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COP 26 | Show me the climate finance money

Wealthy sovereign nations have failed to keep their promise of $100 billion, and there remains a question mark on how much private financial institutions will do for climate change.

November 06, 2021 / 11:28 AM IST
The COP26 U.N. Climate Summit in Glasgow, Scotland, began on Sunday, October 31, 2021. (AP Photo/Alberto Pezzali, Pool)

The COP26 U.N. Climate Summit in Glasgow, Scotland, began on Sunday, October 31, 2021. (AP Photo/Alberto Pezzali, Pool)

Glasgow: A few days before the COP26 summit in Glasgow, the UK House of Commons voted to continue to allow water companies to discharge untreated sewage into its seas and rivers.

Figures published by the UK Environment Agency reveal that for more than 300 million hours in 2020, water companies released raw sewage, including human waste, into rivers and beaches across the UK.

Pictures and memes of raw sewage on popular beach fronts flooded the internet even as the UK was promoting the climate summit. The private water companies are allowed to do this under exceptions granted by the Environment Agency due to weather eventualities to protect flooding of homes and streets.

This is not an isolated incident. In 2020, this happened over 400,000 times. One might ask why it is that water companies would do this so often in the UK. The answer is that the existing sewage system was built in Victorian times and needs massive overhaul costing at least £150 billion, which the water companies assert would be rejected by the households. For decades now the upgrade has been assessed as prohibitively expensive.

As COP26 began in Glasgow it became clear that the most distinct fault line – between developed and developing countries – was a manifestation of the difference in approach to tackle the climate crisis. Negotiators have to stitch a middle ground that takes into consideration the aspirations and complexities of the Global South along with the easier-to-espouse-urgency stand that countries in the developed world can take having long passed their peak emission rates.

Also read: COP26: It's half-time at the crucial Glasgow climate change

So while there is an agreement that there is no ready green switch, the money to help developing countries make the transition to clean energy has not been forthcoming. At the same time there has been reluctance on the part of big offenders like China and Russia to engage fully with the international community, gerrymandering geopolitics with climate concerns. Even India, the third-biggest emitter, kept the world in suspense on whether a target would be announced to reach net zero emissions till Prime Minister Narendra Modi declared it as 2070 in his National Statement.

“We all know this truth that the promises made to date regarding climate finance have proved to be hollow. The world ambitions on climate finance cannot remain the same as they were at the time of the Paris agreement. It is India’s request that developed countries make available $1 trillion of climate finance as soon as possible,” he told the delegates, adding that it is “important to track climate finance just like we track the progress of climate mitigation.”

A UK government spokesperson was quick to reject New Delhi’s figure of $1 trillion saying that the - so far unmet - promise of $100 billion should suffice and that the developing countries were already getting a “massive sum”.

It seems that apart from the developing countries who need the finance, the other person speaking in trillions for climate action is Mark Carney, the former governor of the Bank of England and Bank of Canada. Carney, who is now the UN Climate Finance envoy and also UK Prime Minister Boris Johnson’s finance adviser for COP26, sits at the helm of Glasgow Financial Alliance for Net Zero (GFANZ) which was launched in April 2021. GFANZ was created jointly by the UN and COP26 presidency.

GFANZ has 450 financial institutions representing banks, asset management firms, insurance companies, pension funds that have a total of $130 trillion of assets among them. According to Carney, GFANZ members have committed to net zero emissions by reporting emissions of their borrowers and pushing them to decarbonise. While $130 trillion is dazzling, the devil is in the detail.

Also read: COP26 | Climate Justice is the bottom line for all climate action

There are plenty of sceptics. To begin with, when wealthy sovereign nations have failed to keep their promise of $100 billion, there remains a question mark on how much private financial institutions will do for climate change. The financial sector is already in knots over the issue of how to define and agree on emission targets. There is also the possibility of GFANZ coming up with norms like carbon offsets that has been described as getting a licence to emit carbon.

The Rainforest Action Network in a report found that between 2015 and 2020, 60 of the world’s largest banks gave $3.8 trillion to companies dealing in fossil fuel. Even though Carney has wielded the baton in two key continents as governor of the central banks of England and Canada, to make GFANZ a success, he needs to do much more than giving interviews to pink newspapers.

Also read: COP26 | Will climate finance be the deal breaker?

Speaking to a cross section of activists and delegates at the Scottish Exhibition Centre, one key cultural shift that is discernible is the greater awareness of the need for climate finance and why it is not out of place to have an initiative like GFANZ.

But having financial institutions grade their own test is not very inspiring. And when Janet Yellen, the US treasury secretary, says that addressing climate change is the greatest economic opportunity of our time, it doesn’t give much confidence to indigenous communities that have saved and nurtured local ecosystems unyielding to pressures of concretisation.

Which is perhaps why when Rishi Sunak, the UK's Chancellor of the Exchequer, came to speak on the COP26 Finance Day on Wednesday, it was not a full house. He revealed the steps the UK would take to make City of London the world’s first net-zero aligned global financial centre. Will this also lead to a rush by corporates to join the lucrative decarbonisation business?

Also read: India staying out of major climate pledges at COP26: Officials argue varied reasons

Several activists who were in Glasgow opined that the corporates are also afraid of getting entangled in health litigation due to past working conditions like the presence of asbestos, and this could also be a driver for banks and companies to show that they took steps to curtail the use of fossil fuels to prevent multi-million compensation bills. In December 2020, a coroner’s court in London, in a first of its kind ruling in the word, concluded that the death of a nine-year-old girl after an asthma attack was due to air pollution.

Another big challenge to the GFANZ would be to fine-tune variables in its tabulating matrix that would reflect the historical reality between the early industrialised Western world and the Global South. But even before it accomplishes this task, the GFANZ has to quickly come out of its Europe-centric genealogy; of the 94 banks that are currently members of the Net-Zero Banking Alliance, not a single one is from India, China, Pakistan, Russia, or Turkey. It is true that US-based private banks are the biggest culprits of climate change among the banking giants. They would listen, if not necessarily act, to what Carney says; but the challenge will be to get behemoths like Coal India and Saudi Aramco involved, as the Economist points out.

A questionnaire sent to GFANZ remained unanswered till the time of publication, but the veteran that he is, Carney has of course figured out that climate finance has been on the margins for a long time in the fight to keep the earth from getting hotter. “We now have the essential plumbing in place to move climate change from the fringes to the forefront of finance so that every financial decision takes climate change into account,” said Carney. But along with the plumbing, it is the actual money that is required. Carney need not look far; the COP26 venue is right next to the river Clyde which received 650,000 cubic metres of waste water for which Scottish Water was fined £19,000 in February 2020.

A century and a half ago, MPs would sit irritably in their gilded offices in Westminster, holding their noses due to the foul odour emanating from the river Thames, forcing them to keep windows shut in summer. So grim and desperate was the situation that it was joked that Britain could colonise every inch of the world, but could not clean the Thames. Then the Victorian sewerage system helped provide relief to Londoners, now it’s a humungous problem with no easy solution. Mankind has begun luxury travel to space now, but is still struggling to fix the Earth. The looming climate crisis needs a far revolutionary and long lasting solution.

Read more: Corporate climate pledges often ignore a key component: supply chains

Danish Khan is a London-based independent journalist and author of 'Escaped: True Stories of Indian fugitives in London'. He is researching Indian capitalism at University of Oxford.