden costs in the products and services that they buy in the form of climate change risk. Right? Your house burns down, it's flooded, there's a hurricane. And who knows what's going to happen in the next few years where the risk is significantly increases, increasing as tipping points are being achieved. So I think the law should allow and does allow businesses to cooperate to eliminate those hidden costs. The total cost, the true cost to consumers. Now the EU, the European Union and the UK already acknowledge this the EU adopted guidelines just last week, creating a very careful balance in saying, okay, agreements to achieve sustainability are permissible if certain conditions are met. Very thoughtful analysis. The UK does the same. They even go a little bit further than than the EU in connection with climate agreements. And the reasons why they allow that is because they recognize that these agreements between insurance companies, they are not attempt to rip off consumers to raise the company's short term profits and to do that secretly. These are not attempts to exclude rivals from the market and take over their market share so that they can raise prices again. These are not attempts to create and maintain market power. These raising.
Christiana: [00:35:00] And sorry, sorry Maurits, everything that you have just outlined there, that is the purpose of the antitrust law. Correct?
Maurits: [00:35:09] Exactly, exactly. It is to prevent companies from ripping off consumers and raising their profits in the short term and to do so secretly. And they can do that directly or indirectly. And these agreements are not that. In fact, some of these agreements are even reducing their profits in the short term.
Paul: [00:35:30] Maurits, can I can I try and chip in here? And I would like your permission to try and adopt the accent of an attorneys general from the United States. So just please forgive me for a moment.
Christiana: [00:35:43] Oh, boy.
Paul: [00:35:44] Makes clear in the letter here that both Louisiana and Utah law will not allow unfair discrimination in favour of particular individuals or persons between insured between, I'm actually I'm not going to keep the accent up between insured subjects or insurance having substantial risk. Anyway, key point, any discrimination that is not based on an underwriting risk is not allowable, according to Louisiana and Utah law. Now, look, I know you're completely right. This is tomfoolery, I called it earlier in our episode to use this particular piece of law. But the point that these attorneys general make, or at least somebody has persuaded them to make, because I find it extremely hard to believe that something that accuses them of promoting electric vehicles was spontaneously coming from the legal departments of these states. May I say Christiana said she saw a smoking gun when she saw that particular quote. But my key point here is they do say in terms of the law, that any discrimination that's not based on underwriting risk is against the law. I was joking that they have to, you know, insure terrorists and Al-Qaeda. But in all seriousness, please, can you give a response to this this this assertion that this collusion, because we have to remember, they sent vans to the offices of insurance companies saying stop the collusion. Can you tell us if this collusion is a is a real issue?
Maurits: [00:37:16] Yeah. So I think this collusion and it is not collusion because it is not secret coordination to raise profits or to exclude rivals. It's it's not a problem, this cooperation, because the goal is not is not to raise profits, but to to improve the situation for consumers and for customers. Let's keep in mind.
Christiana: [00:37:40] To protect, to protect. I would use the verb.
Maurits: [00:37:41] Yes.
Christiana: [00:37:41] To protect their own assets and us as global citizens.
Paul: [00:37:45] But but, just if, that thing where they stand up in the court and they interrupt, which I hate doing because I know you're a real expert, but if this was a courtroom drama, I would say what you're saying is your political opinions. But the Louisiana and the Utah law says, you know, you're not allowed to do that.
Maurits: [00:38:00] Well, your honour, please instruct my opponents not to interrupt my pleadings. He has his chance afterwards and then he can make his point. And the point is that Swiss Re, which is a large reinsurance company, last year, estimated that global warming could cut annual global economic output by as much as 14%, $23 trillion. There's another study by Patrick Bolton for the IMF recently, which is really quite worth looking at comparing the costs and benefits of replacing coal with renewables. And the conservative estimate of that study is that the net gain for consumers is $85 trillion. Right. It's worthwhile to cooperate to achieve those kind of benefits for consumers. And and when you look at the kind of discrimination that you're talking about, what some people would call a collective boycott. Right. When you look at the case law, Northwest Wholesale Stationers, the Indiana Federation of Dentists, the Superior Court Trial Lawyers case, the the Rothery case and so forth, those are, actually Rothery was not a collective boycott, but those were all intended to exclude rivals and to increase short term profits for the companies that participated. They were not intended to resolve market failures and to improve the lot of consumers and society. And that is a crucial difference why the law should not be applied in the way that the attorney general there proposes.
