During this year’s NYC Climate Week, I attended three webinars focused on the themes of sustainable finance and building back greener in a COVID-19 Impacted world: “Principles for Kickstarting the Sustainable Transition through Partnerships”, a discussion between Danish and U.S. climate ministers, state lieutenant governors, industry directors, and CEOs; “Global Climate Action: Unpacking the finance sector’s investment commitments”, hosted by the NewClimate Institute; and “Community Investment to Advance U.N. SDGs”, featuring the Local Initiatives Support Corporation (LISC).
Together, these webinars highlighted the importance of governmental partnerships, encouraging business and financial investments to set ambitious targets, and committing to action through transparency and accountability. Together, non-state actors such as cities, companies, and the financial sector can lead a just, green transition during our COVID-19 recovery period.
Sustainable Targets
In compliance with the Paris Agreement, Copenhagen pledged to decrease their carbon emissions 70% below 1990 levels by 2030, which requires as much reduction now to 2030 as they’ve already completed from 1990 to 2020. Not only is this one of the most ambitious national targets, it has been written into law by the Danish parliament. Twelve cities including London, Berlin, and New York City, also recently signed the “Divest/Invest Declaration”, which pledges to deliver an “equitable & resilient recovery from COVID-19 by divesting from fossil fuels and investing in #TheFutureWeWant”. Mayors will now divest city assets from fossil fuel companies while calling on city pension funds to follow and increase financial investments in climate solutions.
Many industries and businesses are also committing to net-zero targets, due to public interest trends increasing and peaking during global climate action summits and annual Conference of the Parties (COPs). In 2020, finance companies communicating net-zero targets accounted for a turnover of about $2 trillion, with 29 asset owners worth nearly $5 trillion committing to “net-zero by 2050”. However, these targets can be difficult to track, monitor, and report.
Partnerships
Partnerships between cities and countries such as Denmark and New York State, as well as between the public and private sectors, will be an essential element to reaching these ambitious targets. In order to encourage action and hold corporations accountable, we will need governmental support and public accountability. The role of governments is to establish and codify goals into law, while the private sector can implement actions through innovations, competition, and capacity building. Partnership could also emerge from clear opportunities for private and public investments in infrastructure, for example expanding off-shore wind or electric vehicle charging stations. Some solutions will present challenges for private industries, but incorporating sustainability will more often help companies compete long-term. Building together allows reinforcement of ambition and support for businesses to take risks.
Intention to action: How can the financial sector help us move and scale up?
Although the momentum of net-zero target setting by the financial sector is growing, targets can have different meanings with varying implications on global decarbonization. The majority of targets account for a business’s own operations only, rarely including downstream emissions from their investments. The devil will be in the details of company sustainability plans; constructive transparency is a key indicator for ambition. Consumer-facing industries are affected most and consumers’ individual actions can drive businesses to actually commit and keep up with shifting demand.
Community Investments & SDGs
An example of the private sector helping to implement global goals can be seen in Community development financial institutions (CDFIs). CDFIs lend non-predatory, affordable loans to low-income communities and people who are typically shut out of mainstream banks. Through these efforts, LISC has created over 1.56 million jobs, over 2 million housing units, and supported 11,500 community facilities. They use global targets, such as the Sustainable Development Goals set by the U.N. general assembly, to inform and communicate their work. By incorporating goals such as “no poverty”, “sustainable development”, “reduced inequalities”, “sustainable cities and communities” etc. into their mission, CDFIs and LISC blend environmental justice and financial investments.
Build Back Greener
While COVID-19 and climate change both present extraordinary local and global challenges, COVID-19 is a temporary issue – climate change is not. We as a global community must address both through intergovernmental cooperation, public and private partnerships, and community engagement. These webinars made me hopeful that countries like Denmark, cities like New York, and financial institutions like LISC will continue expanding their targets and implementing real solutions to reach net-zero 2050 goals.
