UMass Amherst: America's Wealthiest 10% Responsible For 40% Of Us Greenhouse Gas Emissions

[OKIsItJustMe]

RESEARCH
AMERICA’S WEALTHIEST 10% RESPONSIBLE FOR 40% OF US GREENHOUSE GAS EMISSIONS
New study from the University of Massachusetts Amherst is first to link emissions to U.S. household income, finds that investment is the major driver of emissions inequality

August 17, 2023

A new study, led by the University of Massachusetts Amherst, reveals that the wealthiest Americans, those whose income places them in the top 10% of earners, are responsible for 40% of the nation’s total greenhouse gas emissions. The study, published in PLOS Climate, is the first to link income, especially income derived from financial investments, to the emissions used in generating that income. The authors suggest that policymakers adopt taxes focused on shareholders and the carbon intensity of investment incomes in order to equitably meet the goal of keeping the global temperature to 1.5 C of warming.

Scientists and environmentalists have long known that consumption—the amount and kind of food we eat, the vehicles we drive and all the stuff we buy—is closely linked to greenhouse gas emission. Traditional environmental policy has then sought to either limit consumption or guide it into more environmentally friendly avenues: replacing red meat with plant-based diets or swapping a gas-guzzler for an electric vehicle.

“But,” says Jared Starr, a sustainability scientist at UMass Amherst and the lead author of the new study, “consumption-based approaches to limiting greenhouse gas emissions are regressive. They disproportionately punish the poor while having little impact on the extremely wealthy, who tend to save and invest a large share of their income. Consumption-based approaches miss something important: carbon pollution generates income, but when that income is reinvested into stocks, rather than spent on necessities, it isn’t subject to a consumption-based carbon tax.”

…

Not only did the team find that over 40% of U.S. emissions were attributable with the income flows of the top 10%, they also discovered that the top 1% of earners alone generate 15 – 17% of the nation’s emissions. In general, white, non-Hispanic households had the highest emission-linked income and Black households the lowest. Emissions tended to increase with age, peaking with the 45–54 age group, before declining.

…

[MichMan]

1. Huge mansions and private jets.

What a huge surprise.

[OKIsItJustMe]

2. That's not actually the point.

https://journals.plos.org/climate/article?id=10.1371/journal.pclm.0000190

RESEARCH ARTICLE

Income-based U.S. household carbon footprints (1990–2019) offer new insights on emissions inequality and climate finance

Jared Starr , Craig Nicolson, Michael Ash, Ezra M. Markowitz, Daniel Moran
Published: August 17, 2023. https://doi.org/10.1371/journal.pclm.0000190

Abstract

Current policies to reduce greenhouse gas (GHG) emissions and increase adaptation and mitigation funding are insufficient to limit global temperature rise to 1.5°C. It is clear that further action is needed to avoid the worst impacts of climate change and achieve a just climate future. Here, we offer a new perspective on emissions responsibility and climate finance by conducting an environmentally extended input output analysis that links 30 years (1990–2019) of United States (U.S.) household-level income data to the emissions generated in creating that income. To do this we draw on over 2.8 billion inter-sectoral transfers from the Eora MRIO database to calculate both supplier- and producer-based GHG emissions intensities and connect these with detailed income and demographic data for over 5 million U.S. individuals in the IPUMS Current Population Survey. We find significant and growing emissions inequality that cuts across economic and racial lines. In 2019, fully 40% of total U.S. emissions were associated with income flows to the highest earning 10% of households. Among the highest earning 1% of households (whose income is linked to 15–17% of national emissions) investment holdings account for 38–43% of their emissions. Even when allowing for a considerable range of investment strategies, passive income accruing to this group is a major factor shaping the U.S. emissions distribution. Results suggest an alternative income or shareholder-based carbon tax, focused on investments, may have equity advantages over traditional consumer-facing cap-and-trade or carbon tax options and be a useful policy tool to encourage decarbonization while raising revenue for climate finance.

Introduction

Anthropogenic climate change is an existential threat to all of humanity. Yet, extreme economic inequality, across and within societies, results in a powerful disconnect between those facing the worst climate impacts and those reaping the economic and consumption benefits that drive greenhouse gas (GHG) emissions. This disparity in harm and benefits has been a central tension at international climate negotiations, particularly when trying to allocate responsibility and financial compensation between developed and developing countries.

In recognition of such disparities, wealthy nations at the 2009 United Nations Climate Change Conference (UNCCC–COP 15) agreed to mobilize $100 billion a year, by 2020, to fund mitigation and adaptation efforts in poorer developing nations. The creation of a “loss and damage” fund at the recent UNCCC COP 27 marks an additional commitment to address disparities between those disproportionately driving emissions and those disproportionately experiencing the harms they cause. These efforts represent progress, yet there is also some reason for skepticism. Existing climate commitments will not keep global temperature rise within 1.5°C, finance pledges fall about 5-10x short of the need, and nations have consistently failed to meet these insufficient emissions and finance pledges. This has made the current moment pivotal to address an increasingly urgent climate crisis and suggests addition perspectives may be useful in motivating such efforts.

