Tag: finance

Is the Loss and Damage Fund all that it promises to be?

Posted on by amanda.woodman-hardy

Examining some of the Fund’s shortcomings and putting things into perspective after COP 28

Failed crop

 COP 28, the latest United Nations Climate Conference, came to an end in December 2023. It began with an agreement to launch the loss and damage fund, which was kick-started by the UAE’s $100 million pledge. A further 15 countries followed suit, making pledges of varying amounts, and by 2 December 2023, a cumulative total of $655.9 million had been pledged to the loss and damage fund.[1] The fund has been heralded by many as the biggest success of the entire conference and a historic agreement – being the first time that a substantive decision was adopted on the first day of the Conference. The delegates of nations present from around the world, rose in a standing ovation when the agreement was passed.  

However, although the loss and damage fund is an important and long overdue step towards getting vulnerable countries and communities funding they require, it may be too soon to be rejoicing, with many of the details regarding the fund’s set-up being highly controversial.  

A brief background to the loss and damage fund  

The loss and damage fund was first agreed to at COP 27 last year, after more than three decades of pressure from developing countries disproportionately affected by the irreversible and adverse consequences of climate change calling for funding to help them pay for the losses and damages suffered as a result of the escalating climate crisis. These impacts range from, and are caused by, increasingly frequent and more extreme weather events, as well as slow-onset events, including sea-level rise, increasing temperatures, ocean acidification, glacial retreats, loss of biodiversity, land and forest degradation, salinisation and desertification. These endanger human security and health, destroy homes, disrupt agriculture and threaten water and food security in ways that are often unequally distributed. 

As one of the outcomes of COP 27, a Transitional Committee was established and, in the lead up to COP 28, they met several times to negotiate the operationalisation and the details of the new funding arrangements. In less than a year, the Transitional Committee were able to report back with its recommendations and its text was subsequently passed at COP 28, with no objection by the parties. After almost no momentum for thirty years, the progress made in less than a year is a remarkable feat.  

Examining some of the shortcomings  

While funding for climate disaster loss and damages is vital and certainly hard fought for, one should be hesitant before deeming it a substantive win for developing countries.  

 Inadequate and duplicate pledges 

Although $655.9 million may at first glance appear like a significant amount of money, it is in fact relatively insubstantial when one considers that it is estimated that more than $400 billion is suffered in losses by developing countries each year,[2] a figure which is expected to grow as the impacts of climate change grow worse. The current funding will therefore cover less than 0.2% of developing countries’ annual needs. It has therefore been recommended that $400 billion be used as a baseline and revised upwards over time to meet increasing needs.[3] Furthermore, how to actually implement the pledges that have been made poses its own issue. This is a problem that previous funds, such as the Green Climate Fund, have faced and it is an issue that will need to be tackled to ensure that the pledges made do not simply turn out to be more broken promises.  Moreover, approximately $115.3 million of the total amount pledged to date will go towards setting up the fund rather than directly to beneficiaries of the fund.[4] Future pledges to the fund may make this operational expense insignificant, but it is still uncertain how much money will go into the fund and where it will come from. In addition, campaigners pointed out that some countries, such as the United Kingdom, were simply re-pledging money that they had already committed to, rather than offering new or additional funding.[5] In this way, the United Kingdom are simply re-branding existing forms of climate finance or development aid so as to appear to be contributing.  

Moreover, the amount pledged by some countries has been criticised for being inadequate. In particular, the United States, the world’s largest historical emitter[6] and the largest producer and consumer of oil and gas in 2023,[7] pledged only $17.5 million, an amount that still needs to be approved by Congress and accordingly hinges on the political climate and the upcoming elections. When viewed against the billions of dollars of undelivered climate finance that the United States owes to developed countries as part of its share of the annual $100 billion climate finance goal committed to by developed countries in 2009, this amount of $17.5 million certainly appears limited.[8] Of the $43.51 billion the United States owes, as part of its fair share of the $100 billion goal, only $9.27 billion has been provided to date, being a measly 21% of its targets.[9] 

It is also very telling as to what the United States’ priorities are when the $17.5 million pledged by the United States to the loss and damage fund is compared to the estimated annual $20.5 billion in fossil fuel subsidies distributed by the United States government each year,[10] contributing to the cumulative amount of $7 trillion in fossil fuel subsidies in 2022.[11] 

Historical responsibility and voluntary contributions  

During the negotiations that the Transitional Committee had leading up to COP 28, the United States, Australia and Canada all insisted that the loss and damage fund be de-linked from liability or compensation. This is in keeping with previous stance adopted by developed countries, particularly with that of the United States, who insisted that this wording be included in the decision on the adoption of the Paris Agreement which noted that loss and damage was “not a basis for liability or compensation”.[12] As the historically greatest emitters, developed countries have long opposed the establishment of the loss and damage fund over concerns that it would open the door to legal liability and compensation. Due to this refusal to assume historical accountability, communities who are experiencing the worst impacts of climate change have been forced to shoulder the consequent costs of loss and damage suffered, even though many of them, such as the Pacific Small Island Developing States, have contributed very little to climate change. This goes to the issue of equity and responsibility for the climate crisis, a sensitive topic which makes developed countries defensive. Instead of framing loss and damage in terms of responsibility and liability, wording was included in the agreed text stating that the fund is based on cooperation and facilitation.  

The approved text also stops short of demanding any payments, with the United States having fought to ensure that the contributions should remain voluntary, and the text indicated that developed countries ought to “take the lead” on providing seed money. The text “urged” developed countries to contribute to the fund, while other developing countries are “encouraged” to provide support “on a voluntary basis”.[13] The United States, Australia and Canada further insisted that contributor countries include presently high-polluting nations such as China, India, Russia and Saudia Arabia, and that only the least developed countries be eligible to benefit from the fund. As a result, high polluter states are not obligated to make any payments into the fund and instead of framing the contributions in terms of countries’ responsibility for the majority of greenhouse gas emissions, they are framed as donations made out of generosity and charity. 

The World Bank as the interim host of the Loss and Damage Fund, the set-up of the Fund’s governing board and the structure of funding 

Who would host and administer the new fund was a politically contentious sticking point in the discussions leading up to COP 28. Less than a month before COP 28, at a final and impromptu meeting called by the Transitional Committee, this matter was hastily decided. Developing countries wanted the loss and damage fund to operate as an independent United Nations body and were resistant to it being hosted by the World Bank, which many poorer countries see as an economic policy weapon wielded by the industrialised world.  

The World Bank was established by colonial powers and is known for having historically spread pro-Western ideologies and policies.[14] Moreover, it is housed in Washington DC, is headed by a US citizen, appointed by the government of the United States, as its major shareholder,[15] and has a history of operating as an Untied States policy tool. In addition, concerns were raised that the World Bank would be charging high hosting fees, has a weak climate change record and that having it host and administer the loss and damage fund would compromise the fund’s independence and give developed countries the influence over who receives the funds and who doesn’t. Developing countries eventually caved under the United States’ insistence that the fund be hosted and administered by the World Bank, and it was agreed that the World Bank would act as an interim host, provided that the World Bank would agree to certain conditions. This arrangement is to be reassessed in four years, which will result in either the fund being made fully independent or continuing as a permanent hosting situation under the World Bank.  

