PHOTO: COURTESY OF THE BANK OF ENGLAND
THERE WERE MANY innovations from the Paris Agreement, but three were key.
First, setting the clear objective of less than 2 degrees Celsius warming, with the stretch objective of 1.5 degrees.
Second, the innovation of voluntary country plans (NDCs) that were then objectively added up to assess what would happen if countries met their commitments.
Third, the involvement of the private sector and non-state actors, so that solutions to this enormous problem are bottom up as well as top down.
Since Paris, the concepts of Net Zero, Paris Aligned, and a 1.5 degree target have moved from the climate cognoscenti into the mainstream. Net zero is now an organizing principle that is cascading from the global to the country and the company.
But the climate crisis has not abated. The sobering reality is that the problem of climate change grew after Paris. Last year it was estimated that the world’s temperature would rise above 3 degrees Celsius by the end of the century.
This would cause catastrophic flooding, pollution, wildfres, drought, extreme weather, and destruction of species. We are already seeing the early warnings of this devastation.
Moreover, the scale of what’s required to achieve 1.5 degrees is sinking in: emissions need to fall by 7 percent a year over the course of this decade. Last year, many countries met this high bar, but only because large swaths of the economy were shut down—hardly something to be repeated. This underscores that we must invest and grow to get to net zero.
The UN Climate Change Conference (COP26) will be a watershed for finance. To that end, we are on track to deliver by COP26 the foundations for a system in which every financial decision takes climate change into account.