Mark Carney, Governor of the Bank of England, said: "With major investors, the question is: what is your plan to get to net-zero?"
Greenpeace International has said 24 banks participating in the WEF 2020 here have extended financing worth USD 1.4 trillion to the fossil fuel industry since 2015 Paris Agreement. In a report titled ‘It’s the Finance Sector, Stupid’, released here, Greenpeace put the blame for the climate emergency at the feet of the banks, insurers and pension funds that participate in Davos summit.
Since the ground breaking Paris summit on climate change, 24 global banks have invested USD 1.4 trillion in the fossil fuel industry, said Jennifer Morgan, Executive Director of Greenpeace International, a non-governmental environmental organisation.
The report said USD 1 trillion could buy 640GW of solar power, more than the current global capacity.
However, financiers on a WEF 2020 panel along with Morgan, argued that the international financial system is fundamentally reshaping itself around how to transition to a net-zero economy (net-zero carbon footprint). They are responding to the demands of their clients as well as directly feeling the heat through, for example, having to reprice the cost of insurance risk.
Mark Carney, Governor of the Bank of England, said: “With major investors, the question is: what is your plan to get to net-zero?”
Two-thirds of questions at bank AGMs are now around these issues, he said, adding: “Everyone knows they need a plan.”
Carney acknowledged Greta Thunberg’s reference at the Annual Meeting on Tuesday that on our current emissions trajectory we will – in a little over eight years – most probably breach the limit required to restrict global warming to 1.5C.
He called for a credible trajectory towards a green transition, based on an agreed time frame and common metrics.
This, along with public pressure and government policy, will determine where capital flows, he said.
Morgan said governments are lagging behind and the world is in the midst of the largest civil society protest since the Iraq and Vietnam wars. She called on government leaders to take courage, sit down with experts, civil society and innovators, and put together what we know needs to be done.
Carney pointed to November’s COP26 meeting in Glasgow as the opportunity to get private actors and regulators together to ensure that climate change is taken into account in every financial decision. Speaking as a member of the board of directors for Saudi Aramco, Andrew N Liveris agreed that governments have been slow and called for businesses to “get very serious on the financial side of Key Performance Indicators (KPIs)”.
Outcomes will only emerge if we hold people accountable to the right KPIs, he said, adding that COP26 is an opportunity to develop metrics that business will respond to. However, governments also need to get their own houses in order, said Mariana Mazzucato, Professor of Economics of Innovation and Public Value; and Founder and Director, Institute for Innovation and Public Purpose, of University College London.
Mazzucato asked how genuine the claimed transformation of the finance sector really is. “Currently there is lots of talk, but all the walk is going in the wrong direction,” she said. What will really cause change is the way we govern businesses, she said, asking: “Why don’t we have a financial transaction tax?”
Panellists all agreed on one key issue – 2050 is far too late to achieve a net-zero economy. “We cannot get to 2030 and still have this conversation”, said Liveris.