Episode Transcript
Speaker 0 00:00:00 Welcome to the Definitive Sustainability Perspectives Podcast, where our goal is to engage and inform our audience from investors to asset managers and portfolio managers, to sustainability leaders and those involved in E S D and sustainable finance. This is Kesa Shrine. We are approaching a date that is very important for the international community, the five year anniversary of the Paris Agreement happening in this December. Now, this year, governments and other actors will be urged to present more focused climate goals, and to talk to us about the current state and the future of the Paris Agreement. We, Mariana Pio Feldman, senior Director International Climate Corporation, and Monit core, Alia Senior Program Officer, US and International Climate Corporation. And both join us as partners of the World Wildlife Fund and the Alliances for Climate Action. Thank you both for joining us. And Marianna, let's just jump right into it. What is the objective of the Paris Agreement?
Speaker 1 00:01:13 Hello, and thank you for this opportunity. Um, the Paris Agreement, um, has been a landmark agreement, and the reason is that it's the first global blueprint to address the planetary challenge of climate change. Back in 2015 when, um, governments from around the world came together, um, they coalesced, uh, with the recognition that addressing the climate crisis is critical for the future of people and planet. And back in 2015, over 190 countries signed the landmark agreement, and then the Paris Agreement came into effect only 11 months later in November, 2016. Now, what does the Paris Agreement aim to do? While all of the signatories of the Paris Agreement aim to collectively limit global warming to well below two degrees Celsius and do everything within their power to keep global warming from going beyond 1.5, which is considered, um, uh, the guardrail to avert the worst impacts of climate change. In addition, under the Paris Agreement, um, governments commit to improving their ability to adapt to climate impacts and to help redirect global financial flows so that we can match, um, the investments to the decarbonization and the climate preparedness we need to see.
Speaker 1 00:02:39 Part of what makes the Paris Agreement unique, um, even in international governance, is that it is combining an unprecedented hybrid approach. And what do I mean by that? Because it blends. What it does is that it blends a bottom up delivery mechanism where basically every country that is party to the Paris Agreement, uh, commits to contribute, um, their best effort towards reducing, um, uh, greenhouse gas emissions and prepare for the impacts of climate change to what are called nationally determined. This improves that everybody contributes, but recognizes differences in national circumstances. This gets combined with a top-down approach or a top-down framework where we have shared goals, we have rules to ensure mutual accountability, and we have a ratchet mechanism so that over time together we do more. The other thing that makes the Paris Agreement unique is that while national governments are the parties to the Paris Agreement, the Paris Agreement recognizes that national governments alone won't delivered on the goals that I've just laid out. It basically recognizes that every actor in society, the institutions that shape social and economic activity, like the private sector investors, local governments, university, civil society, they all have a part in this. And it recognizes their role as a, as being critical players that need to work with national governments so that we reach our common and much needed destination. Mm-hmm.
Speaker 0 00:04:09 <affirmative>, so great. We have that context of the history, the importance because all of these nations, governments are really coming together to make these commitments. Could you let us know why in 2021, the Paris Agreement holds such importance as we head into 2021 and beyond? What is the importance of it right now today?
Speaker 2 00:04:30 Thanks Kisa and the definitive team. Um, so in terms of answering your question, the coming decade could be a turning point in humanities efforts to a tackle climate change. According to the latest science, global surface temperatures are projected to exceed three degree Celsius based on current policies, a path which according to the intergovernmental panel on climate change, the I P C C would result in destabilized socioeconomic systems, decimated ecosystems and increased suffering of the human race across the world. Yet up to the last year, total greenhouse gas emissions, which are manmade emissions, kept increasing at a staggering pace. Science also tells us that global emissions must be reduced by 50% relative to 2010 levels by the year 2030 and reach net zero by 2050 to prevent global temperatures from surpassing the one point, uh, degree Celsius mark, which is the world's guardrail to contain the catastrophic climate change impacts that I talked about.
Speaker 2 00:05:43 Now, this daunting undertaking has been only made more difficult by the current COVID 19 pandemic. While emissions are projected to result in the largest annual reduction of human-induced emissions on record, the national recovery packages under consideration around the world run the risk of further locking the world into a fossil fuel based economy. In the coming months, national governments must submit climate targets under the Paris Agreement for 2030 and 2050 to the U NF c c, the un, uh, climate Council for climate change in advance of the rescheduled COP 26 in November, 2021. That will set the trajectory of global emissions for years to come. At the same time, national governments are grappling with how to jumpstart their economies and help the people and their communities after a devastating pandemic. Now look, this is a unique opportunity to invest in building back better investing in policies and measures that decisively steer the world towards a net zero emissions trajectory, rather than contradictory or incremental steps that severely crippled the world's chances to stay well below the safe temperature limits.
