COP21 can only succeed if the finance system is transformed
Chris Hewett, Head of Advocate Programme for The Lab, shares his insight from November’s Finance Watch workshop in Paris regarding COP21.
On November 5th, I had the privilege of hosting a workshop in Paris with Finance Watch which brought together over thirty civil society groups focused on climate change and those focused on finance reform, from across the EU. In the run up to COP21, the questions we were asking ourselves was:
What will it take to realign the interests of the finance system with those of a low carbon economy?
We mapped where current flows of public and private money go in the fossil fuel dominated energy economy, and worked on redrawing the flows to where we need them to go to prevent dangerous climate change. Then we started to think about implications for policy advocacy, campaigns and the financial system. Where are different initiatives complementing each other and helping systemic change? What financial flows are we ignoring or having very little impact on?
In the media scrum around the Paris COP, much focus will go on government targets, the prospects for global agreement and relatively little attention will be paid to the role of the global finance system. Our workshop conclusion was clear that this is a mistake, and that much of the climate policy rhetoric will be undeliverable without fundamental change in the way the finance system works.
A recent report from Bankwatch has shown exactly how much global bank lending is going into fossil fuel lending. Between 2009 and 2014, the top 25 global banks lent $98bn to renewable energy projects and $931bn to fossil fuel projects. Nearly a ten-fold difference in favour of fossil fuels. They have asked banks to sign the Paris Pledge to stop lending to coal. So far 20 banks have signed up.
News that the G20 Financial Stability Board is investigating the impact of climate risk on the finance system is welcome, but a more important question seems to be: How much impact are financial risks having on the climate system?
At the event, 17 civil society organisations including Greenpeace, 350.org, Oxfam, Finance Watch and Finance Innovation Lab, signed a joint statement which called on governments to make finance serve climate objectives.
The global divestment movement is the most visible collaboration between finance reform groups and climate change campaigners, but we will need to see more such initiatives in the future if we are to deliver a low carbon economy as rapidly as climate science is telling us we need to.