The United States has argued that there are practical reasons for placing the loss and damage fund under the auspices of the World Bank, and that the fiduciary experience the institution has, places it in the best position to deliver money to state beneficiaries. However, given the World Bank’s donor-recipient and loan-driven business model, reservations have been expressed as to whether developed donor countries would have a disproportionate influence, even though the Transitional Committee has recommended that the fund’s governing board have a majority of developing-country members. Although this sounds positive, the board’s composition is limited to national representatives, meaning that civil society representatives such as members of Indigenous groups, are automatically excluded. 

Another concern regarding the World Bank, is high overhead costs, with the administrative fees of the World Bank rising and likely to absorb a large portion of the funding meant for the fund’s beneficiaries. Further, developing countries have consistently called for funding to be in the form of grants, rather than debt and loan financing, which would only deepen the debt crisis and increase developing countries’ burden, which is the traditional model of financing employed by the World Bank. The agreed text stipulates that “the Fund will provide financing in the form of grants and highly concessional loans”.[16]

The ultimate success or failure of the loss and damage fund still hangs in the balance  

In order to retain any faith in the international climate policy process, there needs to be follow-through on both the pledges and commitments made. To date, climate finance has not had the best track record. Other funds, including the Green Climate Fund and the Adaptation Fund, have been radically under-resourced from the get-go and climate finance has grown at an annual rate of only 7%, which is less than half of the cumulative annual growth of 21% which is required until 2030.[17] In order for the Loss and Damage Fund to be effective, the scale of the funding will need to be increased, as what has been pledged to date constitutes a mere 0.2% of what is actually needed. 

There are also still a lot of questions to address, which the new Board of the Loss and Damage Fund will start to work through at its first meeting on 31 January 2024. Popular Gentle, the development management expert to the prime minister of Nepal, pointed out that while the establishment of the loss and damage fund is a promising start, that applause should be reserved for the time being, saying “our concern is we are excited about the establishment of the loss and damage fund. We are still cautious that the same story will be repeated. We need easy, equitable, accessible loss and damage funds without any procedural difficulties”.[18]  

So far, there are already some concerning issues that have arisen out of what has been decided. The issues that still need to be determined will prove critical to whether the fund’s operation is a success or a failure. These issues include the fact that there are no specifics yet on the scale and scope of funding, the financial targets or how the loss and damage fund will be funded going forward – although the text provides that contributions will come from a “variety of sources”.[19] The current language included in the agreed text merely invites developed nations to “take the lead”[20] in providing finance and encourages other developing country parties to make commitments. There is also little clarity regarding the performance indicators and who will be eligible to receive funding or precisely what type of climate loss and damages will qualify. Another issue will be how the application procedure will work and how quickly countries who need it will be able to access the funds and whether they will encounter any procedural difficulties in doing so. Until these things are decided, it is simply too early to greet the loss and damage fund with anything other than a mixture of cautious optimism and healthy scepticism. 

References  

[1] Joe Thwaites ‘COP28 Climate Funds Pledge Tracker’ (NRDC, 9 December 2023), available at: https://www.nrdc.org/bio/joe-thwaites/cop-28-climate-fund-pledge-tracker

[2] Julie-Anne Richards, Rajib Ghosal, Brenda Mwale, Hyacinthe Niyitegeka and Moleen Nand ‘STANDING IN SOLIDARITY WITH THOSE ON THE FRONTLINES OF THE CLIMATE CRISIS: A LOSS AND DAMAGE PACKAGE FOR COP 28’(The Loss and Damage Collaboration, 20 November 2023), available at: https://assets-global.website-files.com/605869242b205050a0579e87/655b50e163c953059360564d_L%26DC_L%26D_Package_for_COP28_20112023_1227.pdf

[3] Julie-Anne Richards, Liane Schalatek, Leia Achampong, and Heidi White ‘THE LOSS AND DAMAGE FINANCE LANDSCAPE’ (The Loss and Damage Collaboration, 16 May 2023), available at: https://www.lossanddamagecollaboration.org/publication/the-loss-and-damage-finance-landscape

[4] ‘COP 28: Key outcomes agreed to at the UN Climate talks in Dubai’ (Carbon Brief, 13 December 2023), available at: https://www.carbonbrief.org/cop28-key-outcomes-agreed-at-the-un-climate-talks-in-dubai/

[5] Tweet on X (CAN-UK 30 November 2023), available https://twitter.com/CAN_UK_/status/1730225613456204089?s=20

[6] ‘Cumulative carbon dioxide (CO₂) emissions from fossil fuel combustion worldwide from 1750 to 2022, by major country’ (Statistica, 12 December 2023), available at: https://www.statista.com/statistics/1007454/cumulative-co2-emissions-worldwide-by-country/#:~:text=Global%20cumulative%20CO%E2%82%82%20emissions%20from,combustion%201750%2D2022%2C%20by%20country&text=The%20United%20States%20was%20the,birth%20of%20the%20industrial%20revolution

[7] World Population Review, available at: https://worldpopulationreview.com/country-rankings/oil-producing-countries; https://worldpopulationreview.com/country-rankings/oil-consumption-by-country; https://worldpopulationreview.com/country-rankings/natural-gas-by-country

[8] At the 15th Conference of Parties (COP15) of the UNFCCC in Copenhagen in 2009, developed countries committed to a collective goal of mobilising USD 100 billion per year by 2020 for climate action in developing countries, in the context of meaningful mitigation actions and transparency on implementation. The goal was formalised at COP16 in Cancun, and at COP21 in Paris, it was reiterated and extended to 2025; Laetitia Pettinotti, Yue Cao, Tony Mwenda Kamninga, Sarah Colenbrander ‘A fair share of climate finance? The Adaptation Edition’ (ODI, 13 September 2023), available at: https://odi.org/en/publications/a-fair-share-of-climate-finance-the-adaptation-edition/#:~:text=In%20a%20bid%20to%20strengthen,national%20income%2C%20and%20population%20size

[9] At the 15th Conference of Parties (COP15) of the UNFCCC in Copenhagen in 2009, developed countries committed to a collective goal of mobilising USD 100 billion per year by 2020 for climate action in developing countries, in the context of meaningful mitigation actions and transparency on implementation. The goal was formalised at COP16 in Cancun, and at COP21 in Paris, it was reiterated and extended to 2025; Laetitia Pettinotti, Yue Cao, Tony Mwenda Kamninga, Sarah Colenbrander ‘A fair share of climate finance? The Adaptation Edition’ (ODI, 13 September 2023), available at: https://odi.org/en/publications/a-fair-share-of-climate-finance-the-adaptation-edition/#:~:text=In%20a%20bid%20to%20strengthen,national%20income%2C%20and%20population%20size

