This Changes Everything

by Naomi Klein

  Critics have been quick to point out that divestment won’t bankrupt Exxon; if Harvard, with its nearly $33 billion endowment, sells its stock, someone else will snap it up. But this misses the power of the strategy: every time students, professors, and faith leaders make the case for divestment, they are chipping away at the social license with which these companies operate. As Sara Blazevic, a divestment organizer at Swarthmore College, puts it, the movement is “taking away the hold that the fossil fuel industry has over our political system by making it socially unacceptable and morally unacceptable to be financing fossil fuel extraction.” And Cameron Fenton, one of the leaders of the divestment push in Canada, adds, “No one is thinking we’re going to bankrupt fossil fuel companies. But what we can do is bankrupt their reputations and take away their political power.”37

  The eventual goal is to confer on oil companies the same status as tobacco companies, which would make it much easier to make other important demands—like bans on political donations from fossil fuel companies and on fossil fuel advertising on television (for the same public health reasons that we ban broadcast cigarette ads). Crucially, it might even create the space for a serious discussion about whether these profits are so illegitimate that they deserve to be appropriated and reinvested in solutions to the climate crisis. Divestment is just the first stage of this delegitimization process, but it is already well under way.

  None of this is a replacement for major policy changes that would regulate carbon reduction across the board. But what the emergence of this networked, grassroots movement means is that the next time climate campaigners get into a room filled with politicians and polluters to negotiate, there will be many thousands of people outside the doors with the power to amp up the political pressure significantly—with heightened boycotts, court cases, and more militant direct action should real progress fail to materialize. And that is a very significant shift indeed.

  Already, the rise of Blockadia and the fossil fuel divestment movement is having a huge impact on the mainstream environmental community, particularly the Big Green groups that had entered into partnerships with fossil fuel companies (never mind The Nature Conservancy, with its own Texas oil and gas operation . . . ). Not surprisingly, some of the big pro-corporate green groups view this new militancy as an unwelcome intrusion on their territory. When it comes to fracking in particular, groups like the Environmental Defense Fund have pointedly not joined grassroots calls for drilling bans and a rapid shift to 100 percent renewables, but have instead positioned themselves as brokers, offering up “best practices”—developed with industry groups—that will supposedly address local environmental concerns. (Even when locals make it abundantly clear that the only best practice they are interested in is an unequivocal ban on fracking.) “We fear that those who oppose all natural gas production everywhere are, in effect, making it harder for the U.S. economy to wean itself from dirty coal,” charged EDF chief counsel Mark Brownstein.38

  Predictably, these actions have provoked enormous tensions, with grassroots activists accusing the EDF of providing cover for polluters and undercutting their efforts.III39

  But not all the Big Greens are reacting this way. Some—like Food & Water Watch, 350.org, Greenpeace, Rainforest Action Network, and Friends of the Earth—have been a central part of this new wave of anti-fossil fuel activism from the beginning. And for others that were more ambivalent, the rapid spread of a new, take-no-prisoners climate movement appears to have been a wake-up call; a reminder that they had strayed too far from first principles. This shift has perhaps been clearest at the Sierra Club, which, under the leadership of its former executive director, Carl Pope, had attracted considerable controversy with such corporate-friendly actions as lending its logo to a line of “green” cleaning products owned by Clorox. Most damaging, Pope had been an enthusiastic supporter of natural gas and had appeared publicly (even lobbying on Capitol Hill) to sing the praises of the fossil fuel alongside Aubrey McClendon, then CEO of Chesapeake Energy—a company at the forefront of the hydraulic fracking explosion. Many local chapters, neck deep in battles against fracking, had been livid. And it would later emerge that the Sierra Club was, in this same period, secretly receiving many millions in donations from Chesapeake—one of the biggest controversies to hit the movement in decades.IV40

  A great deal has changed at the organization in the years since. The Sierra Club’s new executive director, Michael Brune, put an end to the secret arrangement with Chesapeake and canceled the Clorox deal. (Though the money was replaced with a huge donation from Michael Bloomberg’s foundation, which—though this was not known at the time—is significantly invested in oil and natural gas.) Brune was also arrested outside the White House in a protest against the construction of Keystone XL tar sands pipeline, breaking the organization’s longtime ban on engaging in civil disobedience. Perhaps most significantly, the Sierra Club has joined the divestment movement. It now has a clear policy against investing in, or taking money from, fossil fuel companies and affiliated organizations.41

  In April 2014, the Natural Resources Defense Council announced that it had helped create “the first equity global index tool that will exclude companies linked to exploration, ownership or extraction of carbon-based fossil fuel reserves. This new investment tool will allow investors who claim to be socially conscious, including foundations, universities, and certain pension groups, to align their investments with their missions.” The rigor of this new tool remains to be tested (and I have my doubts) but it represents a shift from a year earlier, when the NRDC admitted that its own portfolio was invested in mutual funds and other mixed assets that did not screen for fossil fuels.42

