The Road To Net Zero: Where Do Investors Fit In?
With today being COP26’s day of Finance, we thought we would look at some of the top takeaways from our recent Future Forward webinar with Dr Rhian-Mari Thomas OBE, CEO at the Green Finance Institute. You can also watch the whole interview between Rhian-Mari and UKBAA’s CEO Jenny Tooth at the bottom of this article.
Human activity has unequivocally caused climate change
Although the earth’s climate does fluctuate, for the past 12,000 years the earth has stayed at a relatively stable climate allowing human civilisation to flourish. You can read more about this in a recent McKinsey report. However, the average global temperature has increased by 1.1 degrees since 1880 which is 5,000 times faster than the most rapid natural warming episode in the planet’s past.
A recent report by 234 scientists across the world concluded that this rise in temperature has been caused by human activity, primarily burning fossil fuels. Half of the carbon that has been released into the air has been done in the past three decades, since Al Gore published his first book on climate, meaning ‘we’ve now caused as much damage knowingly as we did in ignorance’.
Those who fail to act will lose credibility
As the facts about climate change become more evident, the case for decarbonisation will likely be driven by policy and regulation as well as technology, so will have a large impact on markets and companies. Those companies that recognise the risks and opportunities of decarbonisation will prosper, whereas those who don’t will lose credibility.
It is essential for developing countries to leapfrog the high carbon phase of the industrial revolution
Although the African continent only accounts for 3% of global carbon emissions, the five countries most affected by extreme weather in 2019 were African.
Rhian-Mari pointed out that investing in clean energy in the developing world is key to the stability of our climate because the emerging markets and the developing economies are home to two-thirds of the global population. It is also the role of the UK to act as a pathfinder, trialling policies, regulations and more to move towards decarbonisation, which could be followed by other countries in turn.
Collaboration is key
A wide-reaching challenge requires a similarly wide-reaching response from all kinds of businesses. No single type of financial investor or asset class can meet the range of investment required to reach the government targets. Where public finance and government finance will need to help de-risk private investments; the role of angel investors will be to use their experience and expertise to inform the policymaking at both a local and government level.
You can view our interview with Rhian-Mari below and you can also take a look at all of our webinars from Future Forward: Investing in Net Zero on the Future Forward website. If you already have a ticket purchased you can log in and view the recordings or if you missed the event, you can use the code FUTUREFORWARD to create a free user account here.
