COP 26: “It’s not about blah, blah, blah”, the big financial firms will manage 130 billion dollars to fight against climate change
Today was money day at COP26. With the focus on a gigantic announcement: some 500 large financial firms will manage 130 trillion dollars, about 40% of the world’s financial assets, towards climate targets related to the Paris Agreement, including limiting global warming to 1.5 degrees Celsius.
The UN’s special envoy for Climate Action and Finance, Mark Carney, met on Wednesday with the Glasgow Financial Alliance towards Zero Net Emissions, a group of bankers, insurers and investors who have committed to situating climate change. in a prominent place of your activity.
But what exactly does this agreement mean?
“The core message today is that the money is there, the money is there for the transition, and this is not a blah, blah, blah,” Carney explained to delegates during a COP26 climate finance event.
“It’s about focusing on the customer, going where the emissions are to help reduce them. So companies that have plans to reduce them will find the necessary capital, and those that do not, will not. That is why we strongly recommend that those plans are put in place, “he explained.
The commitment includes a roadmap by which the companies involved, including most of the major western banks, must follow the scientific guidelines that allow them to achieve net zero emissions by 2050, and commit to reaching intermediate targets. reduction of 50% in 2030, and even 25% in the next five years.
A situation that involves adjusting your business models, developing credible transition plans, and putting them into action.
“And then (do) critical annual reports. We will have the information on who is doing well, who needs to do better, and also in terms of politics, knowing what is there and what is not,” Carney said.
Why do we need the private sector for climate finance?
According to the Alliance, private capital can help finance initiatives in this sector and turn the billions committed to climate investment through public channels into trillions for climate investment. But unlocking systemic change will require ambitious and collaborative commitments and short-term action across the financial system.
“Until today there was not enough money in the world to finance the transition; this represents a turning point“Carney said in the plenary session of COP26.
In the opinion of the executive secretary of the United Nations Framework Convention on Climate Change, Patricia Espinosa, there is no doubt that there should be a profound transformation of the world economy and that the private sector should be part of it.
“The private sector is realizing that climate risks are very important to their portfolios and they have to adapt them to a more sustainable way of acting,” he told reporters gathered at a press conference.
For his part, for the director of the United Nations Environment Program, Inger Andersen, the new alliance with the private sector represents “an absolutely crucial issue.”
“As our report on the emissions gap shows: with the current nationally determined contributions (the national emission reduction plans), there are still (pending) about 500 gigatons (of CO2 emissions), we have subtracted four gigatons, but we still emit 55 a year. This doesn’t add up … There are real opportunities for the financial sectorWe have to stay out of coal, oil and gas, “he explained.
Unsplash / Les Corpographes
Guenther Thallinger of the German multinational financial services company Allianz expressed his commitment to the Glasgow Financial Alliance.
“It all starts with changing the decision-making capacity that financial institutions have. Climate impact must be integrated into decision-making, which is why intermediate objectives are so important. We have all established these types of objectives, and it is very important that be fairly short-term, “he told a panel meeting in the so-called“ Action Area ”of COP26.
“Here we are literally creating a new industry, new rules of the game for a new industry that prioritizes climate action. For this we need all the traditional elements, we need measurements, we need parameters, we need reports … I want to take this opportunity to share that we will announce our first round of interim targets, “added Audrey Choi, sustainability director for US financial multinational Morgan Stanley.
And what about the public sector money at COP26? For now it is delayed
During COP15 held in 2009, funding of $ 100 billion a year was agreed until 2020 to support resilience, adaptation and the energy transition in developing countries. The promise is now officially delayed until 2023.
However, the president of COP26, Alok Sharma, gave good news: 90% of the world economy now has a net zero target when at the beginning of 2020 it was only committed to 30%.
“Unfortunately, it is highly unlikely that we will reach the $ 100 billion target in 2021, but based on information submitted by donors, the analysis shows that developed countries will make a significant contribution towards the $ 100 billion target. dollars in 2022, and I think it also provides confidence that we will reach it in 2023, “he said during a press conference on Wednesday.
Previously, and referring to the same issue, the Chancellor of the United Kingdom, Rishi Sunak, urged developed countries to boost their support to developing countries, among other things by helping them to take advantage of the billions of dollars committed by the private sector to target zero.
However, Espinosa stressed that some progress has been made in this regard.
“The United States joined Britain, France, Germany and the European Union in a billion-dollar partnership to help South Africa finance an egalitarian coal transition. This initiative is valued at a total of 8.5 billion,” he said .
He added that Japan and Australia also announced their commitment to double funding for adaptation, and that the United States, Switzerland and Canada also significantly increased their financial support in this area.
In addition, countries have also committed to allocate $ 12 billion between 2021 and 2025 for climate finance linked to forests.
“Spain, Ireland and Luxembourg have made new commitments, so I hope that by the end of this conference we can reach the goal of 100,000 millionMaybe in 2022, “Espinosa urged.