By Vanya Walker-Leigh in the City of London
A thousand business and finance leaders from 39 countries meeting last week in the City´s 12th century Guildhall expressed strong determination to combat the looming threat of climate change disaster by fast tracking low-carbon innovative technologies and investment strategies.
The second Business and Climate Summit, co-sponsored by UK and international institutions and networks reviewed the private sector´s next steps after the adoption last December of the Paris Agreement by the 21st Conference (COP 21) of the 196 Contracting Parties to the UN Framework Convention on Climate Change. The Agreement was subsequently signed by 175 political leaders (including Malta´s Prime Minister) at a ceremony at the UN in New York on 22 April.
However, its entry into force - mandating post-2020 actions on mitigation, adaptation, loss and damage, financial flows, technology transfer and capacity building with 5-year international reviews of related national policies - requires ratification by 55 nations accounting for 55 per cent of global greenhouse gases. Accounting for over 40 per cent, US and China have pledged early action, but so far only 19 nations accounting for 0.18 per cent of emissions have actually ratified.
A key provision of the Paris Agreement commits governments to hold the increase in the global average temperature to well below 2 °C above pre-industrial levels and to "pursue efforts" to limit the temperature increase to 1.5 °C - implying an unparalleled technological revolution to rapidly slash greenhouse gas emissions from industry, transport, energy production, agriculture and forest management. (Provisional commitments tabled last year with the UNFCCC secretariat by 189 nations put the planet on a disastrous track towards over 3C.)
France´s Environment Minister and COP 21 president, Segolène Royal, urged entry into force before the next COP in Marrakesh, Morocco (7-18 November, 2016) and will continue pressuring EU nations to complete procedures by then. (Only France and Hungary have ratified so far, while parliamentary sources cannot indicate a date for Malta´s ratification).
Co-chair of the 26-country, 90-company Carbon Leadership Coalition, Ms. Royal urged the rapid adoption of a universal carbon price - strongly supported by a 35 top business leaders hosted by President Hollande in Paris last month. France recently legislated for such a price as well as for companies to disclose their carbon footprint and climate change related activities.
The outgoing UNFCCC Executive Secretary, Christiana Figueres hailed broad business support as having enabled an ambitious Paris Agreement, but urged much more dialogue and co-operation between national private sectors and governments to propel the urgently needed albeit "unstoppable" transformation. "We are working against the clock" she warned while urging Brexit-stunned Britain to "keep calm and transform on".
Jean-Dominique Senart, Chief Executive Officer of Michelin advocated for a set of global sectoral commitments to be made at COP 22 by business and government ministers while emphasising the imperative to mobilise world citizens support for climate change action. "I fear that if after COP 22 things don´t go through we may hit lack of credibility, which will discourage businesses to make major decisions."
France´s chief climate change negotiator, Ambassador Laurence Tubiana emphasised that governments "have to not only deliver the policy framework for 2030 but clear mid-century strategies consistent with the below 2c target. A key dimension is social transition - needing a much broader discussion than to-day. Not to create strong resistance in society is one of the major risks we face."
Ninety trillion dollars are needed over the next 15 years for sustainable climate-resilient infrastructure - two-thirds of the total for developing and emerging countries - according to Felipe Calderon, former President of Mexico and Chair of the Global Commission on the Economy and Climate. "We cannot continue building in the same dirty way - low-carbon building will cost five per cent more but can be fully offset by savings in operational costs. Solar and wind can now compete with fossils in more and more regions, we are aware of air pollution costs, yet 1,500 coal plants are in various stages of construction and planning worldwide. We need to stop it."
In its report "The Business End of Climate Change" launched here, the We Mean Business Coalition stated that by 2030 the private sector could account for 60 per cent of the emission reductions up to 2030 posted in the 189 Intended Nationally Determined Contributions - some 10 billion tonnes of CO2 - if all of world business signed up to the Coalition´s five key initiatives. These are Science Based Targets, RE 100 (100 per cent Renewable Energies), ZeroDeforestation EP100 (a 100 per cent increase in energy productivity) and the Low Carbon Technology Partnership.
A business leaders´ climate change summit in Marrakesh will issue a statement according to Miriem Bensalem-Chaqroun, President of Morocco´s General Business Confederation (Confédération Générale des Entreprises du Maroc). Casablanca Finance City will also organise a high-level Climate Finance Day 2016 on 4 November to be followed by an event of the International Finance Development Club, a global network of national, subregional and international development banks..
Due to widespread constrained government financial resources, about 85 per cent of the $90 trillion infrastructure investment posited by Felipe Calderon will have to be sourced in the private sector; green investments have to rapidly move from niche to mainstream said Antonio Simões, HSBC´s Chief Executive, responsible for the UK and Continental Europe. "The total stock of green bonds is currently about $60bn, while we need an annual average of $5 trillion."
"In particular we need to unlock private sector finance to world´s major urban areas - 75 per cent of CO2 emissions come from cities, already housing half the world´s population and two-thirds by 2050. HSBC is meanwhile working with the insurance industry and the V-20 group of finance ministers from the 43 most vulnerable developing nations with a combined population 1.6bn to create a funding mechanism which pools their needs and risk profiles - the basis for a securitised product for private investors."
Several speakers and panelists indicated that some though not all major oil companies were ´rethinking´ their future strategies, to scale back (though not eliminate) fossil fuels in favour of non-polluting renewable energies and energy efficiency.
World trade rules also need to be reviewed for compatibility with the Paris Agreement goals, but "we don´t have what we want to negotiate, only a general goal with no specifics", the World Trade Organisation´s Director-General Roberto Azevedo admitted. John Danilovich, Director-General of the International Chamber of Commerce urged the need to start an already suggested dialogue on trade and climate, as a key topic at the next WTO ministerial meeting in September as well as of Germany´s Group of 20 presidency next year.