It’s been less than eight weeks since the COP21 meeting in Paris where an ambitious global agreement to limit temperature rises below two degrees was reached.
Many of those involved in this historic deal were back in New York on Wednesday to maintain momentum at the Investor Summit on Climate Risk, organised by sustainability advocacy group CERES and the United Nations.
Recurring themes throughout the day were the need for standardisation on carbon risk disclosure, calls for a global carbon price and the reinforcement of the message from COP21 that the world is moving towards a low-carbon economy.
The latter point was crystallised by Al Gore, former vice president of the United States and co-founder of sustainable investment manager Generation, who impressed on a room of investors at lunch the “need to divest particularly from dirty carbon investments”.
“I know it’s tough and a sea change. For those heavily invested in oil and gas it’s a painful time of stress and anxiety, “ he said. “I feel for those. But it’s time to move. The direction of travel is clear.” Gore also compared investments in new fossil fuel reserves to subprime mortgage securities.
Christiana Figueres, Executive Secretary of the UN Framework Convention, the UN’s climate chief who was given a standing ovation at the summit for her role in COP21, had the same message for delegates.
She made it clear that they could not continue to invest in coal and also focused on the expansion of oil and gas fields, saying: “The reserves can stay there, let’s not disturb them.”
Figueres also touched upon the issue of a carbon price, admitting that there had been a “tacit agreement” at COP21 that the global community would take a bottom-up approach to putting a price on carbon, with around 40 jurisdictions already having their own versions. Significantly, China is currently piloting an emissions trading scheme with plans to launch a national scheme soon.
Many other speakers strongly called for a carbon price and an end to fossil fuel subsidies, such as ex-World Bank climate chief Rachel Kyte, who is heading up new UN-backed initiative Sustainable Energy for All, and Gore, who said: “If we had perfectly rational governance we would put a price on carbon and let markets solve this in a effective way.
“But immoral lobbying of known characters is preventing good governance. We need a price on carbon and a price on denial politics.”
Ségolène Royal, the French minister for of ecology, sustainable development and energy, also called for a carbon price in light of falling oil prices.The leadership France has shown was widely celebrated during the summit. France not only hosted COP21, but has also implemented new laws around sustainability and carbon risk, including mandatory portfolio disclosure.
Former New York Mayor Michael Bloomberg – who is heading a new climate disclosure task force – said no other national government was taking on the issue of carbon risk like France, noting that on the whole it would be companies and governments at city-level, not federal governments, that would effectively tackle the problem.
And citing the paralysis of the current US federal government to illustrate the sometime unwieldiness of national governments, Bloomberg said it would have to be city mayors that took political leadership on climate risks.
“People living in cities create pollution through building and transport. It’s where problems start – you have to go there. If you can reduce their energy consumption you’ve come a long way to solve a big problem.”
The summit had a special focus on two rapidly urbanising countries: China and India, which are looking at the transition to renewables.
But, on this, Gore had this warning: “Interest rates are near zero around the world but India is borrowing money on the global market for solar at 8-12% interest. It’s functionally insane and we need to address this as a priority basis.”
In a room full of some of the world’s largest investors a major theme was money and how to unleash capital to drive the transition to a low-carbon world.
UN Secretary General Ban Ki-Moon made a pointed call to investors to double their clean energy investments by 2020 and conversations throughout the day explored the practicalities of driving investment to low-carbon opportunities.
But the appeal to investors was not just the hard numbers, the human element of climate change was also impressed upon the audience.
Gore quipped that the news at the moment felt a like the world that was “going through the Book of Revelations” but his overall message was hopeful, calling the transition to a low-carbon economy “the greatest economic opportunity we have to lift the global economy in a sustainable way”.
Ceres and Bloomberg New Energy Finance released a report called Mapping the Gap: Road from Paris at the summit. It concluded that $12.1trn must be invested in new renewable power generation over next 25. “While the scale of this new investment opportunity is massive, it is dwarfed by the capacity of global financial markets to unleash the needed investment,” it says.