Equilibrium/Sustainability — Ukraine’s invasion leaves Siberia exposed to wildfire 

Siberia’s seasonal wildfires burned more than 91,000 acres last week even as local lakes remained frozen, creating smoke plumes so large they turned skies pink in the Western U.S., according to The Washington Post. 

It’s an alarming sign for Russia, which usually relies on the country’s ground troops and aerial transport to support its forestland firefighters, the Post reported. And the past few years in Siberia have seen raging blazes across the region’s vast reaches of peatland and taiga forests.  

But while this year is likely to be a fiery one for Siberia, those extra resources probably won’t be available, according to the Post. 

“There’s no question that Ukraine has been a huge drain on the ground resources for Russia,” Col. Mark Cancian of the Center for Strategic and International Studies told the Post. 

“They moved a lot of troops outside of the country. Any troops that are going back are pretty beat-up,” Cancian said, adding that these fires are “going to be harder to fight.”   

Welcome to Equilibrium, a newsletter that tracks the growing global battle over the future of sustainability. We’re Saul Elbein and Sharon Udasin. Send us tips and feedback. A friend forward this newsletter to you? Subscribe here.

Today we’ll look at how Russia’s decision to cut gas supplies to two NATO members has E.U. leaders crying “blackmail.” Then we’ll look at a failed attempt by shareholders to get big banks to move off new fossil fuel financing. 

EU leaders slam gas shutdowns as ‘blackmail’

Polish officials accused Russia of seeking to “foster divisions” among Western allies following Moscow’s decision to shut off gas supplies to Poland and Bulgaria on Wednesday, the BBC reported. 

Politicians in Warsaw and Sofia went so far as to describe Moscow’s move as “blackmail,” while European Commission President Ursula von der Leyen said that the “era of Russian fossil fuel in Europe” is coming to an end, according to the BBC. 

‘Unjustified and unacceptable’: Von der Leyen likewise referred to the shutdown as “yet another attempt by Russia to use gas an instrument of blackmail,” stressing in a statement that “this is unjustified and unacceptable.” 

She vowed that the EU would continue to work with international partners to identify alternative sources of natural gas, adding that a “coordinated E.U. response” was in the works, as our colleague Caroline Vakil reported for The Hill. 

What happened? Russia halted supplies of gas to Poland and Bulgaria on Wednesday, while threatening to do the same other countries, The Associated Press reported. 

State-controlled energy giant Gazprom declared that it was shutting off these supplies because those countries refused to pay for gas in rubles, as President Vladimir Putin had demanded, according to the AP. 

Blackmail vs. payment dispute: Denying claims that the move was blackmail, Kremlin spokesman Dmitry Peskov told reporters in a conference call that Moscow only “required a transition to a new payment system,” according to CNN.  

Peskov blamed the situation on “unprecedented unfriendly steps in the economy and financial sector undertaken against us by unfriendly countries,” CNN reported. 

Suspicious timing: But the move occurred just a day after the U.S. and other Western allies agreed to provide heavier weapons to Ukraine — driving up gas prices in Europe the same day, the AP reported. 

Poland has become a critical gateway for the delivery of weapons to Ukraine, while Bulgaria’s new liberal government has severed many previous ties to Moscow.  

POLAND, BULGARIA NOT YET IN DIRE STRAITS 

Russia’s decision to cut off gas to Poland and Bulgaria will not immediately lead to energy shortages for the two countries, according to the AP. 

Poland, for example, has been working for years to identify other sources of energy, and summer weather will make gas less critical for households, the AP reported. 

Nonetheless, Warsaw was due to receive a sizable gas delivery from Gazprom that will need to be replaced, James Huckstepp of S&P Global Commodity Insights told The Wall Street Journal. 

Possible retaliation: Poland’s Prime Minister Mateusz Morawiecki described the gas shutdown as retaliation for Poland’s Tuesday announcement that it would be sanctioning 50 Russian individuals and firms, including Gazprom, the BBC reported. 

Polish President Andrzej Duda, meanwhile, said “appropriate legal steps” would be taken against Gazprom, according to the BBC. 

Bulgaria’s situation is worse: Bulgaria gets more than three-quarters of its gas from Russia, and in comparison to Poland, the country has far fewer options to replace that resource, according to the Journal. 

A pipeline to Greece through which the country intends to import gas from Azerbaijan has faced numerous delays, Tom Marzec-Manser of the ICIS analytics firm told the Journal. 

An ‘economic weapon’: Despite these uncertainties, Bulgaria’s Energy Minister Alexander Nikolov said on Wednesday that his country had sufficient gas in storage for the coming month, according to the Journal. 

“Because all trade and legal obligations are being observed, it is clear that at the moment the natural gas is being used more as a political and economic weapon in the current war,” Nikolov said. 

