ESG & Sustainability Insights

Climate and sustainable finance news: August 2021

7 minute read time

Developments in the green energy sector and beyond.

Global

IPCC report emphasises “unprecedented” scale of climate change

Extreme heatwaves, droughts and flooding will be a regular occurrence, according to a new report that “is a code red for humanity”.

The UN’s Intergovernmental Panel on Climate Change (IPCC) report says human activity is changing the climate in unprecedented and sometimes irreversible ways. It warns that the key temperature limit of 1.5°C is likely to be broken in just over 10 years “unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions”.

The report also states that “it is unequivocal that human influence has warmed the atmosphere, oceans and land”. The past five years, it notes, have been the hottest on record since 1850.

Valérie Masson-Delmotte, Co-Chair of the IPCC Working Group, says: “It has been clear for decades that the earth’s climate is changing, and the role of human influence on the climate system is undisputed.”

Global banks launch carbon offset platform

As organisations and institutions continue to collaborate in order to meet net zero targets, a collective of banks and financial service companies have launched a carbon offset platform.

Carbon offset schemes allow firms to invest in environmental projects to redress their own carbon footprint.

Project Carbon is a collaboration between NatWest Group, Canada’s IBC, Brazil’s Itaú Unibanco and National Australia Bank, and intends to support a global marketplace for quality carbon offsets.

It will initially be launched as a pilot in August, aligned with the objectives of former Bank of England head and now UN Special Envoy for Climate Action Mark Carney’s Taskforce on Scaling Voluntary Carbon Markets.

NatWest Group Chief Executive Alison Rose says: “Climate change is one of the most important challenges of our time. We’re helping our business and personal banking customers to understand and reduce their carbon footprints through partnerships like Project Carbon. Reaching net zero is a global effort, and I am pleased we are working across the industry to support our customers and help tackle the climate challenge.”

G20’s $3.3trn support for fossil fuels laid bare

G20 member countries allocated subsidies of $3.3trn into oil, coal, gas and fossil-fuelled electricity generation sectors between 2015 and 2019, according to a report from Bloomberg NEF and Bloomberg Philanthropies.

The Climate Policy Factbook report states that the subsidies were awarded at a level incompatible with the Paris Agreement on climate change.

The report highlights three steps G20 members can take towards achieving the goals set out by the Paris Agreement:  phasing out financial support for fossil fuels; putting a price on emissions; and encouraging climate risk disclosure. Only Germany and Italy are currently faring well in making policy progress across all three areas.

Meanwhile, the World Benchmarking Alliance has warned that the chances of limiting global warming to 1.5°C in line with the Paris Agreement may soon be dashed by oil and gas investment. These are set to exceed the allotted carbon budget as early as 2037.

UN launches new plan to tackle biodiversity loss

The UN has set a host of targets in a new draft of a Paris Agreement-style plan on biodiversity loss.

The UN Convention on Biological Diversity (CBD) draft report contains targets to meet, including eliminating plastic pollution and reducing pesticide use by two thirds. 

The document will be scrutinised by governments, and the final text negotiated before a crucial biodiversity summit in the Chinese city of Kunming in October.

Global wind and solar generation doubles in five years

Wind and solar provided almost a 10th of the world’s electricity in 2020, doubling its 2015 figures.

Ember’s Global Electricity Review says the US and China were the largest global renewable energy producers, despite fossil fuels still making up the vast majority of their energy use.

The UK and Spain were placed fifth for their share of total electricity generated by wind and solar. That accounted for 29% of Britain’s electricity produced and used in 2020. Denmark was ranked first with 61%, followed by Uruguay (44%), Ireland (35%) and Germany (33%).

COP26: mayors around the world pledge a “decade of action”

As the COP26 UN Climate Change Conference draws closer, union leaders and 13 mayors representing some of the world’s major cities have committed to a decade of action, including the creation of “good-quality jobs, tackling inequality and raising international climate ambition”.

The mayors of Los Angeles, London and Barcelona are among those involved, as well as counterparts in Sao Paulo, Phoenix, Arizona, and Houston, Texas. Their pledge includes support for workers who will lose jobs in polluting sectors.

They met virtually in a summit for city leaders, trades unions and partners.

Europe

EU’s Fit For 55 targets for 2030

The European Commission has produced a series of draft climate change proposals, including a tax on jet fuel and banning the sale of new petrol and diesel cars by 2035. The Fit For 55 plan also aims to cut carbon emissions by 55% by 2030, and will affect transport, manufacturing, trade and consumers.

However, it first needs to be approved by the 27 member states and the EU parliament, and there are fears negotiations could take years.

EU mayors form green alliance

More than 30 European mayors have come together to demand proper implementation of the European Green Deal, as they ask that the bloc stands by its climate commitments.

The mayors involved are demanding that fossil-fuelled vehicles be phased out across EU countries by 2035, and better conditions created to enable low- and zero-emission buildings for construction by 2030.

Meanwhile, the cross-industry CEO Alliance has backed the EU’s Fit For 55 plan to cut carbon emissions by 55% by 2030. Its proposals include accelerating measures to decarbonise mobility and transport, buildings and energy systems, and speeding up the renewal of key industry sectors in the EU. 

UK

Government unveils transport decarbonisation programme

The government has announced its transport decarbonisation plan. It aims to create “cleaner and quieter cities and communities” and to “improve the way people and goods move around”.

The strategy includes consulting on the global pledge to end the sale of polluting cars and HGVs by 2040 and achieve net zero airline emissions by 2050. It also proposes smart electric vehicle charging to reduce energy bills, and a commitment to electrify government cars and vans by 2027.

Heat and buildings strategy delayed until the autumn

The government has delayed its heat and buildings strategy, which was due to be unveiled in July.

News reports state that the long-awaited strategy could now be published in the autumn after the government decided not to launch it before parliament’s summer break.

The plan should set out how the country will decarbonise central heating systems in homes and offices, before the UK hosts the COP26 UN Climate Change Conference in November.

Net zero: 15% of UK businesses have target

Only 15% of businesses have a target to reach zero emissions, according to new research.

The Accenture and IHS Markit UK Business Outlook reveals that construction companies are the most likely to have set a net zero target, with manufacturing firms the least likely.

While there is hope for progress towards decarbonisation, manufacturers are also the least certain about hitting their targets, with only 34% confident that they will be able to deliver.

By Louise Hulland