When corporate bosses descended en masse upon Glasgow for COP26, many observed — often with discomfort — that it felt something like a Scottish edition of Davos. Six months on, many of those same faces are here in the real Davos for the World Economic Forum, talking a good game on climate action in both private and public conversations. But how much progress are they making on realising the lofty pledges many of them made in Glasgow?
I discussed that yesterday with Nigel Topping, who helped to pull together those private sector commitments at COP26 as the UN climate action champion, and is now working on preparations for this year’s COP27 in Egypt. It is still early to make a hard call, he said, pointing out that corporate signatories to the UN’s Race to Zero initiative have until September to lay out hard plans to reach carbon neutrality.
But there were worrying signs of backsliding in some quarters, Topping said, amid calls for new investment in oil and gas as the Ukraine conflict drives surging energy prices. “Nothing scientifically says we need more gas,” he said. “The most disingenuous thing is to suggest that a starvation of investment in hydrocarbons has caused the current energy crisis.”
And for all the bold words from government and corporate leaders here in Davos, he said, there is still a “big gap” between promises and hard policy that will need to be closed fast for serious progress to made in Sharm el-Sheikh.
You will find more on the climate debate in Davos below, along with the latest on the push for global sustainability reporting standards, and the lowdown on a hectic day of shareholder votes in the US. We will be back in your inbox tomorrow. (Simon Mundy)
Davos day 3 in brief
Pakistan’s foreign minister told the FT that the country wants to renegotiate a deal with the IMF, citing worsening economic circumstances. “This is a pre-Afghanistan situation deal, this is a pre-Ukraine deal, this is a pre-pandemic deal and pre-current global economic trends.”
Pfizer’s chief executive Albert Bourla warned that growing complacency on Covid-19 will cost lives. “I feel . . . people are ready to compromise and lower the bar: maybe we can accept a few more old people dying,” he said.
IMF deputy managing director Gita Gopinath said there was no evidence yet of a systemic sovereign debt crisis — but warned that the risk ahead was “salient”.
WTO head: Rich world has ‘no excuses’ on climate finance failure
On a day thick with climate discussions at Davos, perhaps the most noteworthy remarks came from Ngozi Okonjo-Iweala, director-general of the World Trade Organization.
The former Nigerian finance minister delivered a swingeing attack on the failure of developed nations to meet a pledge to provide $100bn in climate-related financial assistance to developing countries, contrasting it with the firepower they rolled out domestically in response to the Covid-19 crisis.
“There was a pandemic and we suddenly saw $14tn . . . money coming out of everywhere,” she said. “It was the right policy response. But then it has bred scepticism. If the developed countries could come up with that amount of money in a short amount of time, what’s $100bn compared with $14tn? Why can’t we come up with this money? There are no excuses on this.”
Okonjo-Iweala renewed her call for an international carbon pricing system — something that she said could be developed under the WTO’s auspices.
Her remarks followed a session earlier in the day that grappled with the problem of how to hit the global goal of net zero carbon emissions by 2050. UN climate envoy Mark Carney added his voice to those warning against an excessive focus on divesting fossil fuel assets. “This is about real-world decarbonisation, not the false comfort of portfolio decarbonisation,” he said. “The easiest thing to do is to sell and walk away, make it somebody else’s problem.”
Anne Richards, chief executive of the $800bn asset manager Fidelity International, said that there had been a dramatic shift in her sector’s approach to climate issues, with most clients now keen to ensure their investments help tackle the problem. “It’s almost never that you don’t have sustainability raised as part of that conversation — whereas if you go back five years, the ESG agenda was a niche.”
But a far more sceptical take on the financial sector’s transformed thinking came with a session of young climate activists, who condemned a continuing failure by corporate and political leaders to turn rousing words into action. Ecuador’s Helena Gualinga hit out against the oil companies that she said have been having a devastating impact on her Kichwa Sarayaku community — and the financial companies who continue to fund such projects.
“Many, many big banks and financial institutions work directly with these companies,” she said. “Even though they’re not harming with their own hands, they’re complicit in the harm that is being done.” (Simon Mundy)
Faber seeks to calm jitters on ISSB standards
The International Sustainability Standards Board is planning to develop its new framework in a way that is practical and proportional, its chair Emmanuel Faber pledged in Davos on Wednesday.
Faber promised to make the standards as streamlined and simple as possible. “We will be pragmatic,” the former Danone boss said, noting that it would be inappropriate to expect small companies to adhere to the same standards as global giants.
The comments come as the issue of accounting has sparked extensive debate in Davos in private meetings and panels, since many global giants are not only racing to implement their own frameworks and metrics — but increasingly demanding that their own suppliers do this too.
The recent initiatives from the SEC and European Commission have sparked particular discussion, since many corporate leaders have reservations about some of their measures, and are urging them to water them down. There is also dismay among some finance chiefs and chief executives that they are likely to need to adhere to three sets of standards in the future — from the SEC, EU and ISSB.
However, nobody doubts the direction of travel, and many say that clearer frameworks could help reduce the charges of greenwashing and the risks that the SEC’s recent action against BNY Mellon has highlighted. “Words like ‘pragmatic’ and ‘proportional’ are what we want to hear,” the finance chief of one large bank told Moral Money. Whether green activists will agree, however, remains to be seen. (Gillian Tett)
Quote of the day
Jeremy Raguain, a fellow at the Association of Small Island States, warned a Davos audience that vested corporate interests still wield disproportionate clout over the climate-related policies of governments in large economies.
“The science is clear, but there are many well-funded lobbyists,” he said. “Who’s in the room when the science is being fought over to make policy?”
Elsewhere in ESG: Climate activists score wins at company meetings
While demonstrations against BlackRock’s fossil fuel holdings on Wednesday were not as raucous as the protests at Shell earlier this week, eight people were arrested outside the asset manager’s Manhattan office as shareholders took part in the group’s annual meeting, activists said.
Inside the meetings, shareholders endorsed agitation at companies to move faster on climate progress. On one of the biggest days in the US for annual meetings, a majority of ExxonMobil shareholders supported more disclosures about how it is affected by the International Energy Agency’s net zero 2050 models. More than one-third of Exxon shareholders also supported a report about the company’s efforts to reduce single use plastic.
Shareholders at Chevron pressed the company to move faster on climate change. Thirty-nine per cent of shareholders voted for a full accounting of the company’s climate risks.
“With this strong vote, investors have made it clear that companies must fully address how the global transition away from fossil fuels will affect their companies’ bottom lines and future success,” said Danielle Fugere, president of As You Sow, a non-profit that sponsored the proposal.
In Silicon Valley, Amazon came up against a record 15 resolutions on environmental issues and workers’ rights — all of which were voted down by investors. But shareholders at Twitter voted for a petition demanding the company publish its political spending to lobbying organisations and other causes. The company has said it does not do political giving, but it has received low scores for political transparency.
While the final chapter on the annual meetings season has yet to be written, companies have faced fire from investors when they have been unwilling to concede to demands before a vote. (Patrick Temple-West)
Smart read
Mining company Glencore is set to shell out $1.5bn to settle charges of bribery and market manipulation. Two of its subsidiaries will plead guilty to corruption charges. It’s yet another stain on the company’s troubled reputation. But is it good news for shareholders?
Source: Economy - ft.com