Speaker 2 00:07:02 Now, investors have a unique role to play in this pivotal moment, steering public and private finance towards a new novel that recognizes that the fastest way to get people back to work and improve the health of our communities is through bold and just climate action that leaves no one behind. By being positive change agents, investors can help accelerate our recovery that increases our towards decarbonization rather than postpones it along with government commitments. The world needs investors, the world needs companies, and by investors I mean including the asset managers who collectively have over 91 trillion in assets as a potential to support a net zero carbon climate residual transition aligned with the goals of the Paris Agreement.
Speaker 0 00:07:58 So that's great, man. I really appreciate the, the term there that NetZero by 2050 is really the world's guard rail. I think that's, um, a really great way to interpret it in a really great way to visualize it as the world's guardrail. And Marianna, I want to just talk about going from why it's important in 2021 and beyond to talk about the commitments. Have they changed, um, from its inception in 2015 to now, and how do we expect it to continue to evolve the commitments that these nations make, as well as, um, the objectives of the Paris Agreement? Do we see evolution? Has there been major evolution over the last few years?
Speaker 1 00:08:38 So when, uh, parties ratified, national governments ratified, um, the Paris Agreement, um, they brought with them what were, um, their original, um, uh, initial sets of targets for 2030. Those were the intended nationally determined contributions as they're unknown, but now that, uh, the Paris Agreement is gonna go in earnest in into full implementation. Um, under the Paris Agreement, parties were asked to update their nationally determined contributions, their targets for 2030. In addition, um, they were asked to submit the long-term what are known as long-term strategies, uh, which are basically aim need to lay out what the path for decarbonization for our country is. The two very much fit together. The long-term strategies provide a long-term direction of travel and an endpoint. While these 2030 targets are also known as NDCs, provide, um, a sense of the scale of ambition and the actions that will be taken in the next 10 years. So we are now at a critical period when governments need to put forth these 20, 30 and 2050 targets. Originally, they were intended by this year, uh, but given that the, uh, conference of the parties, the cop has been postponed to 2021, we might see some governments spilling into early next year to submit them.
Speaker 0 00:10:10 If we have to think about success factors, I'm thinking about this from a very business oriented perspective, KPIs, success factors, what does success look like? What would the layout of that be? What would success look like for the organization?
Speaker 1 00:10:27 So the science is absolutely clear about where we need to go. We know that in order to avert the worst impacts of climate change, and we are seeing already, uh, what those impacts look like, even as the temperature, global temperatures have only increased by a degree, which is already enormous, uh, that what we need to do is in the next 10 years by 2030, global greenhouse emissions need to be reduced, uh, by 50%, and then we need to keep reducing them so that by 2050 we reach climate neutrality, uh, and we reach particularly net zero carbon emissions by 2050. So we are at a critical time for humankind when we actually need to use our best technologies, our best know-how and political will and investment to align with this trajectory. The targets that we need to see on the table need to set that clear align with science and direction of travel. And in the next five years, we need to see policies at the national level and the subnational level align with the efforts of the private sector investors and so many others to align with that trajectory and put human ingenuity in support for of the health
Speaker 0 00:11:54 Of the planet. So reducing the GHGs and really focusing on policy, it sounds like those are the key success factors that we're really looking at here. And in terms of cautionary tales, um, and we don't like to think about what it would look like if we don't get it right, but are there cautionary tales around not taking action? And in terms of repercussions of lack of involvement, um, in the Paris agreement, obviously in the US we've seen, um, the switch being turned off in terms of lack of involvement and then getting back into it, are there repercussions or issues that countries really need to think about if they are not involved in the Paris agreement?
Speaker 2 00:12:35 <unk> like not talking about gloom and doom here and there is hope, but the message is very clear. The decarbonized economy train has left the station, so get on or get left behind. There's every indication that the economy is committing to this path from asset management firms like BlackRock to industry leaders like ikea, Walmart, McDonald's, Microsoft. Since the launch of the financial sustainability boards organ, um, task force on climate related financial disclosure, the tcfd, more than 1500 organizations have expressed their support for its recommendations. 60% of the world's hundred largest public companies support these recommendations and already report in line with these. Therefore, while we do see that this is, um, something right in front of us, we are also seeing that climate action is playing an increasingly central role in the strategic approach approach across the board. It is also clear that public support for climate action has been consistently rising during the last decade across countries, not only on the economic, but the political costs of ignoring this issue.