[10] Janet Redman ‘DIRTY ENERGY DOMINANCE: DEPENDENT ON DENIAL – HOW THE U.S. FOSSIL FUEL INDUSTRY DEPENDS ON SUBSIDIES AND CLIMATE DENIAL’ (Oil Change International, October 2017), available at: https://priceofoil.org/content/uploads/2017/10/OCI_US-Fossil-Fuel-Subs-2015-16_Final_Oct2017.pdf

[11] Simon Black, Ian Parry, Nate Vernon ‘Fossil Fuel Subsidies Surged to Record $7 Trillion’ (IMF Blog, 24 August 2023), available at: https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel-subsidies-surged-to-record-7-trillion

[12] UNFCCC 2015, Decision 1/CP.21, Adoption of the Paris Agreement, UN Doc FCCC/CP/2015/10/Add, para. 51, available at: https://unfccc.int/resource/docs/2015/cop21/eng/10a01.pdf

[13] Para 12 of Annex I ‘Draft decision on the operationalization of the new funding arrangements, including the fund, for responding to loss and damage referred to in paragraphs 2–3 of decisions 2/CP.27 and 2/CMA.4’ to the Report by the Transitional Committee dated 28 November 2023, FCCC/CP/2023/9−FCCC/PA/CMA/2023/9, available at: https://unfccc.int/documents?f%5B0%5D=topic%3A1136&search2=&search3=&page=0%2C0%2C0

[14] E Feder, ‘Plundering the Poor: The Role of the World Bank in the Third World’ (1983) 13 International Journal of Health Services 649, available at: https://journals.sagepub.com/doi/10.2190/6GE4-8EC6-JXD5-QJ2Q

[15] The Congressional Research Service Report prepared for Members and Committees of Congress, titled ‘Selecting the World Bank President’ and updated 10 May 2023, available at: https://sgp.fas.org/crs/row/R42463.pdf

[16] Para 57 of Annex II to the Report by the Transitional Committee dated 28 November 2023, FCCC/CP/2023/9−FCCC/PA/CMA/2023/9, available at: https://unfccc.int/documents?f%5B0%5D=topic%3A1136&search2=&search3=&page=0%2C0%2C0

[17] Baysa Naran, Jake Connolly, Paul Rosane, Dharshan Wignarajah, Githungo Wakaba and Barbara Buchner ‘The Global Landscape on Climate Finance: A Decade of Data’ (Climate Policy Initiative, 27 October 2022), available at: https://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-a-decade-of-data/

[18] Lameez Omarjee ‘COP 28 I Pledges for Loss and Damage roll in, but billions is needed – SA chief negotiator’ (news24, 10 December 2023), available at: https://www.news24.com/fin24/climate_future/news/cop28-pledges-for-loss-and-damage-roll-in-but-billions-needed-sa-chief-negotiator-20231210

[19] Para 20 (i) of Annex I ‘Draft decision on the operationalization of the new funding arrangements, including the fund, for responding to loss and damage referred to in paragraphs 2–3 of decisions 2/CP.27 and 2/CMA.4’ to the Report by the Transitional Committee dated 28 November 2023, FCCC/CP/2023/9−FCCC/PA/CMA/2023/9, available at: https://unfccc.int/documents?f%5B0%5D=topic%3A1136&search2=&search3=&page=0%2C0%2C0

[20] Para 13 of Annex I ‘Draft decision on the operationalization of the new funding arrangements, including the fund, for responding to loss and damage referred to in paragraphs 2–3 of decisions 2/CP.27 and 2/CMA.4’ to the Report by the Transitional Committee dated 28 November 2023, FCCC/CP/2023/9−FCCC/PA/CMA/2023/9, available at: https://unfccc.int/documents?f%5B0%5D=topic%3A1136&search2=&search3=&page=0%2C0%2C0

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This blog is written by Cabot Institute for the Environment member Alexia Kaplan.

Alexia Kaplan
Alexia Kaplan

Loss and Damage: fears, vulnerabilities, emotions and compensation in the face of climate change

Posted on by amanda.woodman-hardy
Artwork by Andy Council on loss and damage
Artwork by Andy Council on loss and damage. Image credit: Amanda Woodman-Hardy. View the artwork in high resolution.

In July 2023, the Cabot Institute for the Environment and Universities UK Climate Network hosted an event focusing on loss and damage.

Loss and damage captures the adverse impacts and irreversible harm caused by climate-related events and changes, particularly in vulnerable and disadvantaged communities. It recognizes that some effects of climate change cannot be fully mitigated or adapted to, leading to tangible and intangible losses such as loss of lives, livelihoods, cultural heritage, and ecosystems.

Loss and damage has become a significant topic in international climate negotiations, with discussions focusing on how to address and compensate for unavoidable consequences of climate change, often in the context of financial support and liability for those responsible.

Participants at Loss and Damage event.
Participants at Loss and Damage event.

Participants at the workshop were encouraged to speak openly about their emotions around climate change losses and what it might look like to be compensated. They spoke openly and with great vulnerability about what they feared and hoped for.

post it notes denoting peoples feelings around loss and damage

Artist Andy Council was on hand to take notes and created a stunning piece of art to reflect our conversations – centering around greed, grief, injustice, and anger.

post it notes about compensation with regards to loss and damage

Andy said ‘When I attended the event, I heard different thoughts on the issues raised and I wanted to get as many of these into my artwork piece as possible. I wanted to get the different ideas as smaller components into a larger image, a symbol: the dollar sign. It seemed relevant as unfortunately things come down to money – profit from industry over climate change and habitat loss, money put towards preserving prestigious artefacts, less industrialised nations bearing the brunt of climate change and the funding to compensate for the loss and damage. The artwork is overall quite dark and gloomy, however there are elements of hope within the piece with images of resistance and preservation of the world’s natural landscape.’

Artist Andy Council looking at post it notes on the floor
Artist Andy Council reading post it notes.

Art has the unique ability to transcend language and cultural barriers, making it a powerful tool for raising awareness and fostering understanding of complex global issues like loss and damage. Climate change often feels abstract and distant, but through art, it can become tangible and emotionally resonant. Art can also convey the urgency and gravity of the issue, bridging gaps between different communities and fostering a sense of shared responsibility.

The UK Climate network said ‘we are keen to make sure that our research connects to people and action outside the academic world. It was great to see Dr Alix Dietzel engaging the public on this topic and bringing the conversation to life through art.’

COP27 established a Loss and Damage Fund that aims to provide financial assistance to nations most vulnerable and impacted by the effects of climate change. However, the UNFCCC has not yet specified which countries should contribute to the fund, and who will be eligible to receive help. As we head into COP28, all eyes will be on the negotiations to see whether these aspects of the fund can be nailed down.

COP27: What really happened on finance, justice and Loss and Damage?

Posted on by janet.crompton

The Cabot Institute for the Environment sent three delegates to the recent Conference of the Parties 27 (COP27). Drs Alix Dietzel (Sociology, Politics and International Studies); Colin Nolden (Bristol Law School); and Rachel James (Geographical Sciences) were present for most of the first week and Colin was there for the full two weeks. As the Institute has observer status with the United Nations Framework Convention on Climate Change, Alix, Rachel and Colin had the chance to engage with policy makers and climate policy experts from around the world to help promote climate action which is informed by the best evidence and research.

