As the world readies for next week's COP26 meeting, it's becoming increasingly clear that finance will be at the core of many discussions – whether in terms of private and public sector spending, investment, or the financial and societal costs of failing to urgently address climate change.
That latter concern will hang over all areas of the climate talks in Glasgow, with many world leaders quietly signalling that actions taken as a result of this summit may not meet the expectations and hopes of campaigners. U.S. envoy John Kerry, for example, has admitted that there may be 'gaps in proposals put forward by world governments.
The United States' Democratic party has pledged to spend close to $600 billion fighting climate change but has already seen one major effort derailed – the ambitious Clean Electricity Payment Program (CEPP) – thereby forcing the Biden administration to consider less effective actions, such as executive orders.
The impact of Covid
It is largely believed that governments will lack the stomach for strong spending commitments in the face of the billions they've been forced to spend in addressing a global pandemic. According to a recent article by The Guardian, Covid-19 has cost the world roughly $29 trillion in lost output. And certainly it's the case that such costs have been at the forefront of thinking in the United Kingdom, where many of the government's recent budget proposals were aimed at rejuvenating an economy weakened by Covid.
Meanwhile, it's estimated that sustained spending of at least $60 trillion over the next 30 years is necessary to transition the world's economies to be low-carbon and climate resilient.
The challenge of getting cash-strapped governments to commit to such expenditure is leading to a feeling of deep cynicism and concern amongst COP26 observers. The fear is that immediate costs will blind world leaders to the potentially greater costs of doing nothing.
Those costs are indeed great, however.
Should the world fail to keep global warming below 1.5ºC – a key target of the 2015 Paris agreement – it will face 'deadly heatwaves, ruinous storms, disastrous flooding and crop failures, wiping trillions of dollars from economic activity and forcing the displacement of millions of people,' according to a recent report by The Guardian newspaper.
The cost of doing nothing
Putting an exact figure on the cost of climate inaction is difficult because of the incredible number of variables involved (For example: Will people still want to buy white goods when they're constantly being burned and flooded out of their homes?), but some estimates have suggested the economic impact could exceed $790 trillion by 2100.
The question of private financial influence will also loom large at COP26. Organisers have already stated that 'banks, insurers, investors and other financial firms need to commit to ensuring their investments and lending are aligned with net zero,' but evidence suggests that the financial sector has been slow to take up green causes.
A recent article by Bloomberg, for example, shows that although banks have slowed their involvement in fossil fuels and increased investment in green projects since the Paris agreements were signed in 2015, they have not done so rapidly. So far this year, the world's biggest banks have issued roughly $459 billion in oil, gas and coal-related financing – only slightly less than the nearly $463 billion in green bonds and loans. According to Bloomberg, almost $4 trillion in fossil fuel financing has been issued since the Paris agreement.
This kind of lethargy would seem to run against recent polls showing that the majority of the world's citizens want "strong action" to be taken and "ambitious targets" to be set at COP26. The numbers calling for such action has increased considerably since the Paris agreement. Additionally, opposition to climate action has decreased, with just 3% of respondents saying they do not want their countries to sign up to agreements.
The role of faiths
Many of those people will have the same expectations for the faith groups to which they belong. In this area there is some good news, with faith organisations leading the way in terms of green action. For example, in just one day this week a collective of some 72 faith institutions from around the world announced they would be divesting from fossil fuels – the group represents more than $4.2 billion in assets.
FaithInvest works with hundreds of faith organisations, helping them to invest for positive change while adhering to the tenets of their faiths. We will be hosting and attending a number of workshops and meetings at COP26, including the FaithInvest and Climate Investment Funds roundtable, and the COP26 Faith Plans for People and Planet panel discussion and workshop.
Read our Director of Membership Nana Francois's piece on why FaithInvest will be at COP26 next week with high hopes for progress and plans to listen, learn, collaborate and contribute