As we exit from the pandemic, governments will be spending trillions of pounds to aid the recovery. This provides a unique opportunity for countries to embark on a journey towards sustainability.
As we exit from the pandemic, governments will be spending trillions of pounds to aid the recovery. This provides a unique opportunity for countries to embark on a journey towards sustainability. If governments and businesses prioritised the areas which make a positive contribution to the fight against climate change and cut off those which don't, we will be at a turning point.
Governments should attach strings to their bailouts and hold businesses to account over their targets for carbon reduction and alignment to 1.5°C. This will be a powerful force to promote change, showing where priorities lie and forcing businesses into action if they wish to receive financial support. Given that my generation will foot the bill from these bailouts and recoveries it is only fair that the clear steer to tackle the climate emergency by young people is prioritised.
Individuals, organisations and shareholders can also impact the flow of finance. Moving investments into environmental funds and savings into ethical banks support the growth of climate solutions. Actively investing in solutions is a step better than not financing the old regime. Over the past ten years, the cost of solar panels has dropped by 89%.[1] The more investment there is in these technologies, the faster this development will happen and the easier it will be for countries to decarbonise their energy systems. Gone will be the excuse that it costs too much to decarbonise the energy system or that the technology isn't there. Instead of this being used as an excuse for inaction, it should be flipped into a rallying cry.
In the case of fossil fuels, divestment also removes the previous social acceptance for expansion giving a voice to the "orderly winding down"[2] the UN calls for. The UN Environment Programme noted the effectiveness of divestment in its November 2019 report, The Production Gap: 'Through fossil fuel divestment campaigns and other efforts, civil society groups and investors have placed social, political, and economic pressure on governments and companies to move away from supporting fossil fuel production.'[3] Even the major oil companies themselves acknowledge the impact of divestment. Shell's 2018 annual report stated: 'Some groups are pressuring certain investors to divest their investments in fossil fuel companies. If this were to continue, it could have a material adverse effect on the price of our securities and our ability to access equity capital markets.'[4] By divesting to actively invest in renewable energy and the infrastructure fora shift in energy demand, it helps create market conditions that force action from polluting companies.
Finance plays a huge role in the current economic system and where money is directed has a massive impact on what can thrive and what can't. Let's hope that with finance being one of the core themes at COP26 this year we will see a real shift. We don't want to go back to business as usual, so let's not fund it.
[1] https://ourworldindata.org/cheap-renewables-growth
[2]SEI, IISD, ODI, Climate Analytics, CICERO and UNEP, ‘The Production Gap 2019Report’, https://wedocs.unep.org/bitstream/handle/20.500.11822/30822/PGR19.pdf, p.2
[3]SEI, IISD, ODI, Climate Analytics, CICERO and UNEP, ‘The Production Gap 2019Report’, https://wedocs.unep.org/bitstream/handle/20.500.11822/30822/PGR19.pdf, p.2
[4]Shell, ‘Shell annual report and form 20-F 2018 – Strategic Report’,https://reports.shell.com/annual-report/2018/servicepages/downloads/files/strategic_report_shell_ar18.pdf,p.16