We asked them to give an update on their experience at COP27 and as a result, whether the pledges made at COP27 would mean that 1.5C is still achievable.

Drs Colin Nolden and Alix Dietzel at COP27.

Climate finance – Dr Colin Nolden

Colin’s research interests span sustainable energy policy, regulation and business models and interactions with secondary markets such as carbon markets and other sectors such as mobility. COP27 was an opportunity for him to talk directly to policymakers about implementing the Paris Agreement and to people directly affected by climate policy decisions.

Here are Colin’s post-COP thoughts:

“Alongside Loss and Damage, the main issue discussed at COP is climate finance for decarbonisation. The $100bn/yr pledged in Paris has never materialised and to add injury to insult, rich countries can borrow at 4%, whereas poor countries borrow at 14%, as Mia Motley, Prime Minister of Barbados, pointed out in her speech on Day 1. Under these conditions, investments in fossil fuel infrastructures pay off, but investments in renewables do not. An endless number of panel discussions and side events on ‘climate finance’ and ‘accelerating the clean energy/net zero transition’ are testament to this gap.

“Article 6 of the Paris Agreement is a mechanism to overcome this funding gap by providing the legal foundation to finance decarbonisation projects in a country in exchange for carbon credits provided by another. Whether these should lead to according adjustments in emissions inventories, as is the case under bilateral agreements using Article 6.2, is controversial. How Article 6.4 will deal with this issue is still unclear and is unlikely to be agreed on at successive COPs. Negotiations on Article 6 will determine the climate credit and finance architecture for years to come.”

Climate justice – Dr Alix Dietzel

Alix is Associate Director for Impact and Innovation at the Cabot Institute for the Environment and an environmental justice scholar. Her role at COP27 was to observe the negotiations and critically reflect on whose voices were heard and whose were left out of the discussion, as well as concentrating on whether topics such as Loss and Damage and just transition were being given adequate space and time during the negotiations.

Dr Alix Dietzel at COP27.

Here are Alix’s reflections from COP27:

“Despite much excitement over a new Loss and Damage fund, there is backsliding on commitments to lower emissions and phasing out fossil fuels. As an academic expert in just transition who went along this year hoping to make a difference, I share the anger felt around the world about this outcome.

“Attendance at COPs is strictly regulated. Parties (negotiating teams), the media, and observers (NGOs, IGOs, and UN Agencies) must all be pre-approved. Observers have access to the main plenaries and ceremonies, the pavilion exhibition spaces, and side-events. The negotiation rooms, however, are largely off limits. Most of the day is spent listening to speeches, networking, and asking questions at side-events. The main role of observers, then, is to apply indirect pressure on negotiators, report on what is happening, and network. Meaningful impact on and participation in negotiations seemed out of reach for many of the passionate people I met.

“It has long been known that who gets a say in climate change governance is skewed. As someone working on fair decision making as part of just transition, it is clear that only the most powerful voices are reflected in treaties such as the Paris Agreement. Despite being advertised as ‘Africa’s COP’, COP27 has further hampered inclusion. The run up was dogged by accusations of inflated hotel prices and concerns over surveillance, no chance to organize protests, and warnings about Egypt’s brutal police state.

“Arriving in Sharm El Sheik, there was an air of intimidation starting at the airport, where military personnel scrutinized passports. Police roadblocks featured heavily on our way to the hotel, and military officials surrounded the COP venue the next morning. Inside the venue, there were rumours we were being watched and observers were urged not to download the official app. More minor issues included voices literally not being heard due to unreliable microphones and the constant drone of airplanes overhead. Food queues were huge, and it was difficult to access water to refill our bottles. Sponsored by Coca Cola, we could buy soft drinks. Outside of COP, unless I was accompanied by a man, I faced near constant sexual harassment, hampering my ability to come and go freely.

“Who was there and who was most represented at COP27 also concerned me. The United Arab Emirates (UAE) registered the largest party delegation with more than 1,000 people, almost twice the size of the next biggest delegation, Brazil. Oil and gas lobby representatives were registered in the national delegations of 29 different countries and were larger than any single national delegation (outside of the UAE). At least 636 of those attending were lobbyists for the fossil-fuel industry. Despite the promise that COP27 would foreground African interests, the fossil lobby outnumbers any delegation from Africa. These numbers give a sense of who has power and say at these negotiations, and who does not.

“All this to say, I am not surprised at the outcomes. There is some good news in the form of a new fund for Loss and Damage – but there is no agreement yet on how much money should be paid in, by whom, and on what basis. More worryingly, the outcome document makes no mention of phasing out fossil fuels, and scant reference to the 1.5C target. Laurence Tubiana, one of the architects of the Paris Agreement, blamed the host country, Egypt, for the final decision.

“COP27 produced a text that clearly protects oil and gas petro-states and the fossil fuel industry. The final outcomes demonstrate that despite the thousands who were there to advocate for climate justice, it was the fossil fuel lobby who had most influence. As a climate justice scholar, I am deeply worried about the processes at COPs, especially given next year’s destination: The United Arab Emirates. Time is running out and watered-down commitments on emissions are at this stage deeply unjust and frankly dangerous.”

Loss and Damage – Dr Rachel James

Rachel is a climate scientist, focusing on African climate systems and developing climate science to inform and advance climate change policy. Her previous research has been designed to progress international climate policy discussions, including the COP process, and she has analysed the impacts of global mitigation goals, comparing different warming scenarios (1.5°C, 2°C and beyond).  At COP27, she engaged in adaptation discussions, to learn more about how science can support national adaptation planning, to guide her new research programme “Salient”, a UKRI Future Leaders Fellowship to improve climate information for adaptation, primarily in southern Africa.

Dr Rachel James (fourth from right) at COP27.

In her previous work, Dr James has also looked at how science can support policy discussions about  ‘Loss and Damage’, from climate change, and at COP27 she followed discussions on Loss and Damage, as well as taking part in a workshop to establish a network of African researchers focusing on Loss and Damage. Rachel reflects on her experience of COP and the Loss and Damage discussions:

“The COP is now a huge event, with hundreds of discussions happening simultaneously, and many thousands of people, (almost) all pushing for climate action, and acting on it in their own ways. There are lots of things going on, deals being struck, collaborations forming, alongside the official UNFCCC business.

“This was supposed to be the “COP of implementation”, as the Paris Agreement and the rulebook are already in place. Some said we were largely beyond negotiation.

“However, the Global South came ready to negotiate, particularly on Loss and Damage. They wanted a finance facility on Loss and Damage to be established. Negotiations began in the weekend before the COP, and – after negotiating all night with no food – the developing countries succeeded in getting this onto the formal agenda.

“Over the two weeks of the COP, my perception was that there was a huge shift on Loss and Damage. Once it was on the official agenda, it was much easier to talk about. It has been a very contentious issue. Broadly, the most vulnerable countries have called for mechanisms to address the fact that they are, and will continue to, experience loss and damage from climate change impacts like sea level rise and extreme weather. Those countries who have emitted the most fear this could lead to unlimited liability. When I first started working on it I’d often get a worried look when I mentioned the topic.

