‘We’re going try to attempt a miracle, which is to be on time’! Referring to COP26 sessions starting late, it’s a nice metaphor to start COP26’s Finance Day.
The UK’s ever optimistic Chancellor Rishi Sunak started the day by announcing three major financial strategies:
- Increased public investment;
- Mobilization of private finance;
- Rewiring of the entire global financial system for net zero including better climate data, reporting, standards and surveillance.
The Chancellor states that the G20 will meet the already missed COP15 target of providing $100 billion per year to developing countries; in the next 5 years, $500 billion will be provided. The UK is doubling its investment to £11.6 billion. You’d be forgiven for feeling somewhat confused at how these commitments will be met however following the Chancellor’s Budget last week. The Budget wasn’t just apathetic to climate change, it appeared to take a backward step. The Green Party criticised it saying that the Chancellor didn’t get the ‘climate emergency memo!’
Sunak also announced that the UK would be the ‘first ever net zero aligned financial centre’. Firms will have to ‘publish a clear, deliverable plan for how they will transition to net zero’. All sounds incredible and amazingly positive but can they deliver?
Alok Sharma acknowledged the failure to meet the 2020 $100 billion target. But he too did little to allay fears of a repeat failure. Instead, the COP President massaged the egos of his fellow business and finance colleagues telling them that their industry was now made up of ‘Swampies’ (the environmental activist who started campaigning back in the ‘90s). A slightly difficult pill to swallow; if they were true ‘Swampies’ would the 2020 target not have been met?
The Chancellor fears that most people feel that the economics of climate change are a ‘remote and abstract’ concept. It is the Government’s ability to follow through on their financial promises that seems to be ‘remote and abstract’ with the public confidence to deliver new promises low.
Fear not however, the private sector is here to the rescue! As the main pockets of global money, pressure for investors and private industry to cough up and do their bit is a positive rhetoric. US treasury secretary Janet Yellen tells us ‘the gap between what governments have and what the world needs is large, and the private sector needs to play a bigger role’. The plea to the private sector by Governments is a positive, much needed step forward.
The heart-felt admission of Mark Carney (former Governor of the Bank of England) in reference to the 2020 $100 billion failure stating the ‘disappointment’ and of the ‘plans dashed’ gives hope. He states ‘right here, right now is where we [the financial world] draw the line’ as he acknowledges the loss of confidence by the public. As co-chair of GFANZ (the Glasgow Financial Alliance for Net Zero, not a Korean boyband as Gillian Tett humorously assures us), Carney has created a platform which has brought together over 450 financial firms and leveraged an historic $130 trillion of private investment to support the transition to a net zero economy. Put into context, Indonesia’s finance minister states Indonesia only needs $270 billion of this.
Carney supports Sunak’s plan to rewire the current financial system but appeals for further support from the private sector which requires scaling dramatically. Collaboration is needed as President of the World Bank, David Malpass states ‘no one institution in itself can fund the trillions of dollars needed’.
But is this just a degree of ‘greenwashing’? This doesn’t stop investors investing in fossil fuels. As largely voluntary contributions, is this enough and sustainable? Should the money makers of the world be forced into contributing?
You can’t but help feel positive that even if Governments can’t reliably provide the financial solutions, the private sector can and are showing the will. In this case, Governments need to at least put the policies and plans in place to make the best and most efficient use of the money, to assist and drive collaboration and to help leverage more of this private sector finance.
Written by Jo Herschan, COPCAS PhD Student
