One Planet Summit – What Next?

I was extremely privileged to attend French President Macron’s One Planet Summit this week. As he declared in his opening rally, let’s not kid ourselves: "we are losing the battle against climate change. What we are starting today is the time of action, because the urgency has become permanent and the challenge of our generation is to act.”

As the dust settles on the excitement of the week, it’s time to reflect on the substance that emerged from the political and corporate leaders’ announcements. Is the corporate sector really living up to the actions required to fix the Earth’s declining ecological health? And will this Summit be remembered as a milestone in the climate movement or just one of the many events in this space? 

The good news

First of all, the good news: whilst acknowledging that tomorrow’s actions will need to speak louder than today’s words, there were a number of significant announcements. To name but a few of them: 

• Mexico announced a carbon price coalition in the Americas;
• The World Bank is planning to divest from all upstream oil and gas investments after 2019;
• China declared it will launch its long-awaited national emissions trading scheme in the next few days;
• Climate Action 100+, a coalition of the 225 largest institutional investors worth >$26tn, was launched to jointly push carbon-intensive firms on climate action at an unprecedented level;
• A number of international funds were launched, including a $650m fund led by the European Commission, the Gates Foundation and France to transition the world towards more sustainable agriculture;
• The One Planet Sovereign Wealth Funds (worth $15 trillion) group will redirect funding towards climate action;
• On the finance side, AXA made the biggest statement of the day, by announcing it will divest from all investments with over 30% of activities in oil and gas, as well as all tar sands companies, while increasing its green investments fourfold by 2020 to €12 billion.

All of the commitments of the day were summarised into 12 categories, which are now available online and will help monitor the progress made by governments and institutions on an annual basis.

The trends

The sheer volume of investor, corporate and political statements on the criticality of sustainable finance supports what France’s Economy Minister Bruno Le Maire stated: “Finance must be green, or it won’t exist”.  

Green finance is becoming common practice

The underlying premise of the Summit was that action on sustainable finance is well underway: what we need is “economics, not just politics to drive the transition towards the low carbon economy”, as Mark Tucker, Chairman of HSBC said.

How can that be achieved? We need to raise broader awareness at the board level and, to a degree, within the wider population, about the value of green finance across the entire investment chain. The mindset of those who manage the world’s finances still needs to change and, while our experience points to progress taking place, I’d say we probably live in a pleasant, climate-conscious bubble which isn’t entirely reflective of the global landscape.

So here comes the action point: sustainability can no longer be the sole responsibility of the isolated sustainability or CSR departments. It needs to be embedded in the work of finance, risk and legal teams to change the way business is run. And the reason comes from business leaders themselves: that it makes good business sense in the short, medium and long term. 

Disclosure of climate-related risks and opportunities is critical

One message echoed throughout the chambers throughout the week: corporate disclosure and transparency are key. The Task Force on Climate-related Financial Disclosures (TCFD), spearheaded by Mike Bloomberg and Mark Carney, was heavily referenced as an essential initiative for companies to align with. We, at CDSB, are delighted with the recent momentum behind this agenda which we have been pushing for the past 10 years.

The common misconception that investors don’t consider environmental matters in their portfolio and wider investment decisions has been widely disproved. A large number of investors were part of a group of 237 organisations who signed a statement of support for the TCFD. More and more companies – as announced at a CDSB side-event on the Monday, have also signed up to the CDSB Commitment to implement the TCFD recommendations within 3 years, thereby demonstrating their leadership and understanding of the issues at stake. ExxonMobil, in parallel to the event, gave in to investor pressure and has accepted to further disclose information about its climate-related impacts.

Reporting is increasingly critical as investors want to be able to distinguish between those companies who can see the opportunities, those who can manage the risks and those who don’t know any better.

Divestment is becoming mainstream

“We have to say no coal investment, period. No coal should be backed by anyone”. Former US Secretary of State John Kerry couldn’t have put it more clearly. 

On an hourly basis, statements were being made about divestment-related actions being taken by various organisations, including AXA and the Climate Action 100 coalition. This movement is the new normal, and is driving the attention of key international players.

Carbon pricing is a hot topic

One of the reasons so many businesses are keen to reduce their reliance on fossil-fuel heavy energy, in particular coal, is the rapid expansion of carbon pricing schemes. 

The Mexican announcement of the Americas Declaration was one of the biggest at a national level, but there were other notable mentions, such as the commitment to review the EU Emissions Trading Scheme, which should increase the current price of carbon in Europe, and the Netherlands’ plans to implement a carbon price for certain sectors.

The political momentum: strong, yet weak

It wouldn’t be a fair summary of this week if we skipped over the elephant in the room: the difficulties in climate action caused by different political realities and the urgency required. As President Macron ominously warned, 15 to 20 countries that were present at the Summit may not exist in 50 or 100 years’ time.

Every delegate from the United States, including former Secretary of State John Kerry, Mike Bloomberg and Arnold Schwarzenegger, took great care to highlight both the limited power of the US federal government on climate change matters and the unequivocal commitment of the States, cities and many corporates.

As highlighted before, a series of announcements were made by Mexico, Belgium, Iceland, the EU and France to name but a few. As for the UK, £140m have been pledged towards supporting the world’s poorest communities tackle climate change, and it will be hosting the International Zero Emission Vehicle Summit next Autumn. With the Green Finance Taskforce report being expected in Spring 2018, there is mounting pressure on the UK to deliver a strong signal on financing the low carbon transition. 

The gaps

To put it simply, what has already been achieved is not enough to take us to a sub-2C world. 

• While public financing remains more predictable than private-sector money, countries’ current pledges by 2020 are falling short by $33bn from what was promised just 2 years ago;
• The increase in calls for greater disclosure and transparency are an excellent start, but the focus has not yet moved from climate change to broader environmental or natural capital issues, such as air quality, water, biodiversity or forests. There is a much wider range of issues that go hand-in-hand with climate change and remain neglected;
• A number of countries remained conspicuous by their absence at the Summit and from the announcements. This is a challenge that no individual country can win alone;
• If the key message for all the initiatives that have been portrayed at the Summit is that urgent action is needed, we cannot continue to make commitments that will not start for another 5 to 10 years. Actions need to urgently follow words. 

Personal highlights 

Amongst the well-rehearsed and polished speeches, I’m happy to say that children still provide some of the most memorable moments, even to the most cynical eyes. Vanessa, whose heartfelt closing speech to the Heads of State delegation had President Macron looking on with dreamy eyes in the background. Young Timothy from Fiji, who highlighted the fundamental threats to his country’s existence, managed to remind us all of the very basic reason why we need urgent action.

My personal highlight, however, was hearing Nicolas Hulot, French Minister for the Ecological Transition, speak alongside Arnold Schwarzenegger at the Youth Summit. Not only were both speeches some of the most passionate speeches of the day, but it was personally inspiring to see a childhood hero like Hulot showcasing France’s leadership on climate action.

What to remember

If there is one thing I believe we should all remember from the Summit, it really was the call to arms to join this growing and increasingly powerful community. No one group is working alone: while governments are stepping up to develop supranational policies and supporting significant initiatives, investors are shifting investments away from unsustainable assets, and companies are increasingly demonstrating that the business case for a low carbon transition is real. 

To leave the final word to Antonio Gutierrez, Secretary General of the UN: “The Stone Age didn’t end because we ran out of stones. Let’s not wait until we run out of fossil fuels to end the Fossil Fuel age”. 

Email: simon.messenger@cdsb.net Twitter: @SimonPMessenger LinkedIn: Simon Messenger