The former US Vice President Al Gore and climate activist is urging to overhaul the global financial system and stop providing funds to carbon-intensive projects to cut global GHG emissions and meet countries’ net zero goals.
What is Happening?
- Former US Vice President Al Gore says the global financial system must be reformed and that the industry needs to stop funding carbon-intensive projects in order to meet net zero emission goals by 2050.
- The financial industry should not rely on carbon offsetting as a “get-out-of-jail” free card but rather direct capital towards companies supporting net zero transitions.
We need to overhaul the global financial system and stop the industry from continuing to fund carbon-intensive projects in order to cut down greenhouse gas (GHG) emissions and reach global climate goals set out in the Paris Agreement, according former US Vice President Al Gore.
The finance industry has been facilitating “reckless emissions” that treat the world’s atmosphere “as an open sewer,” Gore said in an interview with the Financial Times. The banking, asset management and accounting industries need to be reformed if countries want to achieve their net zero emissions target by mid-century.
Banks and asset managers have to stop backing and providing capital to companies that are engaged in “destructive practices”. A recent UN report found that nearly 90% of agricultural subsidies are given to farmers every year, which contributes to massive amounts of GHG emissions and are given fewer incentives to diversify to more nutritional food. Another report revealed that 20 livestock and dairy companies emit a greater volume of greenhouse gasses than countries like Germany, Britain or France, while being financed by the world’s most powerful banks and investors.
Capital should be redirected towards companies that are helping countries and the world transition to a low-carbon economy. Gore, who co-founded a sustainable investment fund manager Generation Investment Management in 2004 with David Blood offering advisory services on sustainable and environmental, social and governance (ESG) investing, strongly believes there needs to be much stronger regulations and increased public disclosures within the industry. A systemic reform will force banks and financial firms to reexamine their policies in regards to climate change risks.
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Carbon offsets, in which companies buy up offsets from groups that are planting trees and carbon sinks such as mangroves, or other efforts to reduce carbon emissions from the atmosphere, to compensate for GHG emissions produced and funded by the financial market should and cannot be “a get-out-of-jail-free card”. While carbon offsetting has a role to play, the global focus needs to be on reducing emission altogether, Gore adds.
“It is suicidal for the human race to continue on this track and to pretend that it can be somehow negated by promising to plant trees here, there or elsewhere. This is simply not realistic,” Gore said.
The former US Vice President has been a vehement advocate for climate action since 2006, where his Academy Award-winning documentary An Inconvenient Truth help raised international public awareness of global warming and climate change. Ahead of COP26, the UN climate summit to be held in Glasgow which will kick off on Oct 31, Gore is also urging world leaders to commit to more ambitious climate action.
“This is the meeting where every nation has an obligation to review their commitments and make their commitments more ambitious. Many countries have done so, the European Union has done so, the United States of America has done so as well, so I am optimistic that we are going to see significant progress in Glasgow,” he said.
While Gore is disappointed that some world leaders including Russia’s president Vladimir Putin and China’s Xi Jinping – both countries are the world’s largest emitters of greenhouse gases – are unlikely attending COP26 in person, he remains optimistic that progress will be made in the global fight against climate change.
Featured image by: Wikimedia Commons