Paul: [00:39:46] That's a brilliant answer Maurits. But I think I have a difficult question for you. Why did so many insurance companies then run away from the Net Zero Insurance Alliance?
Maurits: [00:39:58] Well, you can kind of sometimes you can compare it with the person who is, you say you and I are in the jungle and a leopard comes towards us and and we start running and you tell me you can't outrun a leopard. And I say, I just have to outrun you. So they, they they leave because they're threatened with fines. Or at least there is a risk of a I think it's scare tactics. A risk of fines. A risk of liability claims, a risk of even going to prison. That's what's implied in this letter. And these companies is not if you're risk averse and you're not willing to take the fight to the next step and to say, okay, I will stand up in court and I will defend my position, then you leave. And it's you know, from a human perspective, it's not you know, it's not difficult to understand, but it takes courage to stand up against something like this.
Paul: [00:41:04] So may I ask one more question? Sorry. You go, you.
Christiana: [00:41:07] No, go ahead.
Paul: [00:41:08] One last question Maurits, and thank you for explaining this so well. It looks to me because I looked at the organization that sent those vans that this is just a pure money pretend lobbying activity. It really it looks transparently like they're just people are trying to to to make mischief. But the attorneys general have a very responsible job, they are the chief legal officers of states. Is it possible that there's any way to hold them to account? Which one of them which which one of them Maurits is the leader? Would one of them take credit for saying, oh, I came up with this idea? Or if they are simply taking their funders ideas and turning them into, is there any way you can hold states attorney general accountable for what we think is a dangerous thing?
Maurits: [00:41:59] Well, I do think that what they are doing is identity politics and slowing down the energy transition. And we live and these and in the US we live in a in a democracy. And the way to hold the attorney general accountable is in principle by not electing them. So therefore, we need and we need to educate people. I always say that what we need for climate change is regulation, carbon taxation, cooperation, reforestation, education, innovation, subsidization. These are the things we need. Education is an important component for them. But in an in in a democracy, people do have different points of views. And and therefore, unless they do illegal things, which I cannot judge from here. Um, the only way to hold them accountable is by not electing them. Not the answer you want to hear necessarily.
Christiana: [00:42:59] No no, that's a good one. That's, that's, that's what politics is all about, re-elections. Um, but Maurits, that's one line of defence is to hold these, these AG's accountable. The other line of defence that I would also like your opinion on is does this mean that the internal lawyers of these insurance companies are not doing their job? Because if they were doing their job, sorry to attack the the the legal profession here, but why do they not have lawyers such as you that would stand up and go, you know what, this is a total bluff. This is absolutely intimidation. This is a political issue. This is culture wars. This stands absolutely no legal integrity. And hence we can just, whatever, ignore them, continue to be in the alliance, in fact, even strengthen our collaboration on the alliance. Why are the internal lawyers allowing these institutions to run away from the tiger?
Maurits: [00:44:06] So it's not impossible that some of them actually do have me as their counsel. And and I have to say that that the people that I know, as a lawyer, you have to have a degree of judgment and courage. And that means giving advice which is not completely conservative, and say, well, there's a risk, therefore don't do it. You you have an obligation towards your client to set out the real risk, but you also have an obligation to be courageous and explaining in what's possible and how problems can be solved, because that is the role of a lawyer, how to solve the problems. And many of these in-house lawyers, I have to say, those that that I have worked with. Actually have that ethos, but they also have clients and their clients have obligation to their shareholders and sometimes the business. And so an when does an organization show courage, when all the stakeholder in the business are prepared to do the right thing. And that includes the lawyers, that includes management and that includes the shareholders. And we get to fiduciary duties and in particular in an insurance environment. It is important, I would have thought, for management to take those fiduciary duties seriously and to ensure that they do what is necessary to solve the problem of climate change in the long run because it's creating insurance problems. We see that in California now. A number of insurance companies have decided no longer to insure domestic residences because they can burn down or they they and the risks are too great. Well, so what what we're seeing is that they are now starting to refuse to insure the victims and they might still be insuring the causes. Now, to me, it's part of your fiduciary duty to solve this in the long run so that your shareholders can also realize money and your customers and your employees and society as a whole. That's part of your fiduciary duty. I would have thought.
