Expectations are high for Cop26. Many have described the coming years as “a decisive decade”, and the summit in Glasgow is possibly one of our final chances to strike an agreement to tackle climate change and its devastating effects.
The science is clear. Only action will save us. But nothing will be possible without urgently mobilising the trillions of pounds of private finance needed to get us to net zero.
The figures are stark: in the UK alone environmental aspirations require between £44bn to £97bn in investment above current public sector commitments over the next ten years. Globally, the investment required for the energy sector to transition is estimated at $5.7tn a year until 2030.
The City, as a world-leading international financial centre, has a key role to play. That’s why over the last few years the City of London Corporation and our partners have worked tirelessly to fuel the green finance revolution, helping London develop the scale of its sustainable finance offerings.
Significant progress has been made in the lead up to this summit. Heavyweights such as Mark Carney have helped drive this. We have made huge strides in greening finance – through the Task Force on Climate-Related Financial Disclosure (TCFD) and the new International Sustainability Standards Board (ISSB), which we hope will be based in London.
And the Glasgow Financial Alliance for Net Zero (GFANZ) now represents firms with over $90tn of global assets-under-management, with signatories calling on governments to help restructure the global financial system and accelerate the world’s transition to a low-carbon economy. This will give us the firepower we will need to finance green.
We have built a pool of liquidity ready to be deployed. It’s not enough for finance to just stop from funding the wrong things, it is time to take stakes in the green industrial revolution. And we will need to work together – governments, finance and individuals – to mobilise this war-chest of capital where it is most needed.
Work too has been advanced in creating voluntary carbon markets and carbon credits, which will help companies and organisations meet net zero goals. It seems inevitable that we will eventually need a global carbon price – Cop26 should show us pathways to get there. Carbon and nature are two sides of the same coin – the value of nature will soon be an issue for finance too.
The challenge now is channelling the GFANZ finance towards solutions for 2030 not 2050. Currently, our economies are not designed to channel this pool of capital into net zero investments in the economy at the pace needed. So, alongside the Green Finance Institute, we are holding a Green Horizon Summit, to bring together the world’s leading financial institutions.
We will address topics such as the barriers to accelerating the mobilisation of capital and financing both transition and growth. The summit will also discuss how can we mobilise investment into emerging and developing economies.
We know what the problems are – we want solutions. There are no easy answers, but with combined effort, I am optimistic we can succeed.
With the eyes of the world now all on Glasgow, my message to those meeting in the city is simple: we need to act now.