Bank shareholders vote down climate proposals 

Shareholders at three of the nation’s largest banks — Bank of America, Citigroup and Wells Fargo — voted down a proposal on Tuesday that would have spelled the beginning of the end for financing new fossil fuel developments, according to the Sierra Club, a principal sponsor.  

Management at all three banks opposed the proposals, all of which failed. 

But the Sierra Club, like others in the coalition of nonprofits and faith-based organizations that sponsored the proposal, is still counting it as a landmark win. 

By the numbers: Just less than 13 percent of shareholders at Citi Group supported the measure, followed by about 11 percent at both Bank of America and Wells Fargo, according to Reuters. 

What’s in the proposal: The measure called for banks to put in place “credible plans” by the end of the year that would ensure they no longer financed new fossil fuel development, Bloomberg reported. 

A claim of victory? “Observers sometimes tend to think of these votes like electoral politics, where it’s 51 percent or bust,” Gabby Brown of the Sierra Club told Equilibrium. 

“But with shareholder resolutions, it’s really the case that even 10 to 15 percent is enough to make the company pay attention,” she added. 

Key thresholds passed: Any resolution that receives 5 percent of the vote — which all three did — is eligible to be refiled in the following year, according to a statement from Sierra Club. 

Anything above 10 percent of the vote — which all of these measures were — is “considered difficult for a company to ignore,” the statement explained.  

A sign of pressure: Such difficulties have past precedence. A 2020 push to oust former ExxonMobil CEO Lee Raymond from the JPMorgan Chase board also failed with less than 15 percent. Nonetheless, Raymond resigned under pressure a few months later, according to Reuters. 

BREAKING DOWN THE BATTLE LINES 

Major pension funds from New York State, Rhode Island, New York City, and Seattle all supported the measure, as did representative of about $86 billion in capital, according to progressive magazine The New Republic. 

But far more significant — at least in this round — was the opposition from bank managers themselves. 

Thumbs on the scale: At the annual general meeting on the morning of the vote, Citigroup CEO Jane Fraser cast the proposal as an impossible attempt “to shut down the fossil fuel economy overnight,” The Financial Times reported. 

Ben Cushing of Sierra Club told Equilibrium this was a “clear mischaracterization of what these shareholder resolutions are asking for.” 

Instead, the proposal aimed to slow the increase in new fossil fuels, he said. And this is amid a situation in which there are already more existing fossil fuel resources than the world can safely burn, according to the International Energy Agency. 

But key funders were still opposed: While none of the “big three” asset managers — Vanguard, BlackRock and State Street — responded to requests for comment, vote totals suggest that all three opposed the measure, according to The New Republic. 

That’s in spite of the fact that all three are also members of the Glasgow Financial Alliance for Net Zero, which aims to get the financial industry on track to reach NetZero emissions by 2050. 

Why did the big three oppose it? We don’t know for sure, but BlackRock CEO Larry Fink has been publicly skeptical about divestment.  

“Divesting from entire sectors — or simply passing carbon-intensive assets from public markets to private markets — will not get the world to net zero,” he wrote earlier this year in a letter to investors. 

Double game: BlackRock also played up its fossil fuel commitments in a January letter to the state of Texas after officials there called out its climate pledges, according to CNBC. 

Takeaway: Expect upcoming shareholder resolutions at Goldman Sachs, JP Morgan Chase and Morgan Stanley to fail as well, but for these resolutions to begin impacting bank management long before votes occur on these resolutions again in 2023. 

Weather Wednesday

Failing corn harvests, Chile bids goodbye to lawns and Oregon braces for fire season. 

‘Interconnected’ climate risks threaten global corn supplies 

•  By 2100, corn harvests in six key regions worldwide — including the Midwest — will face a doubled risk of failure, owing to a combination of heat, drought and flooding, according to a new study from NASA. “Things are interconnected in a way that we haven’t quite appreciated up to this point,” lead author Colin Raymond said in a statement. 

Grass a ‘luxury’ in Chile’s drought-plagued capital 

• Grass has become “a rare luxury” amid a decade-long drought in Santiago, Chile, where city officials have enforced emergency measures limiting water use, Reuters reported. Local authorities and landscapers have therefore replaced lush greenery with desert flora, according to Reuters. 

Dried-up Oregon braces for fire season 

• Central and eastern Oregon is confronting serious drought conditions that could also translate into fire risk, local ABC affiliate KATU reported. “When we have a drier start to the year, we can expect fires to start and spread more quickly earlier in the spring than they normally would,” Natalie Weber of the Oregon Department of Forestry told KATU. 

Please visit The Hill’s Sustainability section online for the web version of this newsletter and more stories. We’ll see you tomorrow.

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