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Spotlight: What To Make Of The Bridgetown Initiative?

Ideas: Just Transition For Workers, Workers Capital And Shareholder Initiatives

A stat to consider: the combined assets of the world’s 300 largest pension funds is in the range of $23-24 trillion—depending, of course, where the equity and bond markets stand at any given moment since pension funds are invested in the financial markets.

Pension funds aren’t some “handout” to workers—those funds are deferred wages, a piling up of money over decades that comes because workers, mainly through their unions, agreed to put off taking wage increases during their working days in return for living with some security in retirement (we will put aside for a moment the point that pensions are, in the main, a reduced percentage of annual working days income, and many pensions don’t come close to paying for basic retirement expenses).

The IDEAS question here is: can pension fund money be leveraged to impose Just Transition standards, either through agreements with companies or outside pressure using shareholder initiatives?

Deploying the power of workers capital is not a new strategy. It’s been discussed, debated and actively tried for close to four decades. Its success has been, charitably, quite limited. Even the most modest campaigns around excessive CEO pay—the so-called “Say On Pay” efforts—have a spotty track record of success.

The reason for the lack of sweeping victories for capital strategies on behalf of workers is obvious: in virtually every country with private and public sector pension funds, decision-making is, on the face of it, equally divided between management representatives and non-management/worker representatives.

But, that equal division of representation downplays the actual power dynamic: pension funds are managed by investment professionals who, generally speaking, are solely focused on actions that will bring the greatest return for the beneficiaries of the funds—a criteria that also is driven by ensuring job security for those same investment professionals (poor returns, after all, could mean a fund advisor finds himself kicked to the curb). And those pension investment professionals typically are far more aligned ideologically with management representatives on pension fund boards of directors, and they tend to be similarly equipped in the lingo and minutiae of financial markets.

On the other side of the table, workers’ representatives on a pension fund board of directors are typically drawn from the ranks, or leadership of unions, and, no criticism intended here, they are not as well-versed in the ins-and-outs of investments and finance—at least at the granular level needed to contest arguments made against adopting socially-driven criteria to steer investments, and, to be sure, to wield pension fund assets as a cudgel to demand a “high bar” Just Transition for workers.

In truth, while a potent concept in theory, workers’ capital strategies have been deployed in countries to make up for the weakening of collective bargaining and to try to counter anti-unionization campaigns.

We raise this today to highlight a demarcation in the climate change debate. Along with worker-based activism, there has been a raft of broader shareholder activism, across a large menu of issues—also meeting with very limited success.

To wit:

A prominent activist group has filed shareholder resolutions calling on four of the biggest western energy companies to cut emissions more aggressively this decade in an effort to revive investor pressure on Big Oil over climate goals. In motions submitted to BP, Shell, ExxonMobil and Chevron, Dutch shareholder activist Follow This called on the companies to set clear targets to reduce their scope 3 emissions by 2030, in order to be “consistent” with the goals of the Paris Climate Accords to limit global warming. The group said the motions, seen by the Financial Times and set to be unveiled on Monday, had been co-sponsored by investors with more than $1.3tn in assets under management. [emphasis added]

Whether the above effort is successful is to be determined. However, the laudable climate goal of cutting emissions at the behest of investors is decidedly not the same as clinching a “high bar” Just Transition for workers. Presumably, some of the investor motivation can be found in arguments that smart economics mean fossil fuel companies should be more aggressively moving into alternative energies—a  long-term bottom line calculation.

What hasn’t changed, to date, is the lack of a broad adoption by governments and companies that smart economics includes the simple idea that if workers are not made whole in the de-carbonization process, workers won’t have money to spend, communities will be made poorer and, thus, economic activity will sputter.

Opinion: A Just or Unjust Transition: the Trinidad and Tobago Experience

It is understood in Trinidad and Tobago, that our islands and islands in the Caribbean are facing the existential threat of the effects of climate change. The fact is, that the Oilfields Workers’ Trade Union (OWTU) does recognise that climate change is real and currently happening around the world and particularly impacting smaller island states. Therefore, we understand that in Trinidad and Tobago, a carbon reduction strategy is needed to be developed to deal with the high emission from the power generation, transportation and industrial sector.