“In a side event during the first week at Sharm El Sheikh, I heard someone say “some magic has happened” and we can now talk about this in the mainstream. We also saw a series of announcements from countries committing finance for Loss and Damage.  Then, finally, after two weeks of negotiations ran into extra time, countries agreed to establish a fund for Loss and Damage.

“This was a huge victory for the developing countries. Lots of questions remain about how it will work, who will pay into it, and who will benefit, but nevertheless it marks a big step. Developing countries (especially AOSIS, the Alliance of Small Island States) have been working on this for decades. The negotiators work so hard, often into the night, it’s incredible.

“My overall view is that COP continues to be a difficult process, but it is shifting, maybe substantially. Many view COP as a talk shop and suggest it’s a waste of time, but I disagree. Although the process is tortuous, slow, and frustrating, it is the best one we have, and still vital. Progress is way too slow but there is progress. Every country is represented, and we don’t have any other process on climate change where that is the case. The developing countries have power in numbers at the COP that I am not sure they have in any other forum on climate change.”

Dr Alix Dietzel (fourth from right on the back row) at COP27

 

Is 1.5C still alive?

Colin: “The International Energy Agency expects fossil fuel demand to peak as early as 2025. However, with all countries harbouring exploitable fossil fuel resources racing to extract them (with our former Secretary of State for Business, Energy and Industrial Strategy Rees-Mogg vowing in September 2022 to “squeeze every last drop of oil” out of the North Sea) and key initiatives such as the Glasgow Financial Alliance for Net Zero failing to deliver on their promises, fossil fuels will not be phased out anytime soon.

“At the same time, pinning our hopes on Carbon Capture and Storage (CCS) is misguided as current capacities amount to four hours of global emissions and International Energy Agency projections suggest that capacities in 2030 will amount to 16 hours of emissions. This implies that in the absence of a sustained global financial commitment towards demand reduction or sustainable supply, limiting average global temperature rise to 1.5 above will be very difficult indeed.”

Rachel: “A key goal in Glasgow and in Sharm El Sheikh has been to keep 1.5°C alive. Some countries were attempting to backslide on mitigation goals during the final days, but in the end 1.5°C remained in the text. It’s disappointing that we didn’t see an increase in ambition from Glasgow, but 1.5°C is still there – even if “on life support”, as noted by Alok Sharma.

“It’s easy for us to do an academic analysis and speculate as to whether or not we think 1.5°C is politically feasible. But the IPCC has spelled it out clearly: every fraction of a degree of warming matters. What’s important is that we increase ambition to reduce emissions, and we phase out fossil fuels, so that we can limit global warming as much as possible.”

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This blog is written by Cabot Institute for the Environment members Dr Alix Dietzel, Dr Colin Nolden, Dr Rachel James and Amanda Woodman-Hardy.

Further reading

Read more about our experts at COP27.

Read Dr Alix Dietzel’s blog on COP27: how the fossil fuel lobby crowded out calls for climate justice

Read Dr Colin Nolden’s blog on After COP27: Is 1.5C still alive? 

Mock COP26: Convincing, Cooperating and Collaborating

Posted on by janet.crompton

 

Glasgow COP26 presentation, preliminary discussion, and negotiation rounds 1 & 2

On 11th November at 10am around 60 A-level students from schools across Bristol gathered to participate in this year’s Mock COP26, hosted by Jack Nicholls, Emilia Melville, and Camille Straatman from the Cabot Institute for the Environment. After a resounding success from the first Mock COP, which took place online in March 2021, there was real excitement and anticipation building for the in-person event which would be held in the Great Hall of the Wills Memorial Building.

The morning kicked off with an engaging presentation by Jack, Emilia, and Camille, outlining the objectives of the upcoming COP26 in Glasgow. There had been much discussion surrounding the COP in the public sphere in the prior weeks, so it was interesting to see a summary of where things stand in the time since the Paris Agreement and what the potential outcomes of this COP may be.

The negotiations began with preliminary intra-group discussions, facilitated by a group of 12 postgraduate students. Each group defined their stance on each of the COP resolutions, ranging from option A, the most radical response, to C, the most conservative. It was evident from the off that these students were highly knowledgeable and passionate about the environmental, sociological, and economic impacts of each resolution, and as a result, each group wasted no time in prioritising the resolutions that would benefit their actor the most. Brazil factored in its current economic and development situation, as well as the Amazon’s critical role in the ecosystem balance, choosing to prioritise climate finance, natural protection and conservation and protecting climate refugees. For the International Indigenous Peoples Forum on Climate Change (IIFPCC), giving protected status to 50% of Earth’s natural areas by 2050 was defined as the most important resolution, whereas Shell chose to focus on phasing out coal, with the understanding that this would take the onus off the oil industry. Each group presented their ideal resolutions in a clear and concise manner.

The atmosphere really started to build in the hall when the first round of negotiations began. China faced Greenpeace in a heated discussion on coal usage while the IIFPCC negotiated with the USA on protecting indigenous populations. The United Nations High Commissioner for Refugees found alignment with Brazil on many of the resolutions, namely achieving net-zero emissions by 2050, natural protection and conservation to 30% of Earth’s natural areas and protecting climate refugees. In round two of negotiations, we saw Shell and the International Monetary Fund categorically disagree on the timeline for transition to Zero Emissions Vehicles, eventually compromising on a B resolution to have all new vehicle sales as zero-emission by 2040. Brazil was happy in supporting the IIPFCC in resolution 7a. (All countries must allow people fleeing from natural disasters, environmental degradation, and sea level rise to enter their countries and make their new homes there). Brazil and IIPFCC made an alliance to encourage USA toward resolution 7a, instead of their preferred 7b (Countries at risk of extinction from sea level rise should be provided with new land to settle and move their people to OR be provided with financial help to buy land in other nations). China and the Alliance of Small Island States (AOSIS) clash on coal usage, with AOSIS pushing back with a suggestion of image control, but ultimately China held strong on their decision.

Negotiation rounds 3 & 4, voting, and deputy mayor’s speech

The UK showed their tactical abilities and their knowledge in the negotiations with Greenpeace, but Greenpeace did not cede to their demands and manage to agree to a deal.  The IIPFCC was determined to protect indigenous land and communities, but their quest was heavily challenged by Shell. There was no common ground in the negotiation with this petrol giant, so the IIPFCC had to ensure an allyship with Brazil if they wanted to ensure the protection of the indigenous. On round four, Shell tried to sway some votes from China and Sweden, but while agreements were found with the former, the latter country was not going to let Shell influence their values. The tête-à-tête became lively as neither Shell nor Sweden were willing to compromise, resulting in a rather unsuccessful attempt of finding complicity.

After four intense rounds of negotiating, the voting began. Were all parties going to remain faithful to the agreements established during the negotiations? Or would some throw a curve ball, changing their minds at the last minute? The pondered tactics of the IIPFCC were successful, as they managed to lock Brazil’s and the USA’s support on their most valued resolutions. All parties pondered thoroughly on how to best use their votes, and it seemed that this meant that some agreements had been silently retracted, when some astonished reactions followed the raise of hands here and there.

