This time next year will see the UK host the crucially important United Nations COP26 Climate Summit in Glasgow. World leaders from all manner of countries, economies, cultures and creeds will shuttle around conference halls and meeting rooms to negotiate contributions to global emissions reduction efforts. As is often the case, political leaders will be the focus of attention for those of us wishing to see significant climate action. However it is in the private sector where the truly remarkable changes are taking place.
Since 2015, there has been a 22,000% increase in assets committed to fossil fuel divestment. This is an astonishing figure. Investment institutions and companies are falling over each other to promote their environmental credentials. In just ten years, concerted efforts by non-state actors could result in up to a 5.5% reduction in global greenhouse gas emissions. In this dramatic reversal, not investing in green is now on the periphery.
For many, the 1980s was when the debate about Man’s impact on the planet shifted into wider public focus. Back then, the divide was between whether you believed greenhouse gas emissions were doing significant damage to the planet or not. For example, under President Reagan, the Environmental Protection Agency published a report saying a future temperature rise would be “catastrophic”. The White House described this conclusion as “alarmist”, a view at the time shared by many across the commercial and political worlds.
Now, the scientific consensus on mankind’s damaging impact on the climate is widely accepted, and rightly so. Denying this in 2020 is the definition of fringe. Science is as unequivocal on this as it is on evolution and the effects of smoking. Politically, we will see the messaging around this being strengthened – and President-elect Biden is widely expected to put “climate diplomacy” front and centre of his administration’s agenda, signalling a major policy shift away from his predecessor. Given the limits on his power in a gridlocked Congress, working with other nations and global businesses to do more to reduce emissions will be key.
Investing in green initiatives was for too long seen as a negative-sum game. The view was that spending on green meant making dominant fossil fuels expensive for businesses and people. This is still reflected in public policy, with the International Institute for Sustainable Development finding that fossil fuels are publicly subsidised to the tune of $372bn per year globally, compared to $100bn for renewables. This demonstrates how the negative-sum mindset remains firmly entrenched, preventing a meteoric increase in clean, green solutions.
Where the state is failing to act, the private sector is increasingly taking up the mantle. According to the Climate Works Foundation, nearly 1,500 companies with revenues in excess of $20.5tn have made quantifiable commitments to reduce emissions. Given the number of factories, workers, products and logistical infrastructure involved, it has colossal potential to have a real impact, entirely independent of government.
It may not be fashionable to say in some circles, but some of the world’s biggest companies are leading the fightback against damaging climate change. Companies are now all too aware that being seen to oppose green measures and even flirt with climate denialism is toxic to their reputations.
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“Preservation” is now the watchword with shifts towards green investment. Essentially, the ideal is to maintain and improve our standard of living while halting and reducing the damage we are doing to the planet. Animal conservation is about preventing and reversing Man’s harm on wildlife habitats, ecosystems, and wellbeing. And at my own organisation – the Nick Maughan Foundation – we have a particular interest in supporting the myriad of inspiring efforts aimed at doing so. Boosting preventative climate action is a major part of this.
Fossil fuels have undoubtedly been crucial to the development of many industrialised and developing nations, even if they have also played a major role in the destruction of wildlife habitats, via pollution, oil spills and deforestation. We must ensure green clean alternatives will be available for the world’s poorer countries and help them to develop in a more sustainable way.
For decades, the environmental cost of drilling, refining, exporting, discovering and using fossil fuels was outweighed by financial interest. This is no longer the case. A vast $14.5trn is the total value of institutions committed to fossil fuel divestment. These sums clearly demonstrate that protecting our planet is no longer seen as an environmental fantasy, but present economic necessity. The finances involved in green investment have reached a point where they are mainstream, rather than niche.
Nick Maughan is an investor and founder of the Nick Maughan Foundation, a philanthropic project aimed at supporting initiatives in education and civic support schemes for disenfranchised communities.