Can the world become net carbon zero?
7 Min Read
It is one of the biggest challenges facing the world today. We know we need to act on climate change, but the issues surrounding it are vast and complicated.
We are in a race against time – even if we stopped emitting greenhouse gases today, global warming would continue for several decades, as we wait for the environment to respond and residual carbon dioxide to leave the atmosphere.1 Scientists have predicted that if we do nothing to prevent the damage we are causing to the environment, the ‘climate change apocalypse’ could begin as early as 2050.2
In response, governments around the world have set hard targets – the United Kingdom, Japan and the Republic of Korea, together with more than 110 other countries, have pledged carbon neutrality by 2050.3
But how will we get there?
Reconnection to our planet can fuel the solutions
Mark Carney, Former Governor of the Bank of England and Special Envoy for Climate Action and Finance, believes one of the key ways we will achieve carbon neutrality is to reconnect with the natural world.
“In many ways we have separated our society from nature. We see our ability to dip into nature and take things without returning them. If you see yourself as separate from nature, you don’t appreciate the damage you are causing – you only see the opportunities to take,”4 said Carney in a recent webinar hosted by the British Museum about how, when and if the world can become net carbon zero.
“Part of the answer to addressing climate change is rediscovering a hierarchy in relation to our relationship with our planet. Then we need to shift from the social and the cultural [changes] to the engineering, economic and practical solutions – in other words – what are we going to do about it?” continues Carney.
Professor Julia Black, President Elect of the British Academy, believes that this disconnect has played an important role in why we have taken so long to respond to the risks posed by climate change. “We’ve had warnings of climate change for decades and yet Governments around the world and us as citizen consumers have been very slow to act. It always seems like something for someone else to deal with, some other time, some other generation.”5
However, as the results of climate change are becoming more tangible, we are starting to see the issue being taken more seriously.
“The physical manifestations of climate change are becoming so overwhelming that it’s spurring action,” Carney warns.
We have a group responsibility to act
If we are going to halve emissions by 2030 and meet the net zero target by 2050, we all have a role to play. One of the players with the most clout to tackle climate change is the global financial services industry.
Amongst the biggest and most influential sectors in modern society, financial services have a responsibility to operate in a way that not only reduces the impact on the environment, but that also plays an active role in finding – and funding – sustainable solutions.
We must “harness the power of global finance to help solve the problem,” says Carney.
Banks must take into account their exposure to climate risks through various initiatives, for example the SS3/19 Supervisory Statement published by The Bank of England, which sets out the expectations on how insurers and banks should evaluate their exposure to climate change.6
But there is pushback to this – some claim it shouldn’t be the concern of banks and financial regulators to solve environmental issues.7 However, being proactive about climate change within financial services is not just beneficial from a risk management point of view, it is also a great opportunity;
“If climate change is an existential risk, which it is, and you are part of the solution, you are creating a tremendous amount of value,” highlights Carney.
Management Consultants McKinsey agree, stating that providing funding to tackle environmental challenges is key to future growth: “[it is] more than regulatory pressure driving banks to manage climate risk. Financing a green agenda is also a commercial imperative.”8
One of the banks that is open about their commitment to tackle climate change, is Citi bank.
“As a global bank we responsibly provide financial services that enable growth and economic progress for the clients and communities that we serve,” says James Bardrick, Citi Country Officer, UK. “Citi has been incorporating environmental, social and climate change into our financing for more than 20 years.”9
In 2020, Citi released its 2025 Sustainable Progress Strategy which includes a commitment to increase their financing of environmental and climate solutions, including a new £250 billion environmental finance goal.10 The proposal also includes plans to reduce environmental risks in their lending and investments, through the incorporation of newly emerged tools that analyse climate risk.
Citi is also committed to publishing its processes and results, as well as reducing the impact of their own facilities, which number 7,000 around the world, across 97 countries.10
What’s your plan?
It is not just the financial services sector who need to be proactive. For society to reach the ambitious targets set, we as consumers and employees must all put pressure on corporations to mobilise strategies that protect the environment and biodiversity.