The conference was finally over and many parties, including Brazil and Greenpeace, could celebrate the victory of the resolutions agreed upon. Yet, it was clear that a bittersweet aftertaste was left in the mouths of some parties, who did not manage to persuade enough. The heated debate had ended, and what was done was done, but one more surprise was awaiting our participants. Deputy Mayor Asher Craig had been sitting on the sidelines for a few instances already, assisting in the final yet most heated rounds of the conference. She was there, observing our pupils in awe as they got into character and avidly fought for their beliefs. The Deputy Mayor was impressed by the passion of these young minds and how much they are invested in the cause; she was proud to see that young generations care about the environment and our planet, as they came up with ideas for change that they would like to see more in the Bristol. The innovativeness and creativity of the students was remarkable in her eyes, as she proceeded to give an inspiring and uplifting speech on the efforts currently being made by the City Council to respond to the climate emergency. The mock COP26 was a more than a successful event, and as everyone waited for the results of the conference in Glasgow, we all wished that our simulation had been real.

Watch the students in action in this short video created by Particle Productions and funded by Bristol City Council.

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This blog is written by Sonia Pighini and Jennifer Malone, who are students on the Cabot Institute for the Environment Master’s by Research.

Jennifer Malone
Currently studying for a Master’s by Research in Global  Environmental Challenges from the Cabot Institute for the Environment, Jennifer’s research is centred on food system decarbonisation within the scope of UK food policy and community practice.
Sonia Pigini

Sonia is an international student in the MscR programme Global Environmental Challenges. Their research focuses on people-centred sustainable food system transitions in Bristol. They are particularly interested in exploring the potential for a more decentralised food system in the city, which empowers local producers, engages consumers and that keeps aspects such as justice and inclusion at its heart.

Image credit (image at top of blog): Jack Pitts

COP26: How Accounting and Finance can take sustainability beyond ‘blah, blah, blah’

Posted on by janet.crompton

“Accounting and finance, isn’t that all about about making the world a worse place?” – I’m paraphrasing, but this is basically the response from a friend, involved in climate activism, when I mentioned that sustainability is now a core topic in Bristol’s School of Accounting and Finance.

I had to admit that she had a point.

Plenty of people are angry and frustrated at the moment.  Corporations, banks, and governments often seem to talk about ‘sustainability’ and ‘corporate social responsibility’, but then continue on with business as usual.  There is a lot of ‘blah, blah, blah’, as Greta Thunberg put it.  Yet, while this is an important critique, accounting and finance practices, such as measuring costs or planning investments, and those who can engage critically with them, have vital roles to play in going beyond all the talk, in putting sustainability into practice.  While we might feel powerless as individuals, as accounting and finance professionals, we can definitely try to make the world a better place.

Thinking of accounting and finance as a force for change might sound a bit surprising.  After all, accounting is a dry technical subject, right?  It’s for people who are good with numbers, who like things routine and orderly, isn’t it?  Stereotypes in the media, and the way many accounting textbooks are written, might give the impression that accounting is a boring, formulaic process, which follows rules and laws that ordinary people can’t understand.  But we should be skeptical about these impressions.  Talk to anyone who actually uses accounting measures and concepts in their daily work, and they’ll likely tell you a very different story.  They will probably tell you about how accounting numbers underpin the decisions they make about how they organise what they do (including the human labour and natural resources they use), what to prioritize, what to develop, and how to do it.

Contained in any organisation’s ‘cost’ and ‘profit’ data is a story about how much it depends on its workers, their community, and the natural eco-system. Decisions made using this data have important implications for how a business impacts on society and environment.  They can make the difference between a company that just exploits its workers and environment, and one that shifts the focus onto ‘giving back’.

Accounting and finance organisations are actively telling us that they want critical and creative thinkers.  They don’t want ‘number crunchers’, but people who are capable of finding innovative solutions to problems like how companies can reduce their carbon emissions, enrich their local eco-systems, and foster inclusive work places and communities.

The world of finance is also changing, as investors reassess the meaning of risk and opportunity.  Instead of just seeking to acquire more ‘things’, many people are seeing that the world is ‘ours’ to look after and protect, as well as to discover and enjoy.  Sustainability reporting, and other techniques to assess social and environmental performance, have often been problematic, functioning as ways to improve a company’s image, rather than signify real change.  Yet, as debates about priorities happen, and attitudes change, these reporting techniques could play more substantive roles.  Accounting and finance education therefore has a role to play in enabling future decision-makers to look critically beyond ‘what is’ to see what ‘could be’, and take action to make it happen.

More opportunities to make a difference can be found in the millions of alternative organisations developing today, including worker cooperatives and social enterprises.  Worker cooperatives are organizations that the members own and manage collectively.  Because the members are their ‘own boss’, they generally have greater freedom from the bureaucratic structures and procedures, which can hold back change in traditional organizations. Cooperatives have a history of leadership in sustainable development. In the US in the early 20th century, for example, cooperatives formed by African American communities saw themselves as ‘custodians of the land’ and were pioneers of organic farming.

Today, Bristol is emerging as a major hub for cooperative and sustainable business.  Giving the city its creative energy are examples like the Bristol Energy Cooperative, a leader of community-based renewable energy, and the Bristol Bike Project, a social institution in the heart of the city that provides affordable transport for asylum seekers and promotes green and healthy living for all.  For ethical banking and investing, Bristol has Triodos Bank, there is Bristol Green Capital Partnership, a membership network for businesses and organisations who want to work towards a sustainable Bristol, while Aardman Animations, the employee owned animations studio, demonstrates the benefits of democratic and inclusive management practices.  Joining a cooperative or forming one, with the added freedom they provide, could enable you to put that vision of sustainable fashion, housing, lifestyle, or whatever it might be, into practice.

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This blog is written by Dr Alice Bryer, Reader in Accounting, School of Accounting and Finance, University of Bristol. This blog has been reposted with kind permission from The University of Bristol’s Accounting and Finance blog.

Dr Alice Bryer

The COP26 Goals and Small Island Developing States

Posted on by janet.crompton

Small Island Developing States (SIDS) have had a giant impact on international climate negotiations. As part of the Alliance of Small Island States and the High Ambition Coalition, SIDS have pushed for the 1.5°C Paris Agreement target through their tagline “1.5°C to stay alive” as well as their advocacy for loss and damage and climate adaptation finance. Without them, the Paris Agreement would not be nearly as ambitious [1], and there would not be the focus on the 1.5°C temperature goal to the extent there is today. SIDS are amongst the countries on the frontline of the climate emergency, whilst being some of the least responsible for greenhouse gases causing anthropogenic climate change.

But SIDS have not sat back quietly whilst their future becomes more uncertain. They are fighting for the assurances of climate mitigation from the rest of the world to help ensure their habitable future.