Christiana: [00:46:20] When you say solve this in the long run, you mean address climate change?
Maurits: [00:46:25] Yes, that's exactly.
Christiana: [00:46:25] Or do you mean solve this antitrust threat?
Maurits: [00:46:28] Well, both. Both.
Christiana: [00:46:29] Both.
Maurits: [00:46:29] Because, you solve the antitrust threat by standing up to the accusation with a view in the long run to solve the the climate problem.
Paul: [00:46:39] Yes, yes.
Christiana: [00:46:40] Yes. But but there's a difference in timing, right? We yes, we will address climate change in the medium and long term. But can we afford to have an elastic concept of time when for these antitrust threats? It seems to me that is something that has to be nipped at the bud, cut down immediately because this can actually blossom or rather explode to very dangerous levels. And I am you know, I'm just like, where are the lawyers? Why are they not speaking to management and saying, I'm sorry, but this is a total bluff. This has nothing to do with legal risks. You're not going to go to jail. You're not going to pay a fine. In fact, quite to the contrary, could all of these financial institutions be found liable in the long term because they did the wrong thing on climate change?
Maurits: [00:47:37] There is indeed a problem that antitrust claims like this can paralyze action and we cannot afford paralyzed action because we have tipping problems, tipping points already being reached when you look at, for instance, the the emissions from the thawing of the of the tundra, that doesn't respond anymore to human decisions or to regulation or to taxation or whatever, that's now a natural process that we have triggered by allowing climate change to happen. So we have, we cannot afford as a society and as an individual to wait. We have to act. So to me it is indeed, I think, and that it is necessary to stand up against these threats to lobby the government in accordance with your free speech rights, to change the policy. And there are plenty of opportunities for that because the the President Biden, for instance, has in its 20 in 2021 in January issued an executive order called Tackling the Climate Crisis at Home and Abroad. And he says that the government must and he quote, I quote, mitigate climate pollution and climate related risks in every sector of our economy, that Section 201.
Christiana: [00:49:06] Quite.
Maurits: [00:49:06] Right. So that is the order given to the Federal Antitrust Authority, the Department of Justice Antitrust Division. And they're starting to think about it. For instance, the the chief of the Antitrust Division's competition policy and advocacy section gave a very interesting speech in 2022, in September, saying sustainability is a consideration in our antitrust enforcement to the extent that it can be viewed through the lens of quality and innovation. And that's a good way of putting it, because climate change caused by the consumption of your product has a quality deficiency because it creates damage to society and to the atmosphere and to earth as a whole. And that's a quality deficiency that has to be corrected. So the the foundation for antitrust authorities to act here already exist. And you show that already in Europe and in the UK.
Christiana: [00:50:00] So does that mean are you saying Maurits that there's actually an urgent role for regulatory authorities to come and quelch this bluff? I would actually like to use a different verb, a different noun, but I'm not. To quelch this bluff and clarify the importance of these companies actually working together to protect citizens and to protect the global economy. Is that what you're saying? That it has to be the regulatory authorities have to step in because the internal in-house lawyers have not.
Maurits: [00:50:35] I'm saying that everybody has to step in and in particular the government, because that's what the government is for. The government is there to solve collective action problems, to solve things that we can't solve alone. So I do definitely think that the government should step up and adjust these misperceptions of antitrust policy. Absolutely. But it's not the only thing. They should also regulate and they should also support innovation. We see that the beginnings of that and some of that is encouraging, but we need a holistic policy where all of these things come together.
Paul: [00:51:13] Well said.
Christiana: [00:51:13] So Maurits, I'm sorry that we've taken so much time, but I have one more question, if you will allow me. This brouhaha that has erupted in the United States because of political or partisan politics has erupted in the United States for sure, and in red states most specifically. Is it under the danger of contaminating Europe? Will it migrate across the pond over to Europe? And do you think that we will see bluff accusations such as this? And will we see financial institutions also sort of cower in the face of these kinds of threats in Europe? Because in Europe they are much more aggressive and much more responsible in their climate, in their climate action than they are in the United States. So is Europe the next geography for these brouhaha?