  The divestment movement is even (slowly) being embraced by some of the foundations that finance environmental activism. In January 2014, seventeen foundations pledged to divest from fossil fuels and invest in clean energy. While none of the Big Green donors—the Hewlett and Packard Foundations or the Walton Family Foundation, for example, not to mention Ford or Bloomberg—were on board, several smaller ones were, including the Wallace Global Fund and the Park Foundation, both major funders of anti–fossil fuel activism.43

  * * *

  Up until quite recently, there was a widely shared belief that the big oil companies had such a fail-safe profit-making formula that none of this—not the divestment campaigns, not the on-the-ground resistance—would make any kind of dent in their power and wealth. That attitude needed some readjusting in January 2014 when Shell—which raked in more revenue than any company in the world in 2013—announced fourth-quarter profits that blindsided investors. Rather than the previous year’s $5.6 billion quarter, Shell’s new CEO, Ben van Beurden, announced that the company was now expecting just $2.9 billion, a jarring 48 percent drop.44

  No single event could take the credit, but the company’s various troubles were clearly adding up: its Arctic misadventures, the uncertainty in the tar sands, the persistent political unrest in Nigeria, and the growing chatter about a “carbon bubble” inflating its stock. Reacting to the news, the financial research company Sanford C. Bernstein & Co. noted that the plummet was “highly unusual for an integrated oil company” and admitted that it was “a bit shellshocked.”45

  The Democracy Crisis

  As the anti–fossil fuel forces gain strength, extractive companies are beginning to fight back using a familiar tool: the investor protection provisions of free trade agreements. As previously mentioned, after the province of Quebec successfully banned fracking, the U.S.-incorporated oil and gas company Lone Pine Resources announced plans to sue Canada for at least $230 million under the North American Free Trade Agreement’s rules on expropriation and “fair and equitable treatment.” In arbitration documents, Lone Pine complained that the moratorium imposed by a democratically elected government amounted to an “arbitrary, capricious, and illegal revocation of the Enterprise’s valuable right to mine for oil and gas under the St. Lawrence River.” It also claimed (rather incredibly) t
hat this occurred “with no cognizable public purpose”—not to mention “without a penny of compensation.”46

  It’s easy to imagine similar challenges coming from any company whose extractive dreams are interrupted by a democratic uprising. And indeed after the Keystone XL pipeline was delayed yet again in April 2014, Canadian and TransCanada officials began hinting of a possible challenge to the U.S. government under NAFTA.

  In fact, current trade and investment rules provide legal grounds for foreign corporations to fight virtually any attempt by governments to restrict the exploitation of fossil fuels, particularly once a carbon deposit has attracted investment and extraction has begun. And when the aim of the investment is explicitly to export the oil, gas, and coal and sell it on the world market—as is increasingly the case—successful campaigns to block those exports could well be met with similar legal challenges, since imposing “quantitative restrictions” on the free flow of goods across borders violates a fundamental tenet of trade law.47

  “I really do think in order to combat the climate crisis, fundamentally we need to strip the power out of the fossil fuel industry, which raises enormous investment challenges in the trade context,” says Ilana Solomon, the Sierra Club’s trade expert. “As we begin to regulate the fossil fuel industry, for example in the United States, the industry may increasingly respond by seeking to export raw materials, whether it’s coal, or natural gas, and under trade law it is literally illegal to stop the exports of those resources once they’re mined. So it’s very hard to stop.”48

  It is unsurprising, then, that as Blockadia victories mount, so do the corporate trade challenges. More investment disputes are being filed than ever before, with a great many initiated by fossil fuel companies—as of 2013, a full sixty out of 169 pending cases at the World Bank’s dispute settlement tribunal had to do with the oil and gas or mining sectors, compared to a mere seven extraction cases throughout the entire 1980s and 1990s. According to Lori Wallach, director of Public Citizen’s Global Trade Watch, of the more than $3 billion in compensation already awarded under U.S. free trade agreements and bilateral investment treaties, more than 85 percent “pertains to challenges against natural resource, energy, and environmental policies.”49

  None of this should be surprising. Of course the richest and most powerful companies in the world will exploit the law to try to stamp out real and perceived threats and to lock in their ability to dig and drill wherever they wish in the world. And it certainly doesn’t help that many of our governments seem determined to hand out even more lethal legal weapons in the form of new and expanded trade deals, which companies, in turn, will use against governments’ own domestic laws.

  There may, however, be an unexpected upside to the aggressive use of trade law to quash environmental wins: after a decade lull when few seemed to be paying attention to the arcane world of free trade negotiations, a new generation of activists is once again becoming attuned to the democratic threat these treaties represent. Indeed there is now more public scrutiny and debate about trade agreements than there has been in years.

