$130 trillion in investments “committed” to Net Zero (but skepticism remains)
I desperately want to feel positive about today’s various #cop26 Finance Day announcements. So many people I admire and respect have worked hard to get us to this point. And yes, $130 trillion is a big number (that’s the total assets of the firms now “committed” to net zero). And yes, making transition plans mandatory is a good idea.
But it’s nowhere near enough. And I can’t shake the feeling that we’ve created a massive distraction from the actions that really would move the needle. Unless and until we change the underlying economics – through tools like carbon pricing and tougher capital requirements for banks’ fossil fuel lending – we are in the land of what Duncan Austin has dubbed “greenwish”. Or what Greta Thunberg, less generously, refers to as #blahblahblah.
The best argument for voluntary commitments from the private sector is that they make it less politically risky for governments to act. But the opposite seems to have happened: we now see finance ministers applauding the private sector, as though the fact that 40% of global financial assets are signed up to voluntary net zero targets means it’s job done.
Even if that 40% follows through on their commitments, we’d mostly just be shifting the problem elsewhere (to the other 60%; from publicly listed companies to private ones that are not subject to the same level of regulatory oversight).
So long as burning fossil fuels remains profitable, someone will do it and someone else will finance it. The only thing that really matters is changing what is and isn’t profitable. And, sadly, nothing announced today does that.