But the real action began last week.
As national governments, including the US and Brazil, backtrack from their environmental commitments, consumers, businesses and investors are stepping up to the plate. Or in the words of UN Secretary-General Antonio Guterres: “The influence of governments in societies has diminished. Other actors are becoming fundamental, especially the business community and local authorities. That movement largely compensated for the lack of positive engagement by governments.”
On Thursday, Amazon announced a new ‘Climate Pledge’ commitment to the Paris Agreement targets, which will see the tech giant implement decarbonisation initiatives to meet zero carbon emissions by 2040: 10 years ahead of the Paris Agreement goal of 2050. On the same day, Google announced 18 new-energy deals—the largest package of renewable energy deals in history—which it argues will drive $2bn in investments into wind and solar energy infrastructure. On Sunday, the UN Global Compact signed up an additional 59 companies, while 140 banks signed the UN Principles for Responsible Banking (though seven of the largest 10 abstained).
And then there was Friday’s global climate action strike, which saw millions of young protesters from 150 countries take to the streets. At yesterday’s UN Climate Action Summit, organiser Greta Thunberg delivered a blistering speech in which her frustration with “talk about money and fairy tales of eternal economic growth,” of “empty words,” was palpable.
Are they empty words? The latest news coming out of the financial industry doesn’t exactly breed hope. Despite their supposed commitment to various environmental initiatives, banks aren’t putting their money where their mouth is: the FT reports that at a time when reliance on fossil fuels needs to shrink, "bank finance is helping the industry grow.” Meanwhile, yet another asset manager has just been dragged over the coals for holding “thousands of shares in mining and energy companies” in green-friendly ETFs.
It’s a shame, because—as per the latest report from Michael Bloomberg’s Climate Finance Leadership Initiative—financial institutions have a critical role to play in the transition towards a low-carbon economy. Arguing the need for climate action has never been more urgent, Bloomberg's Mara Childress told Al Jazeera that a key task in funding decarbonisation is to “engage the private sector and make sure investment flows go where they need to, shifting trillions to low-carbon solutions.”
The report, which aims to push capital towards more sustainable investments, was presented at the UN Climate Action Summit yesterday and adds to the growing pressure on the financial system to mobilise against climate change. It’s not just about divesting or decarbonising existing investments, as Bill Gates pointed out last week: investors must scale up funding of low-carbon projects, too. Faith-based investors are ahead of the curve here, with ImpactAlpha reporting that a growing number are “carving out portions of their investment portfolios for direct, private impact investing strategies to combat the climate emergency."
Investors have a financial as well as a moral impetus to move the dial. Bloomberg points out that economic growth and climate action go hand in hand, with stranded assets, subsidised carbon and an underdeveloped investment pipeline major threats to investment returns: something the University of California acknowledged last week when it cut fossil fuels from its $80bn portfolio due to financial risk.
This week has laid bare the critical role financial institutions must play in the carbon transition. The question is whether they care enough to play it.