As part of this year’s United Nations Climate Conference COP26, four goals have been set to drive forward ambition to tackle the climate emergency. Here are four reasons why achieving these goals is not only crucial for the future of humanity, but especially for SIDS.

1. Secure global net zero by mid-century and keep 1.5°C within reach

SIDS have long been champions of the 1.5°C goal, underlining the science that demonstrates that limiting warming to 2°C would be inadequate to ensure a habitable future for some small island states. Following the 2018 IPCC report looking at the impacts of a world at 1.5°C and 2°C, a 1.5°C global temperature rise in SIDS would already lead to [2]:

    ↑ More intense rainfall events

    ↑ More extreme heat

    ↑ Longer and more extreme drought

    ↑ Increased flooding

    ↑ Freshwater stress

    ↑ Significant loss of coral reefs

    ↑ Sea level rise

Any increase greater than 1.5°C would compound and exacerbate these risks further and could lead to the loss of ancestral homelands for thousands of people in low-lying islands such as the Maldives or Kiribati. For other islands, there would be severe impacts on lives and livelihoods. To highlight just one example, communities in small islands often rely on coral reefs for food, storm protection and tourism (to name but a few of the many reasons coral reefs are critical to coastal communities all over the world). But at 2°C warming, 99% of coral reefs are likely to perish [2]. For some small islands it really is “1.5°C to stay alive”.

2. Adapt to protect communities and natural habitats

Adaptation will be required in SIDS to help communities adjust to the consequences of a more extreme climate. From coral reef and mangrove restoration in the Caribbean, to early warning systems in the Pacific, adaptation strategies in SIDS are accelerating, but this must be aided by appropriate finance and support. The United Nations proposes that at least 50% of climate finance should be spent on building resilience and adaptation, but financial capital is currently the key limiting factor for adaptation in SIDS. Mobilising finance to boost adaptation projects would be the first step up a long ladder in assisting SIDS facing the steep cost of adapting to a climate they did not create.

3. Mobilise finance

Developing nations such as those in SIDS need financial assistance from developed economies to fund adaptation and the transition to a greener future. This is entirely reasonable considering that developed nations have built their economies using fossil fuels, of which the consequences are a) already impacting SIDS today and b) not an option to fuel sustainable development. Developed countries pledged to raise at least $100billion annually by 2020 to support developing countries with adaptation and mitigation, but in 2018 just $78.9billion had been mobilised [3]. Even if this $100billion is attained it would still be vastly insufficient, considering estimated costs of adaptation in developing countries will be $280-500billion in 2050 [4].

But what about the communities or entire islands who cannot adapt? SIDS have also been key advocates for loss and damage reparations, seeking compensation for their inequitable experience of climate-related disasters and for the loss and damages that cannot be recovered or adapted against. Broadly speaking, this refers to climate-related loss and damages – such as those from weather and hazard events we know are being made more likely and more severe by climate change – as well as helping to avoid future loss and damage through adequate risk reduction and adaptation.

In whichever form these reparations come, it is vital that they come faster and with bolder ambition.

4. Work together to deliver ambition into action

Small Island Developing States cannot combat the climate emergency alone. After all, the very reason for the extreme injustice of climate change in SIDS is that they have done little to cause the problem that they are bearing the consequences of. To put this in context, SIDS are responsible collectively for less than 1% of global greenhouse emissions [5]. This is where governments, business, and civil society from all over the world come in. SIDS (and the entire planet, frankly) need all countries to come forward with robust plans and targets for slashing emissions by at least 50% by 2030 and reaching net zero by 2050, as well as agreeing to mobilise finance to support adaptation against the damage we have already locked in.

Time is ticking. Let’s ensure these goals are achieved at COP26 to help speed up our race against the clock, so that we can safeguard a habitable future for SIDS, for ourselves and the planet.

References

[1] Ourbak, T. & Magnan, A. K. The Paris Agreement and climate change negotiations: Small Islands, big players. Regional Environmental Change vol. 18 2201–2207 (2018).

[2] Hoegh-Guldberg, O. et al. Chapter 3: Impacts of 1.5oC global warming on natural and human systems. in Global warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, (ed. Intergovernmental Panel on Climate Change) 175–311 (Intergovernmental Panel on Climate Change, 2018).

[3] OECD. Climate Finance Provided and Mobilised by Developed Countries in 2013-18. OECD https://www.oecd-ilibrary.org/finance-and-investment/climate-finance-provided-and-mobilised-by-developed-countries-in-2013-18_f0773d55-en (2020) doi:10.1787/F0773D55-EN.

[4] United Nations Environment Programme. Adaptation Gap Report 2020. https://www.unep.org/resources/adaptation-gap-report-2020 (2020).

[5] Thomas, A. et al. Climate Change and Small Island Developing States. Annual Review of Environment and Resources 45, (2020).

Header image: Leigh Blackall (CC BY 2.0)

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This blog is written by Cabot Institute for the Environment member Leanne Archer, School of Geographical Science, University of Bristol. Leanne is a NERC GW4+ PhD student interested in disaster risk in Small Island Developing States, investigating how flood inundation estimates could be improved in small islands under current and future climate change. You can follow Leanne on Twitter @leanne_archer_

How banks are trying to capture the green transition

Posted on by janet.crompton
philip openshaw / shutterstock

Private sector banks in the UK should have a central role in financing climate action and supporting a just transition to a low carbon economy. That’s according to a new report from the Grantham Research Institute at the London School of Economics.

Framed as a strategic opportunity that climate change represents for investors, the report identifies four specific reasons why banks should support the just transition. It would reinforce trust after the financial crisis; it would demonstrate leadership; it would reduce their exposure to material climate risks; and it would expand their customer base by creating demand for new services and products.

The report is not alone in its attempt to put banking and finance at the centre of a green and just transition. Similar arguments are presented by the World Bank, by the European Union, and by many national task forces on financing the transition, including the UK’s.

In all these cases, banks and financial markets are presented as essential allies in the green and just transition. At the same time, the climate emergency is described as a chance that finance cannot miss. Not because of the legal duties that arise from international conventions and the national framework, but because banking the green transition could help reestablish public legitimacy, innovate and guarantee future cashflow.

Twelve years after the financial crisis, we may be aware that banks and finance were responsible for the intensification of climate change and the exacerbation of inequality, but such reports say our future is still inexorably in their hands.

Is there no alternative to climate finance?

Four decades on from British prime minister Margaret Thatcher’s infamous motto that There Is No Alternative to the rule of the market, the relationship between financial capital and the green and just transition is presented as universal and inevitable. However, a vision of the future is a political construction whose strength and content depend on who is shaping it, the depth of their networks and their capacity transform a vision into reality.

Nick Beer / shutterstock
UK banks haven’t recovered their reputation since the financial crisis.

In the case of climate finance, it seems that a very limited number of people and institutions have been strategically occupying key spaces in the public debate and contributed to the reproduction of this monotone vision. In our ongoing research we are mapping various groups involved in green financial policymaking: the EU’s High-Level Expert Group on Sustainable Finance and its Technical Expert Group on Sustainable Finance, the UK Green Finance Task Force, the participants to the 2018 and 2019 Green Finance Summits in London and the authors behind publications like the LSE’s Banking on a Just Transition report.