Maurits: [00:52:17] I think not. And I think that the fact that the European Commission has just adopted those guidelines that allow these kind of agreements and that the UK Competition and Market Authority, which is poised to do the same thing actually, I hope that it's going the other way, that the example set by the EU and the UK authorities will be taken up and taken seriously by the Department of Justice and the Federal Trade Commission and also by the attorneys general in the blue states. And in fact, you already see that because the attorneys generals in a number of blue states, led I think by California, if memory serves, wrote a counter letter in in a case concerning Climate Action 100+, and where they explained why the concerns raised by the red state attorneys general were actually not justified. So I hope that we are going in the other direction that the the the positive policy will cross the Atlantic.
Christiana: [00:53:21] Okay. From your lips to God's, our God's ears.
Paul: [00:53:26] Thank you so much for really insightful answers to difficult questions that a lot of people are struggling with at the moment. A final question that we ask all our guests. Can you give us a sense of one thing that makes you outraged and one thing that makes you particularly optimistic to give us a framing to close our discussion?
Maurits: [00:53:45] Well, what what out, actually, it's kind of related to this using an existential crisis for identity politics. That to me is really problematic. It's perfectly fine to find identity in your community and your political opinions, but not those that endanger society, the planet, yourself, your children and your grandchildren. That's what outrages me.
Paul: [00:54:10] National security, global security. So we have to then, having had the riot act read to some extent here, what makes you most optimistic?
Maurits: [00:54:19] Well, actually, two things. One is innovation. And we should talk about that at some other time. But what really makes me optimistic is to see the young generation, including my own, our own children, in as as I mentioned, an eco architect and activist in Costa Rica in recycling and seaweed research, journalist, academic and the way that they raise their children. That's what gives me hope, because that means that, okay, we did a lot wrong in my generation, but at least we may have done some things right, and that gives me hope.
Paul: [00:54:55] What a wonderful answer. Thank you so much for your insight, your care and your skill in battling this problem. And I'm, I think, very wise insurance companies that retain you.
Maurits: [00:55:06] Well, let's let's do let's do our best. This this this debate is not over yet.
Christiana: [00:55:11] Indeed. Maurits Dolmans, thank you so, so much for joining us. And I must say, I think your Costa Rican grandson is going to be very proud of you.
Maurits: [00:55:22] Oh, that's very kind. He's three years old. Thank you.
Paul: [00:55:26] Thank you.
Christiana: [00:55:27] Well, he has a few years to go yet to make up his own mind. So that gives you a few years to educate your colleague lawyers. How's that?
Maurits: [00:55:36] Indeed. I'll do, we'll do our best. And the Net Zero Lawyers Alliance, you mentioned is definitely a forum for lawyers to join and to work with.
Christiana: [00:55:45] So that's a shout out for lawyers interested in getting into the into the thick of this to to to work there with colleagues in order to protect the interests of global citizens.
Maurits: [00:55:58] Exactly.
Christiana: [00:55:59] Thank you so much Maurits. Really, really appreciate that you were willing to join us on such short notice on an on such an important topic. Really. Thank you.
Maurits: [00:56:08] Well, it's an honour. Thank you very much. And I'll keep following you.
Paul: [00:56:13] Speak again soon.
Christiana: [00:56:14] All righty.
Paul: [00:56:23] What a pleasure to listen to such an expert. And his his kind of, kind, thoughtful tone made me feel that there was kind of hope, I suppose, in the in this legal madness. But what did you think, Christiana?
Christiana: [00:56:37] Yeah, I'm very glad that you emphasized his tone, because I must say, my tone during that whole thing was on the border of hysterical because I just think this is so outrageous, so outrageous that they are totally, totally building a huge thing. And and by the way, this is small NGO, right. That has made these huge waves on complete inventions. No legal standing, no legal ground whatsoever. And yet they're having a pretty impressive fallout, a pretty impressive impact. And I just think it is completely outrageous.
Paul: [00:57:24] But just a question for you, Christiana. Like they you know, this is clearly just a sort of put up job by people worried trying to keep fossil fuels flowing. But it's been so successful, these insurance companies have have left. How do we how do we as a climate movement respond? They must feel like they must be doing something right because they've had insurance companies leave this group. They must think that they're you know, that they're they're doing some kind of useful social purpose or am I wrong?
