Sitting on the train heading back from New York to Washington D.C., gazing out of the window at stressed watersheds, I had some time to reflect on a very special Climate Week. What does it all add up to? Where does it leave us as a global community needing speed and scale in our climate action?
Much is being written. Let me add a perspective. Here are three thoughts amid my swirl of memories, moments and impressions.
Climate osmosis – the street reaches the hallowed halls
It was difficult to stand in the canyon that is 6th Avenue, with a sea of people stretching in both directions – environmental activists, nurses, pensioners, business people, every possible faith community, moms, a sprinkling of celebrity and a dash of statesmen – and not be moved. On the Sunday before the Summit, more than half a million people took to the streets in People’s Climate Marches in New York and more than 160 countries across the globe. The marchers demanded climate action from their leaders, suggesting that the politics of climate action, once considered too hard to handle, might no longer be as difficult as leaders think.
The reverberations continued for 48 hours and became a point of reference in almost every speech at the UN Secretary-General’s Climate Leadership Summit. More than 120 heads of state and government came to hint and in some cases pledge action on climate change. New coalitions of governments, businesses, investors, multilateral development banks and civil society groups announced plans to mobilize over $200 billion for low-carbon, climate-resilient development. Forests and cities were big winners, landing pledges of around $450 million for forests and bringing together more than 2,000 cities in a new Compact of Mayors to help improve accounting of urban greenhouse gas emissions and the actions cities are taking to reduce them.
So was this different? We need action, not just words. Many of the commitments were material and significant – leadership in the insurance industry, pledges to end illegal deforestation in supply chains, working together to price carbon. At the same time, around the announcements were serious meetings of serious people on the mechanics of how to shift the premise of growth toward what we need more of (jobs) and away from what we need less of (CO2).
As we now move into a tense period of climate negotiations, coinciding with a year of negotiations on a new development framework, the challenge is how to bottle both the atmosphere and the intent of the players last week. The "can do, must do, will do" needs to be embraced in the climate negotiations. We need to move past the distrust that burst into the open after Copenhagen. Can businesses and civil society and mayors be given a place at the table for part of the Paris accord in 2015? We have a precedent. There must be ways to have this groundswell resonate better as we start the journey onwards from New York.
Risk concentrates the mind, opportunity inspires.
It was Margaret Mead who said, "Never doubt that a small number of thoughtful, committed citizens can change the world." In the climate finance meetings, after listening to institutional investors talk about decarbonizing their portfolios and insurers talk about screening their entire holdings for climate risk, Carbon Tracker talked about their work. While not everyone has bought into the concept of climate-related stranded assets – that holding high-emitting assets in a carbon-constrained world where smart people see the future as a track to carbon neutrality is a liability – certainly the mix of divestment, screening, portfolio reviews and uptick in use of carbon taxes, market-based mechanisms and/or performance measures has concentrated minds.
Business likes certainty and level playing fields. For global businesses, having to manage across multiple regimes and approaches to carbon creates risk and costs money. The prospect of "arbitrary" rule making, which includes taking prices away as well as putting them on, is problematic.
Business and elected leaders were at the table with ties loosened and sleeves rolled up (yes, still a gender issue in business and economics as it relates to climate) ready to work together. We were beyond the "whether" and the "if", and deep into the "how" to delink growth and carbon intensity. As Paul Simpson, CEO of CDP, said, this broad support is evidence that leaders are no longer asking, "Whose responsibility is this anyway?" but taking action instead.
The signs of growing green and clean investment seem to be spreading. With the green bond market over $25 billion in new issuances this year, commercial banks announced that they will issue $30 billion in new green bonds by the end of 2015; three major pension funds announced plans to accelerate low-carbon investments across asset classes up to $31 billion by 2020, and leaders from the insurance industry committed to doubling their climate-smart investments to $84 billion by 2015 and increasing their climate smart investments tenfold by 2020. The International Development Finance Club announced it is on track to increase direct green financing to $100 billion a year by end 2015.The energy among private sector leaders was in contrast with the $2.3 billion total pledged for the Green Climate Fund (including the $1 billion pledged by Germany back in July). The timing was bad, as everyone knew, but support for the GCF is vital for global progress on climate action and for the trust essential to a deal in Paris.
The success of efforts led by the World Bank Group and the We Mean Business Coalition to highlight momentum around pricing carbon is further evidence of this shift. Over the course of a few short months leading up to the Summit, 74 national governments, 23 state, provincial and city governments, and over 1,000 companies and investors expressed their support for carbon pricing. Long thought necessary but too difficult politically, putting a price on carbon is back on the agenda.
Government supporters recognize the importance of political momentum in driving change and that pricing carbon is a necessary, if insufficient, step towards low-carbon growth. Company and investor supporters include those that are currently using a shadow price on carbon in their business planning, and those that intend to do so.
World Bank Group President Jim Kim invited carbon pricing supporters to join a Leadership Coalition that will share best practices and drive action on carbon pricing. The first meeting will be held in conjunction with the World Bank Group Annual Meetings in October. The Leadership Coalition will build on the technical level collaboration among countries exploring market mechanisms that takes place in the World Bank Group’s Program for Market Readiness. It will undertake scenario building around carbon pricing, work in specific places to support introduction of pricing, ensure leadership support for linking markets and pricing regimes and lead us on a path to globally networked carbon markets.
Groaning governance
Over the next 15 months, a stressed international system, coping with outbreaks of violence and conflict, disease and instability, will attempt to put in place a new framework for disaster risk and reduction, a new framework for development, and a new agreement on climate action from 2020. From the perspective of a citizen in any one of the 193 member states of the UN, these are not separate. The ability to be resilient in the face of disaster, in the face of increased uncertainty as a result of climate change, not only shapes the world in which development goals will be realized, but also what those goals must be.
From the perspective of finance, they are not separate either. Public funds must be used judiciously on priorities with climate and disaster risk awareness built in. Public funds must crowd in private investment. That is on the domestic front for all but the poorest and most vulnerable. And then private financial flows will be needed to build the clean and green infrastructure of the future, and precious official development assistance (ODA) and climate finance will be needed to reach the parts that private investment flows do not reach and to ensure that there is justice in our climate response.
The week in New York was a memorable one. But as memory fades into oral and written history, the spirit of leadership tangible in the streets and to some extent in the corridors will need to permeate every meeting and action area from now to the climate talks in Paris and beyond. The UN Secretary-General’s invitation was not to a meeting, but to a state of being. On the streets and in boardrooms, people get that. So do the occupants of many prime ministers’ and presidents’ residences. For those not listening, the evidence is that delay is an expensive mistake.
Rachel Kyte
World Bank Group Vice President & Special Envoy for Climate Change
www.worldbank.org/climate
Twitter: @rkyte365
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