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Two Steps Forward

The new language of climate change: Trillions

Bye-bye, billions. It’s time for trillions to seize center stage of the climate conversation.

It didn’t seem that long ago that it was all about billions — billions of dollars of climate investments, billions of tons of carbon reductions and billions in new market opportunities. Billions of assets under management being screened for climate risk. All to stem billions more in environmental damage, GDP loss, natural capital savings and ecosystems decline. And probably a billion other things.

That was so last year.

Bye-bye, billions. It’s time for trillions to seize center stage.

Yes, trillions. With a T.

In the ramp-up to Climate Week, unfolding in hundreds of events across New York City over the next five days or so, there’s been a raft of reports, commitments and declarations touting big, big numbers. It’s a clear sign that the money side of climate change — both costs and opportunities — is rising in lockstep with a recognition of the stakes to people and the planet.

Bye-bye, billions. It’s time for trillions to seize center stage.
Witness a sampling of stories from just the past week:
  • Investing $1.8 trillion into early warning systems, climate-resilient infrastructure, improved agriculture, mangrove protection and more resilient water resources between 2020 and 2030 could generate $7.1 trillion in total net benefits, according to a report by the Global Commission on Adaptation, headed by Microsoft founder and philanthropist Bill Gates and former U.N. Secretary-General Ban Ki-moon.
  • Transforming the way that food is produced, processed, distributed, consumed and disposed of in order to deliver a sustainable food system could yield up to $4.5 trillion a year by 2030 to companies, according to a report from the Food and Land use Coalition, a group established at the United Nations in 2017.
  • Investing in low-carbon cities is projected to be worth "at least $23.9 trillion" by 2050, according to research by the Coalition for Urban Transitions, an initiative of the New Climate Economy, jointly hosted by WRI’s Ross Center for Sustainable Cities and the C40 Cities Climate Leadership Group.
  • Renewable electricity from solar and wind costs less than electricity from gas and coal, and can be implemented everywhere at huge scale, giving rise to a trillion-dollar energy windfall, according to Inevitable Policy Response, a project of the U.N. Principles for Responsible Investing that aims "to prepare investors for the associated portfolio risks."

And these don’t include trillions more of banks’ and investors’ money:

  • A group of 515 global institutional investors with more than $35 trillion in assets under management last week urged world governments (PDF) to step up efforts to tackle climate change. The Global Investor Statement to Governments on Climate Change, from a group called the Investor Agenda, said that while investors are taking action on climate change, there is an "ambition gap" with current government commitments to the Paris Agreement.
  • A group of 230 institutional investors led by Ceres and PRI, and representing $16.2 trillion in assets under management, called on companies (PDF) to publicly disclose and implement a commodity-specific "no deforestation" policy with quantifiable, time-bound commitments covering the entire supply chain and sourcing geographies, including establishing a transparent monitoring and verification system for supplier compliance with the company’s "no deforestation" policy.
  • More than 1,100 institutions with more than $11 trillion in assets under management have committed (PDF) to divest from fossil fuels.
  • And leading banks and the United Nations launched the Principles for Responsible Banking, with 130 banks — collectively holding $47 trillion in assets, or one-third of the global banking sector — committing to strategically align their business with the goals of the Paris Agreement and the Sustainable Development Goals, "and massively scale up their contribution to the achievement of both."

And then there’s the U.S. presidential campaign, where the leading Democratic candidates seem to have entered an arms race of climate plans, each invoking the T-word. Bernie Sanders, for example, proposed a staggering $16.3 trillion federal investment over 15 years in renewable energy and public infrastructure. By contrast, Pete Buttigieg’s proposal to invest a measly $1 trillion in climate solutions seems a weak cup of tea.

What, in the name of inflated expectations, is going on here?

Beyond climate

Clearly, the climate crisis has reached a new level of ambition, at least in financial terms, even if it still may fall short of what world leaders in New York are calling for this week. Nonetheless, the fact that investors, governments and corporations are backing up their concern with real money is a sign of how far the climate movement has come.

It’s still not enough. After all, there are all the other, non-climate aspects of the Sustainable Development Goals that need to be addressed.

It’s still not enough. After all, there are all the other, non-climate aspects of the Sustainable Development Goals that need to be addressed.
Case in point: Countries must increase spending on primary healthcare by at least 1 percent of their gross domestic product "if the world is to close glaring coverage gaps and meet health targets agreed in 2015," according to a report released over the weekend by the World Health Organization. That falls slightly short of the T-word, since 1 percent of global GDP — projected to be a bit over $88 trillion in 2019 — amounts to a piddling $880 billion. But that’s still a big number, and keep in mind that the key words here are "increase spending … by at least," so the sum total still could include 12 zeroes.

It’s all just numbers, an abstraction at best. The real work has to do with how this money is deployed, and how quickly. As everyone knows, where there’s big money, shenanigans often follow. And the pace of deployment can result in solutions being too little, too late.

Still, it’s an encouraging sign — real money, as it’s been said — and nicely in line with the unofficial meme of Climate Week: "higher ambition." It’s long been evident that all of the corporate, governmental and nongovernmental commitments and actions to date to stem the climate crisis have been insufficient, by long shot.

And as forests burn, oceans warm, cities parch and crops wilt — exactly as was predicted some decades ago, but also faster than some expected — this influx of capital commitments is a welcome sign that higher ambition is on the near-term horizon.

In a word: Priceless.

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