  The point of this scrutiny, however, should not be to throw up our hands in the face of yet another obstacle standing in the way of sensible action on climate. Because while it is true that the international legal architecture of corporate rights is both daunting and insidious, the well-kept secret behind these deals is that they are only as powerful as our governments allow them to be. They are filled with loopholes and workarounds so any government that is serious about adopting climate polices that reduce emissions in line with science could certainly find a way to do so, whether by aggressively challenging trade rulings that side with polluters, or finding creative policy tweaks to get around them, or refusing to abide by rulings and daring reprisals (since these institutions cannot actually force governments to change laws), or attempting to renegotiate the rules. Put another way, the real problem is not that trade deals are allowing fossil fuel companies to challenge governments, it’s that governments are not fighting back against these corporate challenges. And that has far less to do with any individual trade agreement than it does with the profoundly corrupted state of our political systems.

  Beyond Fossilized Democracies

  The process of taking on the corporate-state power nexus that underpins the extractive economy is leading a great many people to face up to the underlying democratic crisis that has allowed multinationals to be the authors of the laws under which they operate—whether at the municipal, state/provincial, national, or international level. It is this corroded state of our political systems—as fossilized as the fuel at the center of these battles—that is fast turning Blockadia into a grassroots pro-democracy movement.

  Having the ability to defend one’s community’s water source from danger seems to a great many people like the very essence of self-determination. What is democracy if it doesn’t encompass the capacity to decide, collectively, to protect something that no one can live without?

  The insistence on this right to have a say in critical decisions relating to water, land, and air is the thread that runs through Blockadia. It’s a sentiment summed up well by Helen Slottje, a former corporate lawyer who has helped around 170 New York towns to adopt anti-fracking ordinances: “Are you kidding me? You think you can just come into my town and tell me you’re going to do whatever you want, wherever you want, whenever you want it, and I’m going to have no say? Who do you think you are?” I heard much the same from Marily Papanikolaou, a wavy-haired Greek mountain-bike guide who had been perfectly happy raising her toddlers and leading tourists through forest trails, but now spends her spare time at anti-mine demonstrations and meetings. “I can’t let anyone come in my village and try to do this and not ask me for my permission. I live here!” And you can hear something awfully similar from Texas landowners, irate that a Canadian pipeline company tried to use the law of eminent domain to gain access to their family land. “I just don’t believe that a Canadian organization that appears to be building a pipeline for their financial gain has more right to my land than I do,” said Julia Trigg Crawford, who has challenged TransCanada in court over its attempt to use her 650-acre ranch near Paris, Texas, which her grandfather purchased in 1948.50

  And yet the most jarring part of the grassroots anti-extraction uprising has been the rude realization that most communities do appear to lack this power; that outside forces—a far-off central government, working hand-in-glove with transnational companies—are simply imposing enormous health and safety risks on residents, even when that means overturning local laws. Fracking, tar sands pipelines, coal trains, and export terminals are being proposed in many parts of the world where a clear majority of the population has made its opposition unmistakable, at the ballot box, through official consultation processes, and in the streets.

  And yet consent seems beside the point. Again and again, after failing to persuade communities that these projects are in their genuine best interest, governments are teaming up with corporate players to roll over the opposition, using a combination of physical violence and draconian legal tools reclassifying peaceful activists as terrorists.V51

  Nongovernmental organizations of all kinds find themselves under increasing surveillance, both by security forces and by corporations, often working in tandem. Pennsylvania’s Office of Homeland Security hired a private contractor to gather intelligence on anti-fracking groups, which it proceeded to share with major shale gas companies. The same phenomenon is unfolding in France, where the utility EDF was convicted in 2011 of unlawfully spying on Greenpeace. In Canada, meanwhile, it was revealed that Chuck Strahl, then chair of the committee overseeing the country’s spy agency, the Canadian Security Intelligence Service, was registered as a lobbyist for Enbridge, the company behind the hugely controversial Northern Gateway tar sands pipeline. That was a problem because the National Energy Board had directed the agency to assess the security threats to pipeline projects, which was thinly veiled code for spying on environmen
talists and First Nations.52

  Strahl’s dual role raised the question of whether Enbridge could also gain access to the information gleaned. Then it came out that Strahl wasn’t the only one who seemed to be working for the government and the fossil fuel companies simultaneously. As the CBC reported, “Half of the other Harper government appointees keeping an eye on the spies also have ties to the oil business”—including one member who sits on the board of Enbridge Gas NB, a wholly owned regional subsidiary of the pipeline company, and another who had been on TransCanada’s board. Strahl resigned amid the controversy; the others did not.53

  The collusion between corporations and the state has been so boorishly defiant that it’s almost as if the communities standing in the way of these projects are viewed as little more than “overburden”—that ugliest of words used by the extractive industries to describe the “waste earth” that must be removed to access a tar sands or mineral deposit. Like the trees, soil, rocks, and clay that the industry’s machines scrape up, masticate, and pile into great slag heaps, democracy is getting torn into rubble too, chewed up and tossed aside to make way for the bulldozers.