…

Let’s say that a rich family drives an EV, and heats their McMansion with a heat pump. But, they derive a great deal of their income from “mutual funds” invested heavily in oil companies… Compare that to a poor family who drives an old “gas-guzzling beater” and heats with “Natural Gas” but holds no stocks whatsoever. Which family is responsible for more greenhouse gas emissions?

[MichMan]

3. How come is only the 1% than own oil stocks instead of a retired teacher's pension fund?

I have mutual funds in my IRA & have no idea what stocks they hold on any given day.


I guess none of the things I mentioned matter. How do the 1% justify private jet usage again?

[OKIsItJustMe]

5. May I suggest you investigate your options?

Investopedia: How Do ESG, SRI, and Impact Funds Differ?

By MARK P. CUSSEN

Updated November 01, 2022
Reviewed by JULIUS MANSA

A growing number of investors are demanding investment choices from their advisors that do more than provide them with a rate of return.

Younger investors, in particular, are seeking out options that will not only help their assets to grow but also benefit society at large in some respect. This is referred to as responsible investing.

A 2021 survey of investors by financial services organization TIAA revealed that 53% of those polled own some form of socially responsible investment (SRI).

Furthermore, investors polled strongly believed that financial advisors should be knowledgeable about SRIs. Of the total group, 79% stated that they would be more loyal to a financial advisor who helped them make positive impact investments.

…

There are mutual funds that are specifically structured to help combat climate change.

Funds That Prosper From Fighting Climate Change

Sustainable investing, sometimes called ESG for the environmental, social and governance criteria that define the investing style, has taken the fund world by storm.

BY JOHN WAGGONER, NELLIE S. HUANG
PUBLISHED MARCH 06, 2020

Sustainable investing, sometimes called ESG for the environmental, social and governance criteria that define the investing style, has taken the fund world by storm. But it’s not always possible to isolate the E from the S and G, and strategies vary, too. Some portfolios are defined by what they don’t own—firms that derive most revenues from fossil fuels, say. Others concentrate on innovative firms that are making the planet greener, such as renewable-energy companies.

The 10 mutual funds and exchange-traded funds highlighted below have at least a partial focus on the environment. We’ve organized them into three groups that define different approaches: Thematic ETFs that zero in on climate change exclusively; diversified funds that have a sustainable bent; and actively managed funds that hew to an ESG-oriented investment process and get high marks for environmentally friendly portfolios—whether that’s their stated aim or not. Which tack you take will depend on how passionate you are about battling climate change as well as how much risk you want to take.

…

Check out the “prospectus” on your current mutual fund, and you’ll probably find that you own a piece of some of the dirtiest companies there are. Fossil fuel companies are very popular with fund managers, because they return good profits, with relatively little risk.


The Motley Fool: ESG, SRI, Impact Investing: What Are They, How to Get Started, and How Funds Have Performed

What is ESG, SRI, and impact investing, and how have ESG funds performed?
By Jack Caporal – Updated Jul 14, 2022 at 10:13AM

…

[Brenda]

4. How about we compare their spending?

Poor family buys little, moves little and uses little.

Rich family buys miles of shit on a daily basis using delivery services, especially overnight services which means jets are running around the clock, 18-wheelers are running around the clock, container ships are running around the clock, Chinese companies who make all the shit Americans buy are running around the clock.

Any more puzzles for you?

[OKIsItJustMe]

6. OK, you're not actually looking at the study

Direct consumption is just one part of a larger picture.

…

Scientists and environmentalists have long known that consumption—the amount and kind of food we eat, the vehicles we drive and all the stuff we buy—is closely linked to greenhouse gas emission. Traditional environmental policy has then sought to either limit consumption or guide it into more environmentally friendly avenues: replacing red meat with plant-based diets or swapping a gas-guzzler for an electric vehicle.

“But,” says Jared Starr, a sustainability scientist at UMass Amherst and the lead author of the new study, “consumption-based approaches to limiting greenhouse gas emissions are regressive. They disproportionately punish the poor while having little impact on the extremely wealthy, who tend to save and invest a large share of their income. Consumption-based approaches miss something important: carbon pollution generates income, but when that income is reinvested into stocks, rather than spent on necessities, it isn’t subject to a consumption-based carbon tax.”

…

[BlueIn_W_Pa]

8. Really don't agree with this "investment" CO2 concept

This is the financial world scam on GHG and carbon credits.