Christiana: [00:57:54] Who thinks they're doing a social purpose? Sorry.
Paul: [00:57:56] Well, I don't know if they think they're doing a useful social purpose. I mean, they think that, you know, fossil fuels are good and, you know, we don't want to have some kind of insurance company.
Christiana: [00:58:04] No, no, no, no, no. They're not. Don't think that fossil fuels are good. They're just, you know, wanting to protect their income. That's it. So it's not about it's not about righteousness here. It's about money production period. I don't think it's about righteousness. But Paul, to your question of, you know, how should we understand this, I have been thinking today while we have been recording these bits of the podcast, and I don't know if it's ascribed to Mahatma Gandhi or to many other people, but, you know, the very, very famous quote of first they ignore you, then they laugh at you, then they fight you and then you win. In this case, it's first they ignore you, then they laugh at you, then they fight you, then they fight you even more because this is chapter two of their fight. And then eventually you win. Because frankly, what this NGO is doing is they're doing the work of an industry that is in decline and they know that they're in decline. So this is, I would say, desperate, desperate attempts to stretch out the time during which that industry can still sell its fossil fuel resources into the global economy. Everything that they're doing is to delay the impact of legislation that already exists, delay the impact of public sentiment. That is definitely not going their way. I thought it was so interesting how he said they are using an existential threat as identity politics, as partisan politics, as culture wars. Outrageous. Outrageous. But if we stay grounded, we can understand that these are their last desperate attempts from a large ship that is sinking.
Paul: [01:00:01] You put it so well, and you're absolutely right. I think the only final question I have is, don't they have any shame? Don't they have any sense of how much danger, how many millions, how many hundreds of millions of people's lives they are putting in danger using the offices, the legal offices of the chief legal officers of states of the United States creating this this kind of fabricated concern. Just how does somebody act that irresponsibly and not think of the consequences? Do they imagine that people in the future are just going to say, ha ha ha, and laugh it off?
Christiana: [01:00:42] Well, apparently they do. And so, yes. So that just fuels my outrage. Thank you, Paul. I can get even more outraged.
Paul: [01:00:52] If we turn that outrage into energy and we can power a whole city. Hundreds of cities.
Christiana: [01:00:56] This polarization that we're having on on climate, but on so many other issues is honestly really putting corporations and financial institutions and everyone, investors, customers, employees, putting them in a very difficult situation because, you know, corporate leaders are wanting to align themselves with social and environmental issues. But the moment that they do, they get their head chopped off because they step into the middle of especially in the United States, most especially of culture wars that, you know, one one, one misstep, one miss word, one whatever, turns the whole thing into a social media storm and into a corporate crisis that is now crippling businesses and, in fact, maybe even wrecking careers. And so it's it really is just an unforgivable battleground that they have built here, to attack from and frankly, from the left and from the right. Paul, let's be honest here. Right. Leaders, corporate leaders, financial leaders that are standing up are being attacked from the left. Because they're attacked as greenwashing and from the right because they're attacked on being something illegal. And hence what they do is they hush. And I mean, what what should leaders do Paul?
Paul: [01:02:32] Stand up Christiana. Just got to stand up for what's right. Got to hold that in your heart, in your mind, and remember that the infinite future generations are watching us. Thank you. Oh, I needed to hear your, your your clarity and your passion. And we do what we have to do.
Christiana: [01:02:53] Okay. Yes. Oh, how interesting. Clay is reminding us here in the little notes or no, is it Sarah? Sarah, thank you. Is reminding us that very interesting. There's a polling here of Republican voters that are not supporting this, not supporting this because they understand actually that their existence or the existence of their descendants is also on the line. So very interesting that this is a fringe movement posing as though it were the ultimate truth and as though this were mainstreamed opposition to global responsibility. But let's put this back in their box. This is a fringe movement motivated by hanging on to a status quo that has actually lost its anchor. It has lost its anchor from from the political economy point of view and certainly from public expectation point of view. So they have lost their anchor, but they are doing everything desperately to keep their flag afloat. It's a fringe movement.
Paul: [01:04:12] Indeed. But a big animal most dangerous when it's when it's wounded. Tom?
