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Will governments prevent a climate disaster?
Market Mysteries of the week
Will governments prevent a climate disaster?
Answer:
Don't get your hopes up.
There have been twenty-seven United Nations climate conferences, and the latest, COP27, is another disappointing statement of the inadequacy of government action to slow the devastating effects of climate change.
What is COP27?
COP27 is the
, aka
the United Nations Climate Change Conference
. It was held from November 6th until the 20th in Sharm el-Sheikh, Egypt. Government leaders worldwide convene each year to discuss actionable steps to address the negative impacts of climate change.
Did they fix everything this year?
The 27th time wasn't the charm. While there was one landmark philosophical breakthrough and a few signs of incremental progress,
the conference lacked the aggressive, coordinated action that the world needs.
Climate activists
as false marketing. The biggest plastic producer in the world,
, and
out-represented nearly every other government or organization.
The conference participants spent much time discussing global warming temperature targets but needed more significant action.
Last year, at COP26, countries agreed to focus on limiting the rise in the earth's temperature to 1.5 degrees Celsius. With current policies in place, the world is on track to warm by
, which would be
. If that happens,
we can expect a profoundly disrupted climate
with fiercer natural events, more animal and plant extinctions,
, food shortages, and millions more exposed to
each year. COP27 aimed to create a forum where countries could affirm the 1.5C target and accelerate their emissions reductions.
. Most proposals to ramp up action were thrown out, and some countries tried to back out of the COP26 commitment.
Despite last year's significant commitment to phasing out coal,
most other fossil fuel reduction targets were sidelined.
At
, participants agreed to "phase down" the use of "unabated coal power and inefficient fossil fuel subsidies." That was huge, but nothing like that happened this year.
The most celebrated win of COP27 was the commitment to create a Loss and Damage Fund.
Small, developing nations with fewer resources have been and will continue to be, most devasted by climate change. They have been asking for help for decades. At COP27, wealthy nations agreed to set up a pool of money to finance developing nations' infrastructure. It was a landmark philosophical win in which r
icher countries acknowledged a responsibility to the developing world for the harm caused by rising temperatures.
While the Loss and Damage Fund was a major philosophical milestone, it
.
Critics say it could be another empty promise.
In 2010, wealthy nations promised to deliver $100B per year for the next decade to developing countries to help them build the infrastructure to adapt to climate change.
in any of the ten years promised.
If not government diplomacy, what can save us?
Corporations have the power
to dramatically shift the direction of climate change, and
the economic pressure s mounting
.
,
, and
want to allocate their time and money to companies operating responsibly. This pressure has created a
. An activist investor even got energy giant
to focus on a lower-carbon future.
The potential business costs of greenhouse gas emissions are mounting
, from possible taxes on carbon emissions to expensive
. Sustainability has quickly evolved from an ideological mission statement to a pragmatic financial necessity.
How do we hold corporations accountable?
We have to monitor their pledges and call out the false promises.
is making that much easier.
As we've discussed,
.
Not all sustainability pledges are the same.
A net-zero promise using Science Based Targets is the gold standard. Carbon neutrality is better than nothing. JUST Capital tracks
of corporate commitments increasing in rigor: emissions reduction commitments, Net Zero by 2050, Science-Based Target Initiative for 2 Degree Scenario (verified 2-degree SBTi), SBTi for 1.5 Degree Scenario (verified 1.5-degree SBTi). The latter, the most robust corporate commitment, applies to corporations that are on track to support limiting global temperature rise to 1.5°C.
Science Based Targets (SBTi) offers a few points on what we should look for in corporate commitments. Firstly,
we should look to companies implementing rapid, deep cuts to value-chain emissions
– ideally, deep decarbonization of 90-95% - including those produced by their processes, purchased electricity and heat and generated by their supply chain and users. T
hey should set near and long-term commitments
– ideally, by 2050, they should be close to zero emissions. SBTi also recommends that companies make climate investments outside their targets, in addition to their decarbonization, to mitigate climate change elsewhere.
Has your company set a net zero target yet?
âš¡The Share Scoops Team
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