“How capital is allocated in the coming five years will determine life on Earth for the next 300 years,” urges Christiana Figueres, former UN Executive Secretary and driving force behind the Paris Climate Agreement. She recently visited Triodos Bank to emphasise the role of impact investors.
Christiana Figueres is the driving force behind the Paris Climate Agreement, a legally binding, global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below 2°C. It was signed by 195 countries in December 2015. The fact that so many countries signed the Agreement and that the majority of the signees have already drawn up plans to ensure compliance with the agreement is a huge success. Yet there are also critical questions. Because what happens if one of the biggest economies wants to withdraw from that agreement? And actually how effective is the agreement?
Christiana Figueres addressed these questions and the role of impact investors when she visited Triodos Bank in the Netherlands.
Will the Paris Climate Agreement stop or even reverse climate change?
No. That’s obviously a shame, but the truth is that we’ve already polluted the air by two thirds of the maximum. That damage cannot be made undone. As long as humans exist, we must manage with the one third we have left.
The climate agreement plans the path we have to take to prevent the most serious effects of climate change. What we are already experiencing can no longer be reversed. We will therefore have to adapt to these new circumstances.
Does the Agreement apply to all countries?
Yes. For the first time in history, 195 countries came together to sign an innovative and far reaching agreement. We could have gone for the majority, but all the national governments unanimously signed up. That’s unusual when you see what is in the agreement. It’s about the use of land and what we are doing about deforestation. But above all, it’s about energy consumption. Less transport and more sustainable energy generation. When you consider that countries like Saudi Arabia have signed the agreement, countries with big oil reserves, that’s special.
Is the Agreement legally binding?
Yes, it’s legally binding for the countries which have enacted national legislation to implement the agreement. That’s 109 countries so far. A record for the United Nations, so soon after the Climate Agreement. It’s exceptional that so many countries have already done this. In 2020, the previous climate agreement expires. The Paris Agreement was intended to be enacted afterwards. This says something about the growing awareness of climate problems.
Obviously, we’re not yet where we need to be, but nevertheless, records are being broken. The international aviation sector has made agreements. From now on, each airline takes climate change into account. All the airlines in the world have agreed to make huge energy savings and to considerably reduce CO₂ emissions. It’s not enough yet, but still positive because this is the first sector in the world to commit to an emissions ceiling.
Will the Agreement be implemented?
Yes. And that’s not because of the legal commitment or because all the countries agree over the agreement. The agreement will be implemented because we have invited all the countries to make their own plan. They all have their own political and economic system and they all have resources that they are exhausting.
I come from Costa Rica. It’s a good example because the country does not have any fossil fuel sources of its own. Stopping fossil fuel extraction therefore, is not relevant. An import ban on fossil fuels is, however. And thus every country has to see for itself how it can contribute best. 189 countries have already done that.
Let’s be clear, by the way, about their motivation. It’s not that all these countries are so keen to save the world. Their national interest clearly comes first. And let’s be totally honest about it: not many people think about this in terms of saving the world. Over the course of six years, we managed to show each country how it could benefit from fighting climate change. This insight was one of the greatest turning points on the road from Copenhagen to Paris.
The Copenhagen Accord was drafted by the United States, China, India, Brazil and South Africa in December 2009. The document states that climate change is ‘one of the greatest challenges of the present day’ and that actions should be taken to keep any temperature increases to below 2°C. The Accord was ‘taken note of’, however, but not adopted. It is not legally binding and does not contain any legally binding commitments to reducing CO₂ emissions.
What happens if the United States withdraws?
Let’s not look too far ahead. What people say in a campaign does not necessarily turn into policy. And if the United States wants to withdraw from the climate agreement, it won’t be easy. According to international legislation, it takes a country four years to withdraw from the Paris Agreement.
Furthermore, I have faith in the private sector in the United States. There is sufficient understanding about the fact that the world must forge ahead and not stagnate. The United States will lose its competitive edge in the global economy should it choose the path of stagnation.
I compare it with traffic. There’s always one car somewhere that’s slowing down or coming to a halt, but that doesn’t change the direction of the other cars. There’s always help available, but if the driver doesn’t want help, the remaining traffic moves on.
While the new climate summit was taking place in Marrakesh, Trump was elected as the new president of the United States. In Marrakesh, 47 countries agreed to generate 100% renewable energy in 2020. Trump’s victory provided more of an incentive than an obstacle, because the need to proceed is far more important.
What is the role of the financial sector?
I’m concerned about financial resources to implement the Paris Climate Agreement. If there’s no funding, you can’t build anything. The energy sector must be transformed. And there’s very little time left. Both the energy sector and the financial sector are traditionally conservative. Yet these are the sectors that will have to work hardest.
We need money from both the government and the private sector. We know this, but things aren’t going fast enough. Millions of people worked on the Paris Climate Agreement, but it’s no longer in their hands. It’s now the turn of the financial sector.
The fate of our climate is in the hands of impact investors. The people who know what it is to consider sustainability in every investment. The change that the financial sector needs must keep pace with the change in the energy sector.