Speaker 2 00:13:52 A global survey, for example, across 26 countries, shows that the majority of people surveyed across the board said that global climate change is a major threat to donation even in the context of the current pandemic. Even in a country as polarized on climate such as the United States, Americans overwhelmingly want a reduction in global warming and support renewable energy development. But interestingly enough, they don't yet realize how many people share their beliefs as a reflection of growing public concern on the climate crisis. In fact, climate change even took center stage during the US presidential debates and to just get substantiate and give you some examples of the recent climate opinion surveys in the United States, 58% of Americans said that they were either very concerned or somewhat concerned about the communities being harmed by climate change. About seven in 10 also favor full decarbonization of the economy, eliminating fossil fuel emissions from heavy emitting sectors such as transportation, electricity, buildings, industry, the agricultural sectors by 2050. Look, with this kind of support, there is real hope for a significantly bolder approach for climate action here moving forward. So while I'll say there is a cost retail to be told, this can end in a happy ending if we all get on the decarbonization train.
Speaker 0 00:15:21 So we, to this great information around consumers and how the interest in climate change has really evolved and increased, and we've seen that even through political discourse. So going from consumers and customers to businesses and investors, how can a business and investors, how can they engage in the Paris Agreement objectives?
Speaker 2 00:15:46 So as Mariana mentioned, the speed and scale by which we need this transformation, we need all hands on deck, including investors and companies to meet our climate challenge. Now, going back to historically the UN Framework Convention on Climate Change, the UNY has served almost exclusively as a forum for national governments. The Paris Agreement is unique in many ways, but especially because while negotiated with the government, it leaves room for subnational action. In fact, at COP 21, the conference of parties in Paris where this agreement was agreed upon, it had the strongest showing of force of company CEOs, investors, governors, mayors, civil society organizations no longer on the sidelines of negotiations. Subnational actors can engage in the Paris Agreement, uh, through various ways, either through a formal channel called the Marrakesh Partnership, which links subnational actors with national government. Also some of the informal ways of taking individual or collaborative action.
Speaker 2 00:16:52 As we are seeing, um, through examples that we just mentioned through certain alliances and partnerships. Now investors have a dual role. They can a benefit from the Paris Agreement by being aligned to it. And, um, they also can play a critical role in a successful implementation. So to just talk about the benefits of adopting or aligning to the Paris Agreement, we are well aware and as investors and companies listening in that climate change presents financial risk testing, think it will result in opportunities for the global economy. For example, countries that verify the Paris Agreement shape their climate regulations and policies in line with science that actually provides the uniformity, predictability, and consistency across geographies and key economic sectors, which in turn boost investor confidence. It also expands the landscape of clean investments in an investor's portfolio, ensuring a greater return of interest compared to the uncertainty and threat of assets from investments in fossil fuel heavy projects.
Speaker 2 00:18:04 Just as a quick example, by investing in renewable energy, investors will benefit from a future carbon pricing regulation, which no longer is the fu is say 10 years from now. It's coming very soon, which will make their clean investments more profitable over investments in a carbon intensive sector. And then in terms of how investors can help implement the Paris agreement, well, they can do so by a, um, managing their risks. So as a shareholder investor, um, or so as a shareholder or as an investor, sorry, require climate risk and opportunities disclosure. So you can be empowered to do three things, one more transparently and effectively evaluate climate risk to that company in which you're investing. Its suppliers and competitors. B, make an informed decision as to where you will allocate your capital and c, evaluate risks and exposures over the short, medium and long term. And then there's this ambition loop. When you make investments in a clean energy economy, it drives companies to take bolder climate action and provides confidence to national governments to strengthen their climate and energy policies triggering a positive ambition loop. There are also many investors who've realized that the financial risk to climate change, um, are important. And the good news is many are already taking action mm-hmm <affirmative>. However, to truly move the needle, we need everyone. Luckily, there are many examples and resources you can learn from.
Speaker 0 00:19:43 Um, such great information even talking about the, the objective of the Paris Agreement, the importance of it, because it is a global blueprint addressing climate change and all participants are really committing to limiting global warming and redirecting global financial flow. So very, um, clear information about the origins. Also the importance and the real goal. We must reach net zero by 2050, which is the world world's guardrail. And man, I mentioned before, I love that, um, analogy and really putting that visual out there in terms of evolution. Countries are updating their targets and long-term strategies and really clarifying what the path to decarbonization looks like, where they'll be, where they plan to be in 10 years. Um, in terms of another primary goal goal, reducing global greenhouse emissions by 50% by 2030. And we talked about what success looks like as well as what some of the challenges could be if that doesn't happen.
Speaker 0 00:20:45 And the importance in really making a speed and scale are needed. All hands really needed on deck. Thus, the importance of the partnerships between businesses, investors, governments, and also very importantly, investors who align to the Paris Agreement can really see benefits. As you mentioned, both of you, Manjot and Mariana. Um, the risks that we see with climate change that could possibly be reduced moving forward. There are benefits from investing in renewables. Those investors could see greater profitability as the companies could see greater pro profitabilities. And also aligning to the Paris Agreement really supports in managing risk levels, not just now, but moving forward. Manjot and Mariana, thank you so much for joining us.
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