Leaders Accelerate Climate Action Two Years After Paris
On the second anniversary of the adoption of the historic Paris climate agreement, the President of France convened a wide array of public and private sector leaders at the “One Planet Summit.” Far from giving themselves a collective pat on the back for the work that has been done to combat climate change over the last two years, the diverse leaders came to the summit with their sleeves rolled up ready to get down to business on the most urgent challenge of our time.
Leader after leader stood up in front of the world community to announce how their government, company, or firm and their peers are aligning their actions with the goals of the Paris agreement. The following is a flavor of the most substantive commitments pledged by leaders at the One Planet Summit.
Perhaps the most significant announcement coming out of the One Planet Summit is that the World Bank Group will no longer finance exploration and production of oil and gas after 2019. Analysis by Oil Change International pegs that amount at over $1 billion per year on average for the last several years. The World Bank Group had already stopped financing coal with rare exceptions and will use similar rare exceptions for oil and gas. These rare circumstances will only allow them to invest in these projects if there is a clear energy access benefit for the poor and the project fits within the country’s Paris Agreement commitments. We hope that other international financial institutions will follow suit.
Another significant commitment at the summit came from institutional investors to pressure the world’s biggest emitting companies to step up on climate change. Some 225 of the world’s most influential investors with more than USD $26 trillion in assets under management launched an initiative to engage with 100 companies to align their business plans with the goals of the Paris Agreement. Investors engaged in the initiative include CalPERS, the California Public Employees’ Retirement System, the largest public pension fund in the U.S. which oversees $300 billion in assets. The initiative, known as Climate Action 100+, will initially engage with 100 of world’s largest emitting companies, including in the oil and gas, electric power, and transportation sectors. As part of the initiative, leading investors around the world are asking companies to: 1) improve governance on climate change; 2) reduce emissions across the value chain; and 3) strengthen climate-related financial disclosures. In a related announcement, 237 companies with a combined market capitalization of over $6.3 trillion publicly committed to support specific recommendations on climate-related financial disclosures from a task force led by Mike Bloomberg and Mark Carney, chairman of the G20’s Financial Stability Board.
Another major commitment announced at the summit came from AXA, the world’s third largest insurance company. They announced plans to quadruple their investments (to a total of $14 billion) in environmentally-friendly projects. AXA is also moving to further divest itself from fossil fuels, selling off $2.8 billion in coal investments, and moving not to insure any new coal mines, tar sands projects, or associated pipelines.
Investor and philanthropist Bill Gates announced the expansion of the Breakthrough Energy Coalition that he and a group of big name private investors initially launched at the Paris climate conference in 2015. The coalition announced that it is adding 15 new members, including General Electric and Microsoft. The Breakthrough Energy Coalition is now piloting public-private collaborations with five countries, including Canada, Mexico, France, and the United Kingdom, to enhance effectiveness throughout the energy innovation chain to ensure clean energy solutions have better odds at succeeding in the market. The coalition also announced five initial areas of focus to guide its investments, including: 1) grid-scale storage; 2) liquid fuel; 3) micro- and mini-grids; 4) alternative building materials; and 5) geothermal.
A number of new public and private leaders signed on to the Powering Past Coal Alliance, a coalition launched by Canada and the United Kingdom at last month’s climate conference in Germany to rapidly phase out traditional coal power plants without carbon capture and storage technologies. A total of seven new governments and 20 new companies, including Unilever, Salesforce, and Marks and Spencer, joined the alliance.
On the public leaders end of the spectrum, the European Union (E.U.) announced dedicated climate-smart investment as part of its broader investment plan for Africa and neighboring countries. A total of $10 billion in climate-smart investments was announced under the E.U. External Investment Plan by 2020. The investments will be targeted in three areas—sustainable cities, sustainable energy and connectivity and sustainable agriculture, rural entrepreneurs and agribusiness.
Continuing the public leadership on climate action, Caribbean leaders launched an ambitious plan to create the world’s first “climate smart zone.” The so-called Caribbean Climate Smart Coalition is a public-private coalition to catalyze a $8 billion investment plan to bring greater energy and infrastructure resilience to 3.2 million Caribbean households. The coalition will help Caribbean islands to eliminate their costly dependency on fossil fuels so that they can meet close to 100% percent of their energy needs from clean or renewable sources, and to embed resilience into communities and livelihoods to realize the bold ambitions of all Caribbean people. Along that vein, Canada and the World Bank will support developing countries, especially small island countries such as those in the Caribbean, to accelerate the transition away from coal-fired electricity toward clean energy to power their economies.
A representative from China announced at the summit that the country intends to release the first phase of its emissions trading scheme, set to be the world’s largest, in the next week. China also announced that by 2020, every listed company in China will be required to disclose information on its environmental impacts. This information will facilitate the market in determining which companies are green and helping shift the trajectory of Chinese investments towards low-carbon.
A number of the largest issuers of green bonds, created to fund projects that have positive environmental and climate benefits, announced pledges to double down on green financing. Nine of Europe’s largest green bond issuers that account for $30 billion in issuances joined forces to commit to a long-term presence in the green bond market as a core part of their project financing strategy, and that they will implement stringent reporting procedures and call on others to issue green bonds.
On the local government level, a network of mayors announced a charter to accelerate local action on the Paris Agreement. Through the One Planet Charter, cities will commit to specific climate action that drives investments, sustainable public procurement, and policy decisions in renewable energy, energy efficiency, electric vehicles, and efforts for zero emission buildings and zero waste. The One Planet Charter builds on the Chicago Climate Charter, where mayors across North America met last week to reaffirm their commitment to climate action. Cities will bring more detailed commitments to the Global Climate Action Summit to be hosted California in September of 2018.
In sum, these commitments show an ever-building tsunami of climate action around the world, from all walks of society. Only two years after its adoption and one year after Trump came in to office, the Paris Agreement is already rapidly shifting from words on paper to reality on-the-ground. Climate leaders from presidents to CEOs to mayors are helping to build confidence that the world is getting serious about investing in the future. In a year that has been plagued by historic climate-fueled disasters that have touched every continent, the One Planet Summit is a reminder that climate action has never been so possible nor so necessary. And it is a fitting reminder that we only have one planet to leave to our children and future generations, and that we must accelerate climate action even faster to ensure we entrust them with a better world.