‘Either finance becomes green, or becomes nothing’

“We are losing the battle against climate change,” France’s President Emmanuel Macron warned an audience of several thousands at the One Planet Summit held on 12 December which focused on the key issue of mobilising finance.

The event brought together 60 heads of state or government, representatives of another 70 nations, business, financial, local authority and civil society leaders from around the world as well as hundreds of ordinary citizens and 200 schoolchildren at the huge futuristic Ile de la Musique concert hall located on an island in the Seine River, which crosses Paris. Arriving from the presidential palace by boat flanked by the political leaders, he sailed home with the schoolchildren after announcing that such summits would be held every year. How these summit’s outputs can or should integrate into the annual UN climate change negotiations remains to be seen.

Two years ago, the adoption of the UN Paris Agreement on Climate Change was hailed as a diplomatic triumph for France, which chaired the negotiations. Now France is repositioning itself as a global climate action leader both politically and financially with a number of French-led initiatives designed to help mobilise the trillions needed over the coming decades to combat climate change.

Not invited to the Summit was US President Donald Trump, after his declaration last June that he would cancel US membership of the Agreement (which can only take effect as from 4 November 2020). Instead, a group of pro-climate action Americans attended, including former New York mayor and philanthropist Mike Bloomberg and California’s Governor Brown, promoters of the America’s Pledge of nearly 2,000 major US non-state actors to carry out US greenhouse gas reduction commitments under the Agreement. Also present were other top US climate activists including former Secretary of State John Kerry and film stars Arnold Schwarzenegger and Brad Pitt.

Co-hosted by the United Nations and the World Bank the summit endorsed 12 major commitments with President Macron stating “think long and hard, if you make a commitment, we will hold you to it”.

The UN’s Secretary-General, Antonio Guterres warned that “we are in a war for the very existence of life on our planet as we know it, but we have an important ally – science and technology. Finance could be, should be and will be the decisive factor – the difference between winning and losing the war. Today’s global financial system is awash with funds. Tens of trillions of dollars are earning low or even negative interest rates. But, the opportunities for productive and profitable, low-carbon, climate-resilient investment are vast. We need policy-makers and central banks, stock exchanges, pension funds, rating agencies and all financial actors to align investments with the needs of climate action and sustainable development”.

“We must build trust and reduce risk,” he emphasised, “leverage funding and pursue innovative avenues of finance, such as Green Bonds. It is also a fact that fossil fuels remain heavily subsidised – meaning we are investing in our own doom. I have heard it said that Stone Age did not end because we ran out of stones. We don’t have to wait to run out of coal and oil to end the age of fossil fuels.”

Among a series of new climate change activities, World Bank President Kim Yom Jim announced that his organisation would end lending for upstream (exploration and operation) oil and gas projects from 2019 – but for exceptional circumstances relating to gas supplies in the poorest countries. This decision was hailed by civil society activists campaigning for years for an end to fossil fuel financing in favour of switching all bank energy lending to renewable energies and energy efficiency. A joint activity with Canada and the International Trade Union Confederation was also launched to support the clean energy transition of developing nations away from coal-fired electricity production.

Twenty-three national and regional development bank members of the International Development Finance Club and multilateral development banks declared their intention to increase funding dedicated to the implementation of the Paris Agreement. In short statements a couple of dozen political leaders including Prime Ministers of the UK, Sweden, Portugal, Spain and Austria announced individual national commitments.

The European Commission presented a list of 10 Initiatives for a Modern and Clean Economy which did not include action on the much criticised continuing fossil fuels subsidies within the EU (estimated at an annual €70bn). The EU High-Level Group on Sustainable Finance’s report next January (to include climate finance) will be followed by a conference on 22 March and subsequent Commission proposals to progressively “green” all EU financial flows. A European Cli- mate Corps for youth action will also be set up.

At a press conference this reporter asked the Commission Vice-President and President of the Energy Union Maroš Šefčovič whether the EU should increase its 2020 to 2030 greenhouse gas reduction commitments in the light of October’s UN Environment report that total efforts so far declared by all nations for 2030 only amounted to one-third of what was needed to ensure that Paris Agreement goals for global temperature increase by 2100 could be met. As happened with the same question, asked by this reporter of the Energy and Climate Commissioner Miguel Arias Cañete at a press conference in Brussels on 7 November, Sefkovic evaded the issue in his reply.

