Can we trust private finance to save the planet? – World


Activists take part in a march against global climate change, in Nairobi, capital of Kenya, on October 29, 2021. [Photo/Xinhua]

Negotiators who gathered at the 26th United Nations Conference of the Parties on Climate Change, or COP 26, to find ways to ensure the world meets its climate goals were urged to trust global banks and investors to save the planet.

In an initiative that has been met with skepticism by climate activists, a coalition of banks, insurance companies and investment firms has committed $ 100,000 billion in private capital to help the world meet the goals net zero carbon emissions by 2050.

The idea is that these big spenders, including some of the biggest international banks, will channel their clients’ money into investments that save the planet and avoid the fossil fuels that contribute to global warming.

So far, 450 financial institutions in 45 countries have joined the Glasgow Financial Alliance for Net Zero, a coalition convened by the United Nations in April under the leadership of Mark Carney, the UN special envoy for climate action and finance.

Carney, the former Canadian director of the UK central bank, said: “We now have the essential plumbing in place to move climate change from the periphery to the forefront of finance so that every financial decision is made. take climate change into account. “

The theory behind the idea is that governments alone do not have the resources to finance the energy transition and that private money is vital to ensure its success.

However, the Glasgow Financial Alliance for Net Zero has been the target of criticism from climate activists for helping to continue funding fossil fuel extraction during the transition.

Carney believes large investors will have an interest in funding a clean energy transformation, because that is where the future profits lie. He said there was no reason for investors supporting low-carbon projects to settle for lower returns.

Despite this lure of future profits, it was reported that the big banks ahead of COP 26 would resist any commitment to end funding for all new oil, gas and coal exploration projects this year.

Handing over the responsibility of saving the planet to big investors may seem like handing over the responsibility of the henhouse to a fox.

Anyone who lived through the 2008 financial crisis can remember that it was brought on by the reckless mortgage investments of the big banks looking for easy profits. It was up to governments to use taxpayers’ money to put the global financial system back on the brink.

Left on its own, investment money inevitably seeks the most profitable projects, regardless of the implications for society at large. Big tobacco and big oil tankers are among the sectors that have sought to maximize their profits by resisting pressure to limit the damage they cause.

Developed capitalist companies have also tended to prioritize the concept of shareholder value, in which returns on investment are seen as more important than the goods and services produced by a given company or the way it treats its employees and customers. .

This raises the question of whether the world can count on the goodwill of asset managers and large corporations to do the right thing on the climate issue, or whether legislation will be required instead.

Carney recognized ahead of COP 26 that a privately funded green transition plan would also require governments to implement clear and credible net zero policies.

“This includes carbon pricing, a ban on internal combustion vehicles, national targets for phasing out fossil fuel subsidies, and mandatory climate-related financial disclosures,” he wrote in an article by opinion in the Financial Times.

He invited investors to assess who was part of the proposed $ 100,000 billion green transition revolution and ask if it was their bank, insurer, mutual fund manager or pension fund. His words were an invitation to investors themselves to keep banks and asset managers to their commitments.

Investors and the companies they fund have had to shed their ecological footprint in recent years, reflecting pressure from ethical investors demanding societal benefits as well as a return on their money.

Business leaders and world leaders traveled to Glasgow for COP 26 in part to convince customers and investors that they are doing their part for the planet.

Some climate activists have rejected tactics such as “green-washing”, a phenomenon linked more to image building than to real climate action. Campaigners question the credibility of banks that continue to finance fossil fuels.

While the jury is still out on whether COP 26 will be considered a success, Swedish activist Greta Thunberg and her supporters have already declared it a failure. Maybe thinking of the banks, she said: “It should be obvious that we cannot solve the crisis with the same methods that got us there in the first place.

The author is a senior media consultant for China Daily UK. Opinions do not necessarily reflect those of China Daily.

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