While the world continues to do battle with the ravages of the pandemic, those of a more optimistic inclination continue to look for ‘silver linings’ and positive developments that can give us hope for the future.
The pandemic has shown us that governments can mobilise at scale when necessary and communities often come together in myriad ways to support each other. We have seen the welcome return of science and the use of evidence to the centre stage of politics and policy. We have been sorely reminded of the importance of risk-based preparedness and the need to invest properly in resilience measures. We have also learnt that the clashing of human modernity and natural worlds can have a devastating impact on public health on a global scale. These are just some of the many learnings we can take from the tragedy of the pandemic, but they can become ‘silver linings’ if governments and society use them as a catalyst for actively tackling the even bigger and more complex challenge of climate and ecological crisis.
Leaders have also received a timely reminder that there is an electoral incentive for action as well. Despite the absence of XR and a relatively quiet Greta Thunberg in 2020, the UN Development Programme’s ‘People’s Climate Vote’ – a survey of 1.2 million people in 50 countries – confirmed that public concern is still high, as two thirds agreed that climate change is a ‘global emergency’.
It is hard to deny we are currently awash with relevant warnings, learnings, and signals. The good news is that something is indeed stirring. There are positive developments and concrete actions occurring at all levels of government, finance and business that together suggest a low carbon, sustainable world is within our grasp. Of course, the risks are still great, and the window of opportunity is perilously narrow, but here are five reasons to be climate optimistic about the decade to come.
According to a UNFCCC press release in September 2020, the number of commitments to reach net zero emissions from local governments and businesses has roughly doubled in less than a year. At a national level, Xi Jinping pledged China to be net zero by 2060 at the UN General Assembly in November 2020. Last year also saw new net zero pledges from many major emitters, including Canada, the EU, Japan, South Africa, South Korea, the UK and the USA. Over 1,000 companies have now committed to the Science Based Targets Initiative, accounting for 20% of global market capitalisation, and they are typically on course to exceed the pace of emissions reduction required by the Paris Agreement.
Solar, wind, hydro energy, biofuels and other clean fuel technologies are at the centre of the transition to a net zero economy. In 2020 clean energy was the only type of energy that saw growth (7%) and it is predicted by Faith Birol, head of the IEA, to be the largest source of generation by 2025. The International Renewable Energy Agency estimated that over 2010-2019 the average cost of utility installations for solar fell by 80%, with similar falls for wind. The cost of lithium-ion batteries today is just one seventh what it was a decade ago. Renewables will continue to benefit from economies of scale, low interest rates, improving technologies, and a favourable policy environment, meaning in effect the future is now renewable.
3. A climate finance and investment revolution
The rise of ESG is a quiet revolution occurring in the plumbing of the investment and financial world. Putting it simply, this signals the historic alignment of positive business performance and acting for the common good. Its momentum is accelerating – evidenced by the year-on-year doubling in ESG Exchange Traded Fund assets under management in 2020. Meanwhile the financial sector is focusing on climate risk and portfolio emissions through TCFD and CDP respectively, banks are racing to commit to net zero, and they are increasingly innovating in green financing activities. That is why Larry Fink, CEO at BlackRock, views climate finance as the new big structural shift in finance and investment.
Source: FT Moral Money
US leadership is still crucial for global climate action. Thankfully, Joe Biden has wasted no time in re-joining the Paris Agreement. He has done a lot more – he has signalled to the oil and gas sector a tough new stance on infrastructure by cancelling the permit for the Keystone XL pipeline, he has selected environmentalists as Treasury secretary (Janet Yellen), chief economic adviser (Brian Deese), and made John Kerry special global envoy on climate change. His executive action to re-establish a working US government group on the social costs of carbon may turn out to be the most significant. It will feed into government assessment of new policies and investments and may lead to a significant rise in the internal carbon price which should, in turn, help the cause of carbon tax advocates, both in the US and abroad.
Source: FT Moral Money
Some see Biden’s actions as a kind of stealth new green deal. The EU has its own green deal, its “strategy for growth that gives back more than it takes away” according to Ursula Von der Leyen, President of the European Commission, includes a €40bn “just transition” mechanism to help retrain workers and €30bn for hydrogen technologies, among a huge raft of measures. The UK’s Boris Johnson announced his 10-point plan in November 2020 promising 250,000 jobs and £12bn of investment, covering everything from diesel cars to hydrogen and offshore wind power. While it has won measured praise, many experts believe it could go much further in terms of ambition and investment. Governments everywhere are finally making the link between green investment and social and economic development and there is a clamour in the media to ‘build back better’.
Of course, we may be guilty of being Panglossian but when there are too many reasons to switch off the news, it is hard to deny ourselves some pleasure in witnessing this emerging momentum. Common to all these is the underlying fact that key players in the public and private sectors have started getting serious about sustainability. With more nations setting net zero targets and enshrining them in law, companies know they need to adapt if they want to avoid increasing regulation and higher financing. The more ambitious see that sustainability can be a catalyst for transformative action and competitive advantage. Most simply see it is the right thing to do.
As a sustainability consultancy, we are seeing our clients doubling down on their sustainability ambitions as they invest in their future resilience and growth. We are seeing many companies commit to more ambitious and robust net zero targets and plans, many are increasing their focus on risk through climate risk scenario analysis or by improving supply chain transparency, and many now are looking beyond climate, and investing in sustainability through enhanced waste management practices and by introducing circular economy practices. Clearly, this is good news for us as a consultancy – even more so when your ambition is to create a more sustainable world.
more than a word.