The European Bank for Reconstruction and Development, the European Commission and the European Investment Bank with the Global Covenant of Mayors (of 7,400 cities with 860 million inhabitants) announced a Global Urbis programme to provide European and Mediterranean cities and regions with easier access to public and private funds for their climate and sustainability plans.

At the French finance centre’s Climate Finance Day on 11 December, to become an annual event hosted by France, France’s Finance Minister Bruno Lemaire told several hundred top bankers and financiers that “either finance becomes green, or becomes nothing” while announcing a series of new policies and measures. Europlace and the finance centre recently launched a venture Finance for tomorrow to promote sustainable finance in France and internationally.

At a side event at the Italian embassy, Italy’s environment minister Gianluca Galletti said that a new alliance of 15 leading finance centres, co-organised with the UN Environment’s Finance Initiative, focusing on the long-term mobilisation of private capital to meet climate change action goals would hold its formal launch meeting on 12-13 April in Milan – slated to become a sustainable finance centre. Also announced there was a sustainable finance centre being established in Sweden, further developments in Luxembourg’s green financing hub and the City of London’s Green Finance Initiative as well as plans for a sustainable financing platform for Africa hosted by Morocco.

Among other summit commitments and related initiatives were a $3bn plan to rebuild the hurricane devastated Caribbean islands, a 16-country, 32-city coalition committed to reach carbon neutrality by 2050, the Paris Collaborative on Green Budgeting led by the Organisation for Economic Co-operation and Development and France, Sweden, Mexico and Canada for piloting a new ecologically/climate aware framework for presenting budgets, the creation of a Climate Observatory in Space and an eight-country Alliance for Clean Mobility also including cities, regions and major vehicle manufacturers.

A Climate Action 100+ coalition of 225 major institutional investors managing over $26 trillion assets was launched to take on the 100 highest-emitting public companies to convince them to present emission reduction strategies in line with the Paris Agreement objectives and implement the recommendations of the Task Force on Climate-related Financial Disclosure set up by the Financial Stability Board chaired by the Bank of England Governor, Mark Carney.

China, the world’s leading car- bon dioxide emitter, announced the launch of its national cap and trade carbon market while the Carbon Pricing Leadership Coalition, supported by over 40 companies, called for a carbon price in line with the objectives of the Paris Agreement.

Mexico launched a regional Americas carbon pricing scheme involving Colombia, Chile, two US States and five Canadian provinces. Environment and Climate Ministers of France, Germany, the Netherlands, Sweden and the United Kingdom committed to examining, even implementing in some cases a significant carbon price in relevant sectors while pushing for a higher EU-wide price within the Emissions Trading Scheme.

France, Sweden and the UK with over than 200 businesses pledged to implement the recommendations of the Task Force on Climate-related Financial Disclosure.

Aimed to speed up climate mainstreaming in financial supervision and in the refinancing of secondary markets (commercial banks) to promote orderly development of green finance, a new central bank network Greening the Financial System was launched involving the central banks of Mexico, the Netherlands, Germany, Singapore and China led by the French Central Bank, France’s Prudential Supervision and Resolution Authority and the Bank of England. Its foundational conference will be held in Amsterdam next April.

Co-ordinated by France, a One Planet Sovereign Wealth Funds working group (France, Kuwait, Norway, Qatar, New Zealand, Saudi Arabia and the United Arab Emirates) will create an ESG framework (environmental, social and governance) to guide their investment decisions – such funds could hold assets worth over $15 trillion by 2020.

The $1bn Energy Breakthrough Coalition, investing in breakthrough technologies founded by 27 individual investors during the 2015 UN Climate Change conference in Paris, announced expanded membership to include a broad network of world leading banks, funds, energy producers and technology companies committed to commercializing innovative zerocarbon energy technologies. In addition, the $1bn Breakthrough Energy Ventures Fund announced its initial technical focus areas for investment Grid Scale Storage, Mini-Grids, Liquid Fuels, Building Materials and Geothermal.

A Coalition of 10+ philanthropists launched a task force to mobilise philanthropy’s contribution to the implementation of the Paris Agreement, in partnership with development banks and private investors.

Malta, represented by Dr José Herrera, Minister for Environment, Sustainable Development and Climate Change, joined another 33 countries to support the Tony de Brum Declaration urging the International Maritime Organisation to make ambitious progress on curbing shipping’s carbon dioxide emissions.

Replies to an email interview agreed with the minister’s staff had not yet been received at the time of writing.