Quo Greenis, world?
All eyes and ears are on COP26 in Glasgow, with a “reality-check” on the race towards zero-net emissions. The takeaways apart from the personalities and endless speeches are really two big aspects, sustainability and data. We need tools to travel the great agenda of a net-zero goal. Rightly, you should question data, furthermore its time to consider how important standardized data sets are and question that too.Perhaps the duty of economic commentary is not to tell the reader what to think but more importantly, to provoke the reader simply to “think”. Rather than drowning in acronyms, buzzwords and industry jargon that find their way into academic papers, it makes sense to declutter the realties we are wise to think further about. Simply put, we need to look at the real world before we start on a university thesis.
Let’s start with a question before we start with looking for the answers. Is climate change really “economic change”? this is a fundamental consideration, if we are globally committed to the great transformation towards Net-Zero, and we are through regulation beyond the ethical agendas, the financial world will need new quality and quantifiable standardised data. We have lived in a world where the Petro-dollar has been a fundamental economic device for financial markets. Big oil has built the world we live in, but we are moving into a new world where carbon of many kinds has become the great evil that endangers our planet. If we accept climate change and the causes, we need to also come to terms that this means just as radically, economic change. Afterall, our planet is our home, we can’t all make it to Mars with Elon Musk.
Are Carbon Credits the new Bitcoin?
John. D Rockefeller was a rather successful investor and founder of Standard Oil, later to become the Seven Sisters. John D certainly optimized the carbon era. How things have changed. On December 18th 2020 as mainstream media bemouths headlined pandemic centric stories, the Rockefeller Foundation announced their commitment to divest it’s $5 billion endowment from existing fossil fuel interests whilst refraining from future fossil fuel investments. It’s fair to say that such an announcement defines the great de-carbonisation shift. We have a new lubrication for our Net-Zero world and it’s gathering momentum. One thing is for sure and remains a constant in the global economy- it’s an enormous amount of data and the decisions we then make based on orderly datasets.
The Devil is in the Detail, no Greenwashing
Like all great shifts in global economic policy, the challenge lands fairly and squarely on the major players. Indeed, sustainability targets are a formidable challenge. Around 40% of global financial assets are controlled by 450 firms. That’s equivalent to $130 trillion. Those 400 private jets might have guzzled a lot of aviation fuel depositing many tons of carbon into the atmosphere but they were on an important mission at COP26. The masters of the universe have committed in Glasgow to limit global warming to 1.5C above pre-industrial levels. This is a vast challenge, so far progress has been limited.
Since 2000, European carbon emissions have in part been reduced due to the relocation of manufacturing industry to the rest of the world. The Kyoto Agreement back in 1997 set humanity on a road, there is a long hard journey ahead. The big news is that now the great transformation towards net-zero will use quality and quantifiable standardised data. This underpins the entire rational of ATOME Matter. Companies will be obligated to set out detailed plans by 2023 outlining strategies on moving to a low-carbon future. Stated even more robustly, financial institutions will be forced to show how they intend to hit climate change targets. Climate change adds up to economic change.
The EU Perspective
Ursula von der Leyen (December 2019)
The strategy for achieving the goals being driven by de-carbonising and digitising. “This is Europe’s man on the moon moment”
Ursula von der Leyden’s moon goal spells out the future clearly, however we expect she meant “person on the moon”, and some people aren’t convinced we really did put men on the moon either. Nevertheless, the planet that counts is earth and the future of our home speaks louder than any politician ever can.
Hardcore Points Clarified
Net Zero is achieved when a business or country achieves an overall balance between the amount of carbon it emits and the carbon removed from the atmosphere.
EU Commitments 2030 – 2050
- Cut carbon emissions by 55% by 2030
- EU law the commitment for climate neutrality 2050
- Solvency II proposals from the European Commission on sustainability established
EU Major Developments
11th December 2019 the European Commission announced it would raise one trillion euros to invest and create a circular economy. Fundamentally, this depends on a consistent data policy, technology and data linked. There must be trust in environmental disclosure. Further, Europe must adopt a common understanding of environmental data – build a fair economy establishing trust – equally important for financial and non-financial data ESG.
Back to the Real World
Climate change means economic change. BR-AG’s Project Sunrise is aimed to easily analyse, harmonise and standardise complex data sets with ATOME Matter delivering foundations for robust data for sustainable financial markets. As such, it forms an important part in the transition towards the sustainable economy, a joint goal shared by financial institutions and regulators worldwide.
A new decarbonised world depends on data. In achieving the great Net Zero transformation the banks, insurance and general financial sector are literally the lifeblood of a clean green future. The shift away from destructive agribusinesses, fossil fuels and industry mean that capital will be diverted to renewable energy and highly energy efficient homes. COP26 is a catalyst for the financial sector in evolving towards green and away from brown loans with interest rate differentials to stimulate green investment. Built upon consistent climate data, we will see increasing mandatory sustainability disclosures, a greater emphasis on granular ESG data from financial entities and overall, a keen focus on what we leave behind for future generations. The question remains, are you ready to jump into the green bandwagon?