“Hold companies accountable – ask them, what’s your plan for net zero?” asks Carney.
Organisations need to be open and honest about how they will operate in line with their countries objectives and how they plan to get there. Governments must also be clear on what the targets are, so that businesses can act accordingly.
The route to net zero varies between industries. Some will not be viable at all, whilst others will have to adapt to survive in a net zero economy. This need for change is also an opportunity for innovation to thrive, as the collective net zero goal will focus the efforts of researchers and investors to find the solutions companies need to survive.
“If they don’t have a plan, companies are basically saying they are separate from society,” Carney warns, “and we can all judge the merits of those institutions.”
Within the EU, organisations must comply with the Non Financial Reporting Directive (NFRD), which requires large companies to disclose certain information on the way they operate and manage social and environmental challenges, so that stakeholders can evaluate their non-financial performance. This in turn encourages these companies to take a responsible approach to business.11
“The discussions have moved to the top,” says Carney. However, although this is positive news, collectively we still have a long way to go. Many businesses will struggle to make the changes needed to meet the targets and remain compliant.
As we move closer to these urgent and paramount targets, having the expertise to navigate organisations towards a net zero future is highly sought after. At the University of Birmingham, we offer a 100% Online LLM in Energy and Environmental Law, which will give you the essential skills you need to help tackle the world’s biggest environmental challenges. For more information please fill out our request for information form or contact a member of our Admissions Team on +44 (0)800 032 7101.
References
- NASA (2020) Is it too late to prevent climate change? (Online) Available at: https://climate.nasa.gov/faq/16/is-it-too-late-to-prevent-climate-change/ [Accessed 08.01.21]
- WEISE, E (2020) End of civilization: climate change apocalypse could start by 2050 if we don’t act, report warns (Online) Available at: https://eu.usatoday.com/story/news/nation/2019/06/05/climate-change-apocalypse-could-start-2050-if-we-do-noting/1356865001/ [Accessed 08.01.21]
- UNITED NATIONS (2020) Net-Zero Emissions Must Be Met by 2050 or COVID-19 Impact on Global Economies Will Pale Beside Climate Crisis, Secretary-General Tells Finance Summit (Online) Available at: https://www.un.org/press/en/2020/sgsm20411.doc.htm [Accessed 08.01.21]
- CARNEY, M (2020) Can the world become net carbon zero? Mark Carney in conversation (Online) Available at: https://www.youtube.com/watch?v=YQqueJrwSnM&feature=youtu.be [Accessed 08.01.21]
- BLACK, J (2020) Can the world become net carbon zero? Mark Carney in conversation (Online) Available at: https://www.youtube.com/watch?v=YQqueJrwSnM&feature=youtu.be [Accessed 08.01.21]
- SWEENEY, A (2020) Paving the way forward: managing climate risk in the insurance sector – speech by Anna Sweeney (Online) Available at: https://www.bankofengland.co.uk/speech/2020/anna-sweeney-moodys-the-resilience-of-insurers-in-a-changing-climate [Accessed 08.01.21]
- BLACK, J (2020) Can the world become net carbon zero? Mark Carney in conversation (Online) Available at: https://www.youtube.com/watch?v=YQqueJrwSnM&feature=youtu.be [Accessed 08.01.21]
- ECEIZA, J et al (2020) Banking imperatives for managing climate risk (Online) Available at: https://www.mckinsey.com/business-functions/risk/our-insights/banking-imperatives-for-managing-climate-risk# [Accessed 08.01.21]
- BARDRICK, J (2020) Can the world become net carbon zero? Mark Carney in conversation (Online) Available at: https://www.youtube.com/watch?v=YQqueJrwSnM&feature=youtu.be [Accessed 08.01.21]
- BARDRICK, J (2020) Can the world become net carbon zero? Mark Carney in conversation (Online) Available at: https://www.youtube.com/watch?v=YQqueJrwSnM&feature=youtu.be [Accessed 08.01.21]
- EUROPEAN COMMISSION (2020) Non-financial reporting (Online) Available at: https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/non-financial-reporting_en [Accessed 08.01.21]