The OWTU is very clear that every decision our generation makes directly affects the generation to come. The OWTU also understands that we all need to play our role in protecting the environment and creating a sustainable economy while attaining this. Therefore, the “Just Transition” framework was created to ensure a shift from an extractive economy to a regenerative economy. Although the Just Transition appears to be a positive outlook at protecting both the environment and the people who are directly affected, with poor leadership skills from governments and poor planning this can take a negative turn and harmful impact on the future generation

The concept of a Just Transition which emerged from the trade union movement as a means to address the climate crisis in a more just, equitable and fair manner, is being coopted to advance another agenda amidst the crisis of capitalism. It must always be made clear that the contradictions of capitalism have caused the crisis of climate change that we see today. The solutions to the crisis of capitalism do not lie in finding the appropriate regulation, but in the extent to which social movements are able to wage a worldwide process of class struggle from below, that seeks profound changes in the relations of production in energy and the reproduction of human life.

We should start with a fundamental proposition: Energy is a human right and therefore we believe in public ownership of energy. This really should be at the heart of any discussion around a just transition. Also at the heart of a just transition is job security for the working class. According to IndustriALL Global Union, a Just Transition’s objective is to provide an optimistic future for all workers. They also stated that at all times, any public policy support must guarantee the Fundamental Principles and Rights at Work as defined by the 1998 ILO declaration. Union members’ rights must be protected during any transition.

For the transition to be “just” there will be the need for more than political will and rhetorical statements about ending the fossil fuel industry. What will be required is the genuine and active participation of stakeholders based on human rights or else it will be considered simply a “transition” into a green economy. Trade Unions have shown that the transition can only be “just” when all stakeholders are seated at the table, building and creating the plans for a Just Transition.

This means that there has to be a win/win outcome, but that outcome would have to play itself out in class struggle. Any ‘just transition’ if driven by the government without sufficient participation and involvement of trade unions can become a weapon against the working class. In Trinidad and Tobago whilst the government presents a “draft just transition policy” they have in fact embarked on a transition of sorts and it is certainly anything but just. The government allowed the closure of the country’s only steel plant, several petrochemical and manufacturing plants. The government also sent home all the workers from the integrated state own oil company and closed the refinery. They have reduced subsidies aimed to benefit the poor five times; engaged in privatization under the guise of restructuring and have been attempting to eliminate collective agreements and collective bargaining by the state. Talks by government officials about “reskilling”, “retooling” and “capacity development” are fictional. In the past six years and for the 20,000 people who lost their jobs, where was the “reskilling and retooling”? where was the “capacity development.”? These promises never materialized.

What has materialized is a transition that left tens of thousands of citizens and their families displaced and dispossessed. The Trinidad and Tobago transition is in fact a process of neo-liberalizing the state where profit is placed at the centre before people. There are really three main messages coming out of our experience. One, is that the neoliberal approach to climate protection and energy transition is failing. Two, hiding behind climate concerns, the G7, the IMF, the World Bank, etc., are pushing a “green structural adjustment” agenda. Three, the need for a public pathway approach to climate protection, energy transition, and the need to address energy poverty.

Neo-liberalism created a reordering and rethinking of our status as individuals. For instance, think of the free market which has integrated into all of society until it has invaded its way into our personal lives. Individuals who are well-educated, skilled workers and healthy stand a better chance of getting jobs in today’s society. Therefore, the combination of a continuing emphasis on reducing benefits and the existence of a high unemployment rate has led many people to poverty. It must never be forgotten that neo-liberalism aims to lower wages, reduce benefits, destroy the health and education system, and create funding from national and international welfare.

In Trinidad and Tobago, the neoliberal market restructuring began in the 1980s, when the country accepted structural adjustment loans from the International Monetary Fund (IMF) in the wake of declining oil prices. Trinidad and Tobago’s neo-liberal policies then began extracting the wealth of its citizens and transferring it to the upper class of society. Therefore, it would be important to identify whether the government’s current Draft Just Transition Policy document is really a continuation of this process.

The Draft Policy being pursued amounts to a “structural adjustment program,” packaged in such a way that it appears to be motivated by ecological concerns, particularly the need to address climate change, when in fact it aims to advance further privatization, commodification and liberalization of the country. The marketisation and privatization of public energy systems are central to the Draft Policy strategy in order to create an “enabling environment” for more private sector participation.

However, this strategy will not work because private capital will demand terms that are heavily skewed towards securing revenue streams and high levels of profit.  The Draft Policy also introduced de-risking as a strategy but all the evidence has shown that de-risking simply shifts the risks from private to public.

