The United Nations’ top official for global climate action said on Monday that 65 percent of the world body’s 193 member nations, up from 40 percent last year, will seek net zero carbon emissions by 2050.
Mark Carney, the U.N. special envoy for climate action and former Bank of England governor, said 126 member nations, up from 77 last year, committed to the goal set at the 2019 U.N. Climate Action Summit due to “social resets for countries and strategic resets for companies” brought on by the coronavirus pandemic.
“With society placing a greater value on resilience and sustainability, 126 governments have now committed to net zero, including three global giants — China, Japan and South Korea — in the last few weeks,” he told the Green Horizon Summit hosted by London’s governing body, the Green Finance Institute and the World Economic Forum. “More and more countries are recognizing that green stimulus is essential.”
At last year’s U.N. summit held on the sidelines of the annual high-level gathering of the U.N. General Assembly, U.N. Secretary-General António Guterres demanded that world leaders show up with real action plans for lowering greenhouse gas emissions instead of well-meaning speeches.
Along with the 77 nations that made pledges in 2019, some 130 banks representing a third of the global banking sector and 100 business leaders promised to run greener operations by shifting to renewable energy and curbing fossil fuel-burning linked to climate change. The corporate moves were meant to align businesses with the 2015 Paris Agreement on climate change and the U.N.’s 17 Sustainable Development Goals for 2030.
This past September, Chinese President Xi Jinping told the General Assembly that his nation — the world’s biggest emitter of greenhouse gases — plans to achieve carbon neutrality by 2060. Xi called for a “green revolution,” despite China’s heavy reliance on carbon-emitting coal to produce electricity.
Part of China’s calculus is to position itself as an expansive world power concerned with global climate crises, in further contrast to the “America First” policies of U.S. President Donald Trump, who considers climate change a hoax and regularly campaigned against energy efficient products.
Carney encouraged financial leaders to be more transparent about how climate change affects businesses. The Swiss-based Financial Stability Board, hosted by the Bank for International Settlements, created a Task Force on Climate-Related Financial Disclosures, or TCFD, in 2015 to develop consistency with information released.
“Investors, banks, insurers and pension funds responsible for assets of US$140 trillion are now demanding that companies assess the risks and opportunities that climate change poses to their business models and disclose this information in line with the TCFD recommendations,” Carney told financial leaders.
“Six large investor alliances, representing over US$100 trillion of assets, are calling on companies and auditors to reflect fully the effects of climate change in their financial results,” he added, “and to disclose whether the assumptions in financial statements are compatible with the Paris Agreement.”
European Central Bank President Christine Lagarde, who formerly headed the International Monetary Fund, has said she favors examining whether to abandon using a “market neutrality” principle used to factor in climate risk when purchasing corporate bonds. That could reduce some bias towards fossil fuel producers.
She called for “a leap forward” in setting standards for the proper disclosure of “forward-looking” climate-related information and risk reporting, including what is used to set the credit ratings used by investors.
“As we all know, a global and accurate price on emissions that would reflect the true, underlying climatic and economic externality remains vital to provide the right incentives,” she told the London summit. “Climate risks are not adequately priced, causing challenges for financial stability. This is what I would call the pricing gap.”
The Green Horizon Summit begins this morning! 🌏
At #GHS2020, the 🇬🇧 Prime Minister's COP26 Finance Advisor Mark Carney and many others will be discussing solutions and innovation in green finance.
— COP26 (@COP26) November 9, 2020
‘The road to Glasgow’
Carney also spoke in his capacity as the British prime minister’s finance adviser to the U.N.’s next annual climate summit that has been postponed for a year due to the pandemic. The two co-hosts, Britain and Italy, now plan to hold it from November 1 to 12, 2021, in Glasgow, Scotland.
Britain’s business minister, Alok Sharma, will serve as president of the 26th session of the Conference of Parties to the U.N. Framework Convention on Climate Change, or UNFCCC, which serves as the platform for the summits, known as COPs.
The Paris Agreement calls on the world to prevent average global temperatures from rising more than 2 degrees Celsius above pre-industrial levels, or 1.5 degrees C. if possible.
“When the world’s governments set the goal of net zero and over US$100 trillion of capital are demanding action, at a minimum, major companies need to disclose whether the assumptions in their financial accounts are aligned with Paris. In other words, are they joining us on the road to Glasgow or not?” Carney said.
His comments mirror an upswing in climate campaigners’ optimism owing to the election of the 46th president of the United States on Saturday. President-elect Joe Biden and his running mate, Vice President-elect Kamala Harris, promised to rejoin multilateral efforts on the pandemic and global warming that the Trump administration disavowed.
The incoming Biden-Harris administration is expected to reverse Trump’s decision in May to withdraw from the World Health Organization, and to immediately rejoin the Paris Agreement that the United States formally departed from this past Wednesday. Rejoining the treaty would take effect in mid-February and have a significant impact, since the United States is the world’s second-biggest emitter of greenhouse gases.
Carney also championed the creation of new climate-related markets, particularly carbon offsets to encourage investment in projects among developing nations.
The offsets are based on the notion that polluting industrialized nations and companies, rather than cutting their own carbon emissions, should be able to buy credits that reduce their net releases into the atmosphere by paying for projects in developing countries that reduce their greenhouse gases instead.
Some environmentalists, however, have long criticized a system that, in some cases, permits rich nations and businesses to spend billions of dollars creating financial incentives for others, without making their own meaningful cuts in emissions.
“As more and more companies commit to net zero targets, demand for credible and verifiable offsets will soar,” Carney argued. “The most cost-effective of these, with the biggest emission reduction potential, are in developing and emerging economies. These can generate large flows of private capital over many decades.”