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Toothless Fangs:

The scope of the private sector’s green ambitions yesterday sat atop the staggering £95 trillion-pound wall of assets at the Glasgow Financial Alliance for Net Zero’s disposal. But it was how this capital could be used effectively that was encouraging, specifically, leveraging blended finance to strategically pump cash at scale into sustainable development pipelines.

To distinguish between emissive apples and sustainable oranges, globally consistent climate and sustainability standards will be instrumental to making this work. “The money is here,” said UN Climate Envoy Mark Carney, “but that money needs net-zero aligned projects”.

He’s not wrong. The money is there and it has never reached such highs. But “[w]hen people hear about global finance,” as the Chancellor admitted, “it can often feel remote and abstract”. That is because it hasn’t materialised in the past, and when it has, tends to materialise coal power stations. Although the £95 trillion-dollar private piggy bank doesn’t rule out fossil fuel funding, the (albeit thin) strings attached to net-zero strategy do improve the odds for meaningful green investment.

Whether the promise lives up to its own figures is another question. The 2016 UN roadmap concretised the pledge made by developed countries in 2009, reaffirmed at the Paris Conference six years later, to secure $100 billion dollars of climate finance for the developing world. Even “modest assumptions,” the report said, “would lead to projected overall finance levels in 2020 above US$100 billion”. That was in 2016. As has been widely reported, the most recent OECD report shows climate finance mobilised to date misses that target by almost $20 billion dollars. When the Chancellor insisted that “we’re not simply talking about numbers”, he flew in the face of twelve years of evidence to the contrary, because that’s exactly what he could be talking about. So how can the public trust these numbers? There is reason to think it's mostly “blah, blah, blah”.

The Chancellor also announced his decision to mandate the UK’s financial institutions and listed companies to publish net-zero transition plans. Regulated by a new Transition Plan Taskforce, rules on decarbonisation and transition planning would by 2023 force firms to submit detailed net-zero plans. Rules are not legally binding and loose phrasing like a “move towards” making disclosures mandatory triggers climate-complacency déjà vu.

However, businesses may feel straightjacketed by the resulting green tailwinds and, as the Chancellor said of investors yesterday, “[provide] clarity and confidence in the climate impact of their investments as they do in the traditional metrics of profit and loss”. History would truly have turned over a (very green) leaf if so but don't hold your breath. If some recent research is to be believed, sustainable investment, at best, minimise negative ESG impacts. At worst, the naïve expectations of higher returns dye capital flows green.

Shock of the Day

190 nations and organisations pledged to quit coal in a commitment lacking targets or timescales

(Source: BBC News)

Stat of the Day

FIFA and the Premier League commit to net zero by 2040

(Source: Reuters)

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