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ICYMI, We Can Relax, Elon’s Got This

As Tesla’s opportunist-in-chief railed against Bitcoin’s energy use, Lord Stern urged G7 leadership ahead of COP26.

The media spotlight fell on the energy-intensive processes that drive Bitcoin transactions this week after Tesla CEO Elon Musk announced the EV manufacturer would no longer accept the crypto-currency as payment, citing its “insane” consumption of electricity.

It’s entirely possible Musk was responding to the commentary carried in last Friday’s ESG Investor newsletter, but his motives are unlikely to be purely ethical. Following a series of Bitcoin-friendly tweets from Musk, Tesla declared to the SEC its purchase of US$1.5 billion in Bitcoin in February. Sales of 1/10th of this total added US$101 million to the firm’s Q1 2021 revenues, alongside US$518 million in emissions credits from the US government.

Without these two items, observers argue, Tesla would not have been able to post US$438 million net income on GAAP basis for the quarter, especially with Model S and Model X production at a standstill. Musk’s announcement of Tesla’s withdrawal from the Bitcoin market prompted a 10% price correction that hit the pockets of all holders, including his own firm (although Bitcoin is still 70% up for the year). Musk says he will wait until Bitcoin’s energy mix improves, while Bloomberg columnist Matt Levine says he’ll be back as soon as the price is right.

Environmental issues are less a high-stakes game and more a matter of life and death in Brazil. As the UN Environment Programme enhanced visibility of natural resource depletion in tropical and subtropical regions, fighting broke out between illegal gold miners and the indigenous community in Brazil’s largest protected reserve. Later in the week, a bill designed to further relax environmental protections in favour of farming, mining and infrastructure projects was passed in the lower house of Congress and now awaits Senate approval despite international investor opposition.

Investors had more success in the US, where resolutions backing better disclosure and more robust policies on both social and environmental issues gained support at a number of high-profile AGMs. Mandatory disclosures were among the measures proposed by Lord Stern, alongside a “strong price for carbon”, to accelerate the mobilisation of finance in support of post-pandemic sustainable recovery and growth. Commissioned by the UK government ahead of next month’s G7 Summit, Stern’s report called for “credible pathways” to back up recent 2030 commitments and “well-specified” national determined contributions from G7 members ahead of COP26.

Building on the recommendations of the earlier Dasgupta report, Stern proposed global targets for nature including protection of 30% of land and ocean areas by 2030. Brazilian President Jair Bolsonaro may be interested in the report’s investment rationale for nature protection and restoration, estimating 45 million jobs in sustainable land management and ocean economy and US$8 trillion gross value added.

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