General investment impacts stock price on the secondary markets - ie it impacts stock price only, not whether a new well is drilled.

[OKIsItJustMe]

9. So, I can invest my money anywhere! Yay!

If I buy stock in a company that uses child slave labor, and, tans the skins of the workers that die on the job, that’s just fine!

Remind me: Why do companies sell shares of themselves to other investors?

[BlueIn_W_Pa]

10. Supporting a bad company is one thing

but with stocks on the open market, you're just buying and selling to other people. It doesn't make the company money except for the executives with stock options and existing shareholders. It affects the price among market participants, but doesn't stop the oil/CO2/meat industry's CO2 emissions to begin with. You buy Exxon stock today at market price, that money doesn't go to Exxon, it goes to the other seller, so why should you be attached for CO2? Materially, nothing happened to Exxon, or their oil production.

I'm not saying it's right, I'm saying that this premise is far too loosely connected to the actual CO2 toll, and falls right into the big financial institutions who make a fortune on fake green programs and carbon credits.

[OKIsItJustMe]

11. OK, so buying and owning stock in a bad company is fine! (so long as it's traded on the open market)

Did I get that right? Is it still OK if they pay me “dividends?” (You know, when, they pay me a share of the profits?)

If so, alright! Child slave labor companies, here I come! I’m thinking that their profit margins should be pretty healthy. I’m starting here:
https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods-print



Now, tell me again, why do companies sell parts of themselves? I mean, why don’t they keep all of their profits for themselves? Why didn’t Elon Musk take Tesla private like he said he would?

[BlueIn_W_Pa]

12. Jeeze, the point of the post is

trying to attribute CO2 to investments and linking it to the wealthy - not all this other stuff you're bringing into the discussion.

Even your dividend doesn't promote or inhibit CO2.

Slave and kid labor? This isn't even in the realm of what we're talking about.

If you're saying we need to leverage political power to stop bad companies or dissuade investments, of course I agree.
My point is attributing CO2 has no meaning in the real world to global CO2 as a science - it only does politically and those banks playing with CO2 credits.

Why do companies sell stock? Being involved in many IPOs, to get a cash-out of the original investors and employees. Existing companies? to gain operating cash. Nearly all oil/gas/etc borrow money to build out the plant (like equipment finance) and pay it out over time. It's not from stock sales.

...and the only time the company gets money is at the initial stock sale - not trading afterwards which was my first point.

[OKIsItJustMe]

13. So, now that they're established, why not buy back the stock from the IPO

If where my dividend payment comes from doesn’t matter, I’m off to the slave market, guilt free! (Yay!) 💰🤑💵

Let’s see if I can establish something here logically:

• ExxonMobil makes money by ahem… shall we say… producing oil, which is burned, producing CO₂.
• ExxonMobil is owned by stock holders, who earn a “share” of the profits, made by… producing oil, which is burned, producing CO₂. Exxon Mobil Co. (NYSE:XOM) Declares Quarterly Dividend of $0.91
? ExxonMobil stock holders earn money by… producing oil, which is burned, producing CO₂.
Q.E.D.

How’d I do?

Next, let’s talk about the question of wealth:

• ExxonMobil stock holders earn money by… producing oil, which is burned, producing CO₂. (See above.)
• Poor people own virtually no stock. Wealthy people tend to own a great deal of stock.
? Wealthy people tend to benefit much more than poor people by producing oil, which is burned, producing CO₂.
Q.E.D.

What do you think?

[OKIsItJustMe]

14. Selling stock, is essentially taking out a loan

For example, if I wanted to start a company, I might go to my rich uncle, and say, “Uncle moneybags, if you will loan me, $100,000, I promise you, I will pay it all back to you, with interest over the next 30 years.” — That promise to pay back the loan is my “bond.”

Or, if my uncle is a little more of a gambler, I might say, “Uncle moneybags, if you will give me, $100,000. I will use it to start my business, and, in exchange, I will give you a ’share’ of my company, and a ‘share’ of the dividends.”


If my uncle doesn’t like the way I’m running the company (maybe he doesn’t think I’m giving him enough of the profits, or maybe he doesn’t like my use of slave labor, who knows…) he can turn around and sell my “bond” or his “share” of the company to someone else.


I don’t like the way my uncle is always looking over my shoulder though. So, if the company is doing well enough, I could see if my uncle would allow me to buy back his “share” of the company… Of course, if the company is doing really well, my greedy Uncle may expect more than his initial $100,000 investment back…

[LiberaBlueDem]

7. If we all lived like trump

There would not be a planet left.
trump is a 1%er and the 9% just below him are not much good either. In fact they are to balme for 40% of the USA pollution.