October 5 – This year’s Climate Week NYC took place against the backdrop of Russia’s mobilization for its war in Ukraine, a fractious United Nations General Assembly, and another wave of climate change-exacerbated natural disasters, most recently the devastating floods in Pakistan and Nigeria, as well as record September heatwaves in the western U.S.
The annual meeting highlighted that the growing urgency of climate action continues to come up against the messy business of politics, economics and human nature, exposing a widening gap between what is needed and what business says is possible.
The recent passage of the Inflation Reduction Act (IRA) in the U.S. “clearly dialed up the energy level” at the summit, said Antoine Halff, co-founder and chief analyst at geo-analytics group Kayrros, and adjunct senior research scholar at the Center on Global Energy Policy, Columbia University. “There was something of a mood swing and a shift in attitude from ‘just talking about’ climate action to ‘just doing it’.”
Ahead of Climate Week a global coalition of NGOs, including ShareAction, BankTrack, Reclaim Finance and the Sierra Club, called on Net-Zero Banking Alliance (NZBA) members to set more stringent rules on financing fossil fuel projects, in line with tougher criteria issued by the U.N.’s Race to Zero campaign in June.
“In order for financial institutions’ net-zero commitments to be credible, they must explicitly commit to phase out financing for new fossil fuels. It’s time for the NZBA to make clear that banks who continue to finance massive fossil fuel expansion, while making grand pronouncements about climate goals, are not welcome in the alliance,” said Adele Shraiman, campaign representative in the Sierra Club’s Fossil-Free Finance campaign.
Instead, the NZBA, part of the Glasgow Financial Alliance on Net Zero (GFANZ) set up by former Bank of England governor Mark Carney, weakened its language on phasing out coal and other fossil fuels after a number of the world’s biggest banks, including JPMorgan Chase, Bank of America and Morgan Stanley, raised concerns about legal liabilities related to phasing out the commodities and antitrust rules.
U.N. climate champion Nigel Topping has played down fears that commitments are being weakened, saying members of Race to Zero have to sign up to science-based targets, which preclude new coal developments.
But John Willis, head of research at Planet Tracker, said: “There is a concern about these big alliances. They can generate a form of ‘greencrowding’, where organizations hide in the crowd of members and move at the speed of the slowest. I hope they’re not backtracking.”
Rather than having an explicit ban on funding new coal projects, the Race to Zero campaign now says that banks should phase out the “development, financing and facilitation of new unabated fossil-fuel assets, including coal, in line with appropriate global, science-based scenarios”.
It also emerged that two pension funds, Australia’s Cbus and Bundespensionskasse of Austria, have left the GFANZ organizations, the Net-Zero Asset Owners Alliance and the Paris Aligned Asset Owners group, respectively, in recent months, saying they lacked the resources to track the data and file the reports needed to comply with membership.
Late last week the Financial Times reported that GFANZ was in urgent talks to review the terms of oversight by the Race to Zero campaign ahead of the upcoming COP27 talks in Sharm El-Sheikh, Egypt.
It is no surprise, then, that data was one of the key themes of the week, in fields ranging from the measurements for climate action to the growth of carbon offsets to certifying responsibly sourced products and commodities. “This is probably the beginning of a trend that will continue to grow as we move to the hard edge of the practical implementation of policies and the regulation of those policies,” Halff of Kayrros added.
The Inflation Reduction Act’s requirement for the U.S. Environmental Protection Agency to measure methane emissions is one illustration of why more, and better, data is important. “Without reliable, verifiable data that can be trusted by all, it will be difficult to dispel the suspicion of greenwashing and effectively move forward together,” he said.
The recent methane leak from a Pemex facility in Mexico, and the government’s reaction to it, shows how data can both shed light on previously hidden emissions and put pressure on asset owners to tackle them.
Similarly, the new open source Global Registry of Fossil Fuels, which was launched in New York by the Carbon Tracker Initiative and Global Energy Monitor, will increase transparency, help to identify stranded assets and tackle greenwashing. The register includes data on oil and gas reserves, production and emissions for more than 50,000 fields around the world.
The database will help investors to understand which assets could be at risk of being uneconomic, or “stranded”, in the low-energy transition, said Alex Rafalowicz, director of the Fossil Fuel Non-Proliferation Treaty initiative. “The registry is the transparency tool that has been missing in our toolkit for holding governments and corporations accountable on fossil fuel production.”
According to the Capgemini Research Institute, although 85% of organizations recognise the business value of emissions measurement and analytics, half of the those it surveyed said that they were not equipped to capture or use the data they generate to drive decision-making.
This is especially the case for Scope 3 emissions, in companies’ supply chains and in the use of their products. “The coverage of Scope 3 emissions, accounting for a significant 65‒95% of a company’s carbon footprint, is especially low,” said Zhiwei Jiang, chief executive of Capgemini’s insights and data global business. “Additionally, only 43% of organisations have set short-term targets to support their net-zero ambitions.”
But in an example of how those Scope 3 emissions are starting to be addressed, the Mission Possible Partnership (MPP) used the event to announce new sector transition plans for zero-emissions aluminum, ammonia and steel, some of the hardest-to-abate parts of the economy. “These transition plans are operationally relevant and industry-backed, not wishful thinking or pie in the sky,” said Matt Rogers, chief executive of MPP. “We know how to reduce emissions. The imperative is to act now, in this decade.”
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