It is based on a number of wrong assumptions. The Draft Policy claims that there is “a global trend towards decarbonization.” This is a wrong assumption statement as some developed economies are decarbonizing their power sectors, but this is not a “global trend.” In fact, gas and oil consumption has been on an upward trajectory for many years. The Draft Policy also claims that the decarbonization process will automatically lead to lower demand for oil and gas and therefore lower prices. However, what evidence suggests is really energy expansion with growing demands with not only a return to the pre-pandemic prices but we have seen it soaring in actuality.

Another wrong assumption being made by the Draft Policy is that “The trend of global investment in renewable energy is increasing.” But this is misleading. Bloomberg New Energy Finance recently reported that $303.5 billion was invested in new projects and small-scale systems in 2020, a 2% increase over 2019. But in real dollars, investment in renewable energy has flatlined since 2012. Furthermore, the $303.5 billion total includes biofuels and biomass.

It can be noted that Trinidad and Tobago have seen a reduction from 2017 global emission of 0.11% to 2019 0.10%. The government aims to achieve a reduction in the overall emissions from the three sectors by 15% in their 2030 vision. In order to reduce our emissions, the government has estimated a cost of USD 2 billion, which will be generated through domestic funding (taxes) and from the Green Climate Fund. According to the Green Climate Fund, currently, Trinidad and Tobago readiness support is approved for USD 1.7 Million of which USD 606.8 thousand readiness supports have already been disbursed. We as stakeholders, are yet to see how the money has been disbursed. On the other hand, in Trinidad and Tobago, there is a lack of data and information found on recent trends in the climate change of our country.

The Multilateral Environmental Agreements Unit, in the Ministry of Planning and Development, admitted that there is a gap in data in the public domain, especially verifiable data about the statistics available. Instead of attempting to push through a neo-liberal agenda under the guise of a just transition, the government’s first priority should be gathering more updated statistics on GHG emissions. Precise and accurate research should be taken, to gather the right amount of data needed before imposing a destructive neo-liberal agenda under the guise of reducing our CO2 emissions. Seeing that Trinidad and Tobago is only emitting 0.10% as per the latest data, our government should take an approach that takes into consideration how the neo-liberal measures contained in the Draft Policy do not only affect the environment but also the community as a whole.

In our aim to reduce our country’s carbon footprint, one may consider the many types of renewable energy to power Trinidad and Tobago. A question that arises is whether we can transition to another option, where we rely solely on renewable energy. Government should then consider the effects it may have on our country and whether these renewable energies can sustain our energy sector. We can already assume that renewable energy may not be solely sustainable in Trinidad and Tobago. Wind energy requires a large landscape to build on, which Trinidad and Tobago will find difficult to source, while solar energy is very costly to power entire households, hydroelectric energy is challenging to maintain and Trinidad and Tobago is not suitable for geothermal energy.

There is no doubt that we in the trade union movement acknowledge the climate crisis but we also note the failure of the “liberalize and privatize to decarbonize”.  We Reject privatization and liberalization as this is not a viable path to decarbonization. We are convinced that the proposed Just Transition Policy if implemented, will produce negative and regressive social outcomes. We support defending and reclaiming energy systems to full public ownership as a means of ensuring a planned and equitable transition.

As it stands today, with support from Trade Unions for Energy Democracy (TUED) the Union has been able to stall the government’s decision to implement the policy and is prepared to engage in public education and mobilization to rally workers and communities around an alternative approach to the neoliberal approach being advanced by the government.

Leading up to COP 27 the government hosted a consultation where they presented the Draft Policy which was more public relations than substance. The Union had to intervene to highlight the implications of the policy and to raise awareness of the hidden neoliberal agenda contained in the Draft Policy. The trade union movement will be embarking on a series of public events to rally national support to force the government to engage in a proper and genuine process of just transition.

The policy is still before the Cabinet so we still have an opportunity to ensure that any transition will not be like the previous transition the country experienced which leaves greater power in the hands of capital at the expense of labour. We, therefore, are mobilizing for a major policy shift that can establish a “public goods” framework for a progressive just transition. In the coming weeks, early in the new year, the trade union movement will engage in more intense education, awareness raising and mass action for a Progressive Just Transition.

Warwick is the Chief Education and Research Officer for the Oilfields Workers’ Trade Union of Trinidad and Tobago

Links

Sparkz: a company set to employ members of the United Mine Workers of America in a West Virginia factory commercializing high energy-density cobalt-free, lithium-ion batteries.