Since the Paris agreement on climate change in 2015, 33 global banks have poured $1.9tn into financing fossil fuel projects worldwide. Furthermore, the World Economic Forum says that in 2018 coal use inched up and progress on energy efficiency slowed, while the World Economic Forum has concluded that growth in renewables is too slow to meet Paris goals. The result is that energy-related greenhouse gas emissions jumped by almost 2% last year. This demonstrates how vital it is that the financial sector play its part by throwing its full weight behind the fight against climate change. The European commission’s pioneering legislative proposals will push the sector to do just this. For example, from now on, finance players will have to inform their clients about how their investments – including pensions and insurance – are impacting on the planet. Also carbon stress tests for banks can identify and then eliminate assets that will become stranded as we tackle climate change, beginning with fossil fuel assets.
Greens in the European parliament took charge of the negotiations over a “taxonomy” for sustainable investments – a classification system of economic activities identifying which investments are and aren’t sustainable as a first step towards introducing significant financial incentives. Due to our work – and in the face of significant political opposition – we have eliminated “clean coal”, nuclear energy and gas infrastructure from this sustainability taxonomy. Unfortunately, Labour seems to think setting up new coal mines is compatible with addressing a climate emergency. It’s clear that the EU is leading on the design of financial levers to encourage a sustainability transition for the finance sector and thus for all companies. Rather than picking off the London Stock Exchange, Labour needs to embrace our continued membership of the EU. When it comes to tackling serious global issues such as climate change, and transitioning towards a green economy, we will achieve so much more working together cooperatively with our European neighbours.
• Molly Scott Cato is Green MEP for South West England and Gibraltar, and Green party finance and Brexit speaker
We, as Finance Ministers from around the world:
Cognizant that climate change poses a significant threat to our economies, societies, and environments, including risks to economic growth and macroeconomic stability, and that there is an urgent need to accelerate action;
Recognizing that climate change is also an opportunity, and that taking action can generate substantial benefits for our societies by stimulating technological innovation, improving human well-being, and accelerating economic growth;
Noting our unique position as Finance Ministers to help accelerate a just transition to a low-carbon and climate resilient economy through macroeconomic and fiscal policy, public financial management and, where applicable,
Acknowledging that such policies and actions will support global collective action on climate change under the Paris Agreement;
Cognizant that Finance Ministers have a common purpose, and can benefit from a forum for sharing experiences and facilitating the adoption of best practices and policies for low-carbon and climate-resilient growth; and
Supported by technical assistance from development partners.
Hereby establish a Coalition of Finance Ministers to demonstrate our leadership in the response to climate change, wherein we will operate within our national framework, competencies, and mandate to support the following
Align our policies and practices with the Paris Agreement commitments;
Share our experience and expertise with each other in order to provide mutual encouragement and promote collective understanding of policies and practices for climate action;
Work towards measures that result in effective carbon pricing;
Take climate change into account in macroeconomic policy, fiscal planning, budgeting, public investment management, and procurement practices;
Mobilize private sources of climate finance by facilitating investments and the development of a financial sector which supports climate mitigation and adaptation;
Engage actively in the domestic preparation and implementation of Nationally Determined Contributions (NDCs) submitted under the Paris Agreement.
An Explanatory Note accompanying the Helsinki Principles can be found at https://www.cape4financeministry.org/sites/cape/files/inline-files/Explanatory%20Note%20-final.pdf
THE COALITION OF FINANCE MINISTERS FOR CLIMATE ACTION
c a p e 4 f i n a n c e m i n i s t r y . o r g