Wednesday, March 29, 2023

Investors Promise to Take Action to Fight Climate Change, Activists Doubt Motives

GLASGOW, Scotland (AP) – On Wednesday, governments and major investors announced new plans to spend trillions of dollars in curbing global warming, reflecting the financial world’s growing commitment to tackling climate change as a necessity and a business opportunity.

But some social justice activists have called for scrutiny of investor motives, warning that the same financial institutions that have profited from funding fossil fuel companies are now being portrayed as green champions.

There is growing agreement that the private sector must be involved if the world is to avoid catastrophic global warming. Speaking at the UN Climate Summit in Glasgow, Scotland, UK Treasury Chief Rishi Sunak said that while countries like him are spending more money to finance the transition to low carbon economies around the world, “public investment alone is not enough. … “

WATCH: Here are the latest promises from Biden, world leaders, at the UN Climate Summit.

On Wednesday, he praised the pledge of a group of more than 450 major financial institutions to bring their investments in line with the 2015 Paris Climate Agreement, which calls for cuts in carbon dioxide emissions and other efforts to limit global warming by 1.5 degrees Celsius (2. 7 Fahrenheit) is higher than previously. industrial levels.

“This is a historic wall of capital to move to zero around the world,” Sunak said at a conference known as COP26.

Glasgow’s Net Zero Financial Alliance, founded this year by former Bank of England governor Mark Carney, has pledged to follow scientific guidelines to cut carbon emissions to “net zero” by 2050.

This goal of limiting greenhouse gas emissions to an amount that can be reabsorbed, naturally or artificially, is increasingly supported by companies and governments around the world.

Experts say fossil fuel use should drop sharply over the next decade to limit warming to 1.5 ° C, which means investors may have to slash money going to oil, gas and coal producers.

“It’s amazing that financial institutions with $ 130 trillion in assets are now leading to a hopeless future,” said Helen Mountford, senior climate expert at the think tank at the World Resources Institute.

She said mobilizing huge public and private finances would be key to fighting global warming.

To that end, Sunak said UK financial institutions and public companies will have to publish plans detailing the sustainability of their investments and their own businesses to ensure they are truly helping to reduce global warming.

Home to the City of London, one of the largest financial centers in the world, Sunak said the United Kingdom is “responsible for leading the way” in funding efforts to combat global warming, potentially becoming “the world’s first zero-net financial center. … “

But James Thornton, founder of environmental law charity ClientEarth, doubted how effective Britain’s efforts would be.

“The UK market remains tied to fossil fuels,” he said, calling for a working group to ensure that companies are not laundering their activities, that is, using loud announcements of so-called “green initiatives” to disguise others. dirty “activity. The experts also warn that there are various ways of calculating a net zero, and choosing one standard definition is one of the big challenges in the future.

Some campaigners generally did not trust the motives of large investors.

“Many of the financial institutions gathered today have been killed by the climate and environmental crisis, and we should be highly suspicious of any attempt to promote them as heroes,” said Dorothy Guerrero, head of policy at the nongovernmental group Global Justice Now. … “Governments need to regulate the process and lead the transition, not just hand it over to corporations.”

But Alok Sharma, the British official who chaired the Glasgow talks, insisted the shift was genuine.

“Over the past few years, we’ve seen a big step towards greening the private and financial services sectors,” he said, adding that this was not the case when he became a financial advisor in the 1990s. “I really think it’s mainstream now.”

US Treasury Secretary Janet Yellen cited one possible reason: she described the fight against climate change as a huge financial challenge with a cost of $ 100 trillion, but also as “the greatest economic opportunity of our time.”

“Many renewables are now cheaper than carbon-based alternatives and have lower long-term operating costs,” she said. “In many cases, going to the environment is simply economically beneficial.”

Earlier this year, US President Joe Biden issued an executive order to require companies to disclose financial risks associated with climate change.

Investing with a focus on the environment has been one of the biggest trends reshaping the financial industry for years, from a niche to a major force.

WATCH: Timeline for China to phase out coal and adopt green technologies may be too slow to help the climate

According to the latest data from the Global Sustainable Investment Alliance, $ 35.3 trillion was invested in sustainable funds globally in early 2020. That accounted for nearly $ 36 out of every $ 100 professionally managed, and this includes everything from funds that directly fund green projects to funds that simply refuse to buy shares in the most polluting companies.

Although this is still the smallest part of all investments, it is growing faster than in other areas of the market. Four years ago, sustainable investments accounted for less than $ 28 out of every $ 100.

But an analysis of the holdings of 130 climate funds this summer by London think tank InfluenceMap found that more than half were not as green as anticipated. For example, some of them, which were classified as “restricted fossil fuels,” were held by shares in refineries and distributors.

Alina Averchenkova, a climate change policy expert at the London School of Economics, said the statements from investors and governments are an important step in the right direction, but independent audits will be required in the future.

She also noted the growing urgent need of rich countries to finance climate projects in parts of the world that cannot afford to take action on their own.

“We need finance to help developing countries adapt to the impacts of climate change, such as adapting to increased flooding to extreme weather events such as hurricanes,” she said.

Last month, poorer countries were outraged by news that rich countries have not met their previous commitment to provide them with $ 100 billion in climate finance annually by 2020.

This target is expected to be met in 2023.
Kirk reported from London. New York-based business writer Stan Chow contributed to this report.

Nation World News Desk
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