Tom: [01:04:16] No, it's, I mean, it's so good to hear both of your analysis. And I really do agree with with the conclusions that you've reached. I think that in order for us to find a way through this, we're going to have to come together around some of these conclusions in order to make it possible for people to believe that a pathway is feasible. And we're not going to keep falling into these legal risks. And they do seem to be navigable.
Christiana: [01:04:40] Sorry, they're not legal risks. Right. This is absolutely invention, invention of a charity or an NGO who wants us to believe that there are legal risks here. So let us just be lucidly clear that these are not legal risks. These are red herrings being thrown into a process that is being more successful than those in the vested interest camp would want.
Tom: [01:05:12] It's a communications campaign. It's a communications campaign effectively is what it is, and it's a very clever one, but we can't be fooled by it. Okay, so we will explore all of this in a future episode. It's been great to spend time exploring these consequential issues. I don't think we're going to be able to answer them all in one episode. We will be back. But as ever, we're now leaving you with some music, this week, Constant Follower with The Merry Dancers on TV. Thanks for joining us.
Paul: [01:05:36] Bye.
Christiana: [01:05:37] Bye.
McAll: [01:05:39] Hey, this is McAll from Scottish band Constant Follower. The song that we're playing for you is called The Merry Dancers on TV. It's taken from our debut album, Neither Is Nor Ever Was. The name itself, The Merry Dancers on TV kind of gives you an idea of what the song is about. In Scotland and the Scottish Islands, the old people refer to the Northern Lights as the merry dancers, and round about the time I was writing the song, I was thinking a lot already about how we're kind of disconnected from nature because of the devices that we use, because we're indoors staring at screens, even though we feel that we perhaps feel that we're more connected to nature because we know more about it. We know more about what's going on, but we're not out there experiencing it. Anyway, this one night, friends of mine missed the real Northern lights above the house because they were inside watching a documentary about the Northern Lights on YouTube. And that just kind of inspired the whole idea of the song. And yeah, really just a warning to people to put down your devices and go outside as much as you can and experience nature in reality, not just research on your phones.
Clay: [01:10:54] So there you go. Another episode, Outrage + Optimism. It's Clay again. Thank you for listening. This week we are so thrilled to have on the podcast Constant Follower with the Merry Dancers on TV. Now, McAll has just a fascinating, gripping life story involving being attacked at a young age, losing the first 15 years of his memory, self-medicating through early stages of recovery, and he shares his story in an article I've set in the show notes that you can read. But he really highlights his connection to nature as this regenerative force for his life and music. And as he mentioned in the intro before the song, the disconnecting from devices and not missing the amazing world that we live in is where it's at. I just wanted to highlight that for you so you can go check that out. Again, Constant Follower. You can follow the band on social media. You can go by their debut record and actually reading more on McAll, I learned about a UK based charity called Help Musicians that has this holistic approach to supporting the well-being of musicians and the music community. They provide support on everything from start to finish career guidance to mental and physical well-being, health services. So really cool. I realize I may be late to the party on knowing about Help Musicians, but I just found out and very, very cool. Glad to know they're out there. You can go support them as well. So thank you McAll, and thank you to our guest this week, Maurits Dolmans for joining us on the podcast on such short notice. I mean, just like literally an hour ago, you can connect with him in the show notes.
Clay: [01:12:38] As Paul said, you can hire him at links to everything you need to contact him in the show notes. I said right up top before the episode ran that we have a live event coming up on Monday, June 12th. If you have not yet done this, you need to go save your spot for it. If you're interested in joining us for the live Q&A podcast recording the link is too long to read out, so it's got a bunch of dashes and stuff in it, but it only takes a second to register and it's free. We love free. You can go click the link down below. We would love to see you. We'd love to hear from you. It's a Choose Your own Adventure party in our recording sessions. So you know, tea or popcorn is welcome. Both if you want. Again, it's on Monday. Let me actually look up the time here. 1130 EST 430 BST. I will be joining as well. Very much looking forward to it and it would be lovely to have you. Okay, I'm going to go and leave you to your next podcast. Please consider sharing about our podcast Outrage + Optimism with your networks, whether social like online or even in person. Every single connection or recommendation makes a huge difference. And we're so grateful to have an engaged community that's sharing and listening and actively promoting our show. It's how we've grown so far and it's how we want to continue growing together. So thank you for that. Okay, See you next week. Live recording on Monday. Bye.