Across these networks, key positions are occupied by current and former private industry leaders. Having done well out of the status quo, their trajectories and profiles denote a clear orientation in favour of deregulation and a strong private sector.

Often, the same people and organisations operate across networks and influence both regional and national conversations. Others are hubs that occupy a pivotal role in the construction of the network and in the predisposition of the spaces and guidelines for dialogue and policy making. This is the case, for example, of the Climate Bond Initiative (CBI), a relatively young international NGO headquartered in London whose sole mission is to “mobilise the largest capital market of all, the [US]$100 trillion bond market, for climate change solutions”. Characterised by a strong pro-private finance attitude, CBI proposes policy actions that are infused by the inevitability of aligning the interests of the finance industry with those of the planet.

Let’s unbank the green and just transition

COVID-19 has emphasised the socio-economic fragility of global financial capitalism and represents the shock that may lead to an acceleration of political processes. While corporate giants are declaring bankruptcy and millions are losing their jobs, governments in Europe and across the global north continue to pump trillions into rescuing and relaunching the economy in the name of the green recovery.

Political debate and positioning will decide whether these public funds will be spent on bailouts or public investments, on tax breaks for the 1% or provision of essential services, or whether the focus will be on green growth or climate justice. But private finance is already capturing this debate and may become a key beneficiary. Getting a green and just transition does not only depend on the voices that are heard, but also those that are silenced.

Intellectual and political elites on the side of the banks are making it harder to have a serious discussion about addressing climate change. NGOs and campaign groups are participating, but only if they share the premises and objectives of the financial sector.

This crowds out more transformative voices from civil society and the academy, and establishes a false public narrative of agreed actions despite the numerous voices outside of this club. And it also normalises the priority of financial market activities, putting profit before people and planet.

The current crisis is an opportunity to rethink what a green and just transition would entail. We must continue to question the role of finance rather than taking it for granted and ensure that the “green and just transition” becomes precisely that: green and just, rather than another source of profits for banks and the 1%.The Conversation

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This blog is written by Cabot Institute members Tomaso Ferrando, Research Professor, University of Antwerp and Dr Daniel Tischer, Lecturer in Management, University of Bristol. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Daniel Tischer
Tomaso Ferrando

 

 

 

COP24: ten years on from Lehman Brothers, we can’t trust finance with the planet

Posted on by janet.crompton

 

Listen! Andy Rain/EPA

Lehman Brothers filed for bankruptcy on September 15, 2008. The investment bank’s collapse was the drop that made the bucket of global finance overflow, starting a decade of foreclosures, bailouts and austerity.

The resulting tsunami hit the global economy and public sector, discrediting finance and its attempts to extract large rents from every aspect of the economy, including housing and food. An alternative was urgently needed.

Ten years later, private finance and large investors will play a central role at the COP24 in Katowice, Poland, and in the full implementation of the 2015 Paris Agreement.

Representatives from pension funds, insurance funds, asset managers and large banks will attend the meeting and lobby governments, cities and other banks to favour investments in infrastructure, energy production, agriculture and the transition towards a low-carbon economy.

Has finance cleaned up its act?

There is a US$2.5 trillion gap in development aid which needs to be filled if poor countries can adequately mitigate the effects of climate change. With little enthusiasm among rich countries to stump up, the role of private finance is inevitable. Policy makers trust financial capital as our best hope of securing investment to avoid the catastrophic warming beyond 1.5°C.

This has been the case for a while – the first announcement came at the UN Climate Summit in 2014, when a press release on the UN website said the investment community and financial institutions would “mobilise hundreds of billions of dollars for financing low-carbon and climate resilient pathways”.

Since then, networks that stress the role of private finance in rescuing the planet have multiplied, including the Climate Finance session at the Sustainable Innovation Forum, which will also take place in Katowice, on December 9-10 2018.

It is difficult to ignore that a strong reliance on private finance means putting the future of Earth in the hands of individuals and institutions that brought the global economy to the verge of collapse. It may be partially true that some are divesting from fossil fuels and funnelling their money into better projects. But before we pin our hopes on finance to solve climate change, there are some things we need to ask ourselves.

Poor countries like Bangladesh have little responsibility for climate change and need significant investment to adapt to it. Suvra Kanti Das/Shutterstock

Difficult questions for COP24 negotiators

How did we get to a point in history where it is taken for granted that public money alone can never be sufficient to finance our transition from fossil fuels? Is it an objective condition with no clear causation and responsibility, or something else?

What about the fact that global military spending in 2017 reached US$1.7 trillion while poor countries promised funding for climate change adaptation and mitigation in 2015 are still waiting?



Read more:
COP24: climate protesters must get radical and challenge economic growth

What about the cost of bailouts to the financial sector, which in the UK alone has been estimated at US$850 billion? As Michael Lewis noted in his boomerang theory, states that have propped up financiers with public money are now asking those same financiers to step in and do the job that states should do. And this leads to the second consideration.

Climate change is historically, politically and socially complex. Although sustainable finance is not presented as the sole solution, analysing its role produces a series of strategic short circuits.



Read more:
Climate change and migration in Bangladesh — one woman’s perspective

It oversimplifies and depoliticises the response to climate change. It legitimises the idea that sustainability can be achieved within continuous growth and expansion, which are essential to the survival of the financial sector.

It rewrites the way we think about our planet in the vocabulary of finance and its obsession for a return on investment. It marginalises any claim to address climate change based on present and historical injustices, redistribution and bottom-up projects organised by ordinary people.

It accepts that the financial way of defining sustainability and its achievements are inherently aligned with the rights, interests and needs of people and the planet.

Finance may be a partner in the fight against climate change, but it is certainly not a partner motivated by altruism. It’s motivated by generating profit from the transition. It is therefore unsurprising that energy generation, railways, water management and other forms of climate mitigation have been identified as priorities for sustainable finance.

Action on climate change has to involve standing up to the Wall Street Bull. Quietbits/Shutterstock

Fighting climate change on Wall Street’s terms

Wall Street can find large returns by investing in the transition to “greener” infrastructure, including the not-so-green Chinese green belt and road and dams like the Belo Monte, a project that originally applied for carbon credits and was labelled as a sustainable investment. Green bonds can help cities finance projects to reduce their environmental impact or adapt to climate change.

However, if money is the driver, we should not expect private investors to have any interest in projects that won’t generate a sufficient return, but would benefit people or cities that cannot pay for the service or for the debt, or that would protect vulnerable people from climate change. If climate change is fought according to the rules of Wall Street, people and projects will be supported only on the basis of whether they will make money.

Ten years ago, the world saw that finance had permeated every aspect of the global economy. Back then, it was clear that financial interests could not build a better and different world. Ten years later, COP24 should not legitimise large financial investors as the architects of a transition where sustainability rhymes with profitability.The Conversation

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This blog is by Cabot Institute member Tomaso Ferrando, a Lecturer in Law at the University of Bristol.  This article is republished from The Conversation under a Creative Commons license. Read the original article.

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