The world’s poorer countries also are demanding the international financial sector channel more of its investments and loans to less-developed nations to help pay for reducing emissions — and to assist those countries in adapting to the climate impacts they already are confronting.
“Success on climate change requires transforming the entire global economy,” said Nigel Purvis, the chief executive of Climate Advisers, a nonprofit firm involved in marshaling private capital to combat the problem. “That task is too big for governments to do alone. The private sector is the engine of global change, and action and success will depend on harnessing the power of private enterprise.”
“Historically a lot of the climate negotiations have focused exclusively on governmental resources, and the agenda here is in part to enlarge those and to really think about private capital and how that private capital, perhaps blended with some government resources, can substantially enhance the overall financial capacity to address climate,” an administration official said at a Wednesday briefing on the condition of anonymity.
Mark Carney, a former head of the Bank of England and now a climate adviser to British Prime Minister Boris Johnson, on Wednesday will unveil the Glasgow Financial Alliance for Net Zero. The group represents 160 firms with $70 trillion of assets that have pledged themselves the mission of reaching zero emissions by 2050; the commitment will require them to map out detailed steps along the way. The alliance also plans to publish transition targets following “a scientific pathway,” one banker said, speaking on the condition of anonymity to preserve business relationships.
An additional 43 banks in 23 countries have joined a Net-Zero Banking Alliance, setting their own zero-carbon pledges for 2050. Within three years, the banks must set targets for borrowers with larger emissions. The banks will have to spell out in unusual specificity their plans for overhauling nine sectors: agriculture, aluminum, cement, coal, commercial and residential real estate, iron and steel, oil and gas, power generation, and transportation.
Jules Kortenhorst, chief executive of the RMI, a nonpartisan organization devoted to accelerating the economic shift to renewable energy, said coming up with plans to reach those goals won’t be simple.
“It is easy for financial institutions to get their steak — they can invest in all these exciting new, fantastic opportunities,” Kortenhorst said. “But the banks also have to eat their vegetables, meaning they have to transition their existing portfolio away from coal, oil and gas, and other high-carbon assets. They need to think through what to do with the existing balance sheet.”
An analysis last month by a group of environmental activist organizations found the 60 largest commercial and investment banks poured a combined $3.8 trillion into the fossil fuel industry between 2016 and 2020, the period after the Paris climate agreement was signed. JPMorgan Chase was the biggest funder of fossil fuels, although the bank did shrink its portfolio in that area by nearly $13 billion last year, the study said.
“The fact is we’re long past debating whether climate change is real. But we need to acknowledge that the solution is not as simple as walking away from fossil fuels,” Jamie Dimon, the chief executive of JPMorgan Chase, said in a letter to shareholders this month. “We will need resources such as oil and natural gas until commercial, affordable and low-carbon alternatives can be developed to meet all of our global energy needs.”
In the United States, more companies are looking for ways to reach net-zero targets and to meet the demands of shareholders, consumers and employees. Ceres, a nonprofit organization dedicated to sustainable development, recently released a letter signed by more than 400 companies urging Biden to set a challenging goal of cutting U.S. emissions by 50 percent or more from 2005 levels. The signatory companies include Ben and Jerry’s, Salesforce, Ralph Lauren Corp. and the cement maker LafargeHolcim.
This week’s summit will also offer a forum for lower-income countries to try to change the flow of private capital. In early April, a collection of environmental justice and international development groups detailed what would amount to a “fair share” commitment from the United States — the world’s wealthiest country and historically its largest greenhouse gas polluter.
Biden’s initial budget request called for an additional $1.2 billion over the next two years for the international Green Climate Fund, which helps developing nations adapt to climate change and mitigate its effects. Activists criticized that amount as woefully inadequate by itself, although the administration has said that it is starting point and that the United States is likely to pay an additional $2 billion the country had pledged in Paris but that President Donald Trump subsequently blocked.
Anything less would send a signal that the United States is still not taking its global responsibility seriously, said Brandon Wu, director of policy and campaigns for ActionAid USA.
“The United States has consistently failed to deliver on its promises of climate finance to support action in poorer countries,” Wu said in an email Sunday. “Without U.S. support for front-line communities in poorer countries, untold millions of people who have had little role in causing the climate crisis will be left alone to deal with its already devastating impacts.”
Activists are not alone in pushing the White House to find more money for vulnerable nations most at risk from deepening climate impacts — something Trump insisted was not in this country’s interest. More than two dozen House members wrote to Biden and other top administration officials in late March, imploring them to make good on U.S. promises to support the Green Climate Fund and help “rehabilitate our nation’s role as an international leader.”
“It is incumbent upon the United States to contribute its fair share to global mitigation and adaptation efforts by providing financing to developing countries for just and equitable climate action,” they wrote.
Biden embraced such a U.S. role just a week into his presidency. In a broad executive order Jan. 27, he declared the country “will also immediately begin to develop a climate finance plan, making strategic use of multilateral and bilateral channels and institutions, to assist developing countries in implementing ambitious emissions reduction measures, protecting critical ecosystems, building resilience against the impacts of climate change, and promoting the flow of capital toward climate-aligned investments and away from high-carbon investments.”
His special envoy for climate, John F. Kerry, said in an interview with The Washington Post last month that “President Biden is committed to fulfilling our obligation and doing more over time, and we will.”
Some of Biden’s appointments also point toward more attention on financing for less-developed countries. The Treasury Department just announced that its first climate counselor would be John E. Morton, a former partner at the climate change advisory and investment firm Pollination. Last month, Kerry hired Mark Gallogly as a liaison to the business community. The recently retired Gallogly is a founder of the private-equity firm Centerbridge Partners and also spent 16 years at the investment firm Blackstone.
“Simply put, the most vulnerable countries on the front lines need climate finance in order to survive climate change,” noted Antigua and Barbuda’s ambassador to the United Nations, Aubrey Webson, who chairs the Alliance of Small Island States, a group of 44 islands and low-lying coastal states around the world that act as a bloc at international climate talks.
Historically, Webson said in an email, small and developing nations have been left to take on more debt and have faced a lack of access to various forms of climate finance — but that must change.
“We need technical support to build the capacities required to process guarantees, equity, debt swaps, and other more grant-based and concessionary forms of finance,” Webson wrote. “The bottom line is: for the envisioned transition to low-emission, climate resilient pathways, global financial flows need to be redirected accordingly.”