By Max Lawson

The growing anger at the carbon emissions of the super-rich

The carbon emissions of the luxury consumption of the super-rich are gaining more and more coverage and rightly making a lot of people very angry.  This week saw protests at the giant Schipol Airport in Holland, where over 200 protestors blocked private planes on the runway.  Those tracking private jet travel have brought the issue of carbon inequality to public attention with revelations that, in a matter of just minutes, billionaires and celebrities are emitting more CO2 than most people will emit in a year.

I think it is right that the conspicuous and planet destroying levels of personal consumption by the super-rich should be called out. Our own research with the Stockholm Environment Institute (SEI) has shown the richest 1% of humanity are responsible for twice the amount of emissions of the whole of the bottom half of the global population.

It is not just about the numbers either; I also think people rightly take issue with the gratuitous, conspicuous, and thoughtless consumption of the super-rich, not just in a world of poverty, but in a world where we have very little carbon left to emit if we are to avoid planetary breakdown.

Nevertheless, for billionaires, their emissions from their lifestyles, while huge and in some cases thousands of times higher than the average person, are in fact only the tip of the greedberg, so to speak.

The key role of rich people’s emissions from their investments

For the richest people, the biggest source of emissions are those that come from their investments; Lucas Chancel of the World Inequality Lab has estimated between 50-70% of the emissions of the richest come from this source.

In new research we released this week we sought to put some concrete numbers on this in a new way, thought up by my brilliant colleague Alex Maitland.  In our previous work on the emissions of the richest, we have factored in investment, but coming at it from the level of national accounts/ This means basically working out the total level of investment in the economy and the emissions linked to that investment and linking that to different income groups.   This is kind of a top-down way of making estimates, and whilst useful, is by its nature broad brush.

This time we sought to approach the issue of investment emissions in a bottom-up way, looking at the microdata on the investments of the richest billionaires in the world. We did this together with the data crunching firm Exerica.  Whilst there has been a lot of work and campaigning on the role of other investors, like universities, pension funds and the big institutional investors, to date there has not been much of a focus on billionaires as investors, and the big influence they have over many companies.

How did we calculate the investment emissions of billionaires?

So how did we do it?  Well firstly Bloomberg’s billionaire index gives data on where the richest people in the world are invested, and how much stock they hold in particular companies. We took our cut off at 10%; so if a billionaire owned 10% or more of a company, then we counted this in our calculations.  We chose the 10% threshold based on the definition used by the U.S. Securities and Exchange Commission (SEC) of a principal shareholder, as these shareholders are considered to have significant influence over a company.  In fact, 34% of the billionaires in our sample own over 50% of the business concerned, giving them de facto control over these corporations.

We then looked at the corporates where these investments had been made; and in particular their published carbon emissions.  In recent years the number of corporates publishing their total carbon emissions has grown significantly, enabling us to do this.

We then divided those reported emissions by their share; so if company X has emissions of 10 million tonnes of CO2, and billionaire Y has a 20% stake, then we added 2 million tonnes of emissions to their personal carbon footprint through their investment emissions. This data had several key limitations.  Firstly, Bloomberg’s list of billionaire investments, whilst impressive, is not exhaustive.  Many billionaire investments are hidden from public view.  Secondly, not every corporate publishes its carbon emissions.  A significant number still don’t do this at all- 56% of the corporates in our sample.  Lastly, those corporates who do publish their emissions systematically and structurally underreport.

(A very amusing little film my brilliant colleague Rui made)

Whilst we cannot be sure, it seems reasonable to say that those who were left out are likely to be some of the billionaires and corporates with the most to hide in terms of the scale of their carbon emissions, meaning that our final figures are a considerable underestimate.

Our final database contained 183 corporates, with investments by 125 of the world’s 220 richest billionaires worth $2.4 trillion.

The nature and inadequacy of climate reporting by corporates also means that we decided not to focus on a ranking of the 125 billionaires.  In carbon jargon, corporates are meant to report on three types of emissions, know as scope one, two and three.  In fact, very few do- especially scope three emissions: these includes everything from emissions in the company’s supply chains to employee commuting, to the use by consumers of the products it sells. The failure to count these not only artificially lowers the reported level of emissions, it skews the findings.

To give an example, under current levels of reporting, a billionaire in the global south that made their money in aluminium smelting has all those carbon emissions linked to their investment.  Say that their aluminium is the main source for tech firms selling smartphones, laptops, and other tech; yet the billionaire head of that tech firm does not have any of those emissions added to their tab.  Scope three emissions would help redress this. This mirrors the wider debate within the climate movement about counting the emissions of goods and industries in the global south where they are consumed, in the global north.

What were the findings?

Anyhow, despite these caveats, and the fact that our findings are very likely to be underestimates, they were nevertheless pretty dramatic.  We found that our sample of the 125 richest billionaires had a total carbon emission of 393 million tonnes.  This is about the same size as France.  The average for a billionaire in our sample was 3 million tonnes, which is a little over a million times someone in the bottom 90% of humanity, at around 2.7 tonnes.

Beyond the overall footprint, our analysis enabled us to compare the typical billionaire investment with the average, for which we used the Standard and Poor 500 group of companies as a proxy. We found that:

  • Billionaire investments were twice as likely to be in high polluting industries like fossil fuel energy generation or making cement (14% versus 7.2%).
  • Whereas 71% of corporates in the S and P 500 report on their emissions, only 44% of the corporates in our billionaire sample do.
  • If the billionaires in our sample moved their investments to a fund that simply followed the S&P 500, for example, then the intensity of their emissions would be reduced by half. If they were placed into an illustrative low-carbon-intensity equity fund, this could reduce emissions by up to four times.
  • We also did some fun facts too; it would take the flatulence of 1.8 million cows to match one billionaire in our sample for example.

How do we stop this and save the planet?

Our recommendations focused on both regulation and taxation.  Governments need to radically ramp up the scale and teeth of their regulation of both corporates and their wealthy investors- this is not just about transparent reporting based on science-based targets, rather than greenwash and specious commitments to net zero.  It is about compelling them to systematically reduce their carbon emissions.  It is about banning investments in polluting industries altogether.

Our report also recommends that Governments also need to radically ramp up their taxation of wealth- we calculated that a wealth tax on multi-millionaires and billionaires could annually raise $1.4 trillion dollars.   By reducing the numbers and wealth of rich polluters, a standard wealth tax is at the same time a green tax. We also support the idea of Thomas Piketty and Lucas Chancel, for a further steeper rate of tax on polluting investments, to deter billionaires and others from bankrolling a fossil fuel future.

The day our report came out, the head of Jeff Bezos’s $10 billion climate philanthropy fund was quoted in the Guardian as saying that billionaires should not have to make up for the failure of governments to provide promised climate finance.   This is of course the same Jeff Bezos that has been revealed to have a tax rate of 1%.  We should not have to rely on billionaire philanthropy, that much I definitely agree on. But if billionaires instead paid a fair level of tax, rich country governments would have a huge pile of money to support the poorest countries to transition and adapt, and to pay the reparations for the loss and damage caused by decades of belching carbon into the sky. 


Author: Max is the Head of Inequality Policy at Oxfam International & EQUALS Podcast co-host. He is also Chair of the global People’s Vaccine Alliance.