“There is incredible momentum on climate action from individual states, cities, the private sector and citizens. A single political decision will not derail this unparalleled effort” said UN Environment Head, Erik Solheim in response to the US decision to withdraw from the Paris Climate Agreement. You can read his full statement later in this article in which he reminds us that the incredible momentum on tackling climate change is unstoppable. In the following blog post Eric Usher, UNEP FI Head, and Remco Fischer, UNEP FI Climate Team Lead summarise the actions that are already being taken by the private sector, including financial institutions, as well as companies and governments around the world, that will ensure that the US government withdrawal will not knock the Paris Agreement off course.

The transition to the global climate economy – one that is decarbonized to the extent that it avoids catastrophic and irreversible levels of climate change, and is resilient to the inevitable meteorological impacts of climate change – is unstoppable, as Erik Solheim points out.

It is unstoppable in political terms. In the aftermath of President Trump’s withdrawal announcement, governments from North and South, the developed and developing world, as well as many political leaders at state, city, and county-level, from within the United States itself are showing strong leadership. In fact, all other major greenhouse gas emitters such as the European Union, China, India, Japan, Australia and Canada have reaffirmed the importance and validity of the Paris Agreement.

And the systematic and steady climate action and transition to a climate economy requires, is unstoppable on economic and financial grounds. We have known for over a decade that the investments required to effectively address climate change pale into insignificance when compared to the financial costs, and the overall loss in human welfare, that inaction and a path of ‘business as usual’ would lead to. But it is only fairly recently that that understanding – as well as the political, technological, and financial innovation that it unleashed – have started to show powerful impacts on the ground.

Mainstream institutional investors not only view the climate economic transition as the preferred option going forward. They now also consider it to be a plausible, perhaps even the likeliest, scenario:

• Just two days before President Trump’s announcement, a majority of 62% of the shareholders of ExxonMobil agreed that the company, which is the largest Western oil and gas firm, should start assessing and disclosing the effects that a 2 degrees pathway would likely have on its performance and viability, including in the long term. This is the first time that a major fossil fuel company has been forced – by its own shareholders – to do so; not on environmental grounds, but for reasons of financial health and commercial viability.

 

• On 22 May, 282 institutional investors and financial institutions representing more than USD 17 trillion in assets, wrote to G7 and G20 heads of state urging governments to stand by their commitments to the Paris Agreement. Many were from within the UNEP FI membership and included Allianz Global Investors, Amundi, ASN Bank, Aviva, Axa, BNP Paribas, Caisse des Dépôts, Danske Bank, Handelsbanken Asset Management, Henderson Global Investors, Hermes Investment Management, HSBC, Mirova, MunichRe, Nordea, Robeco, Sarasin & partners, SEB.

 

• Institutional investors, including those from the US, continue to implement efforts to align their core portfolios with the low-carbon economy. In 2017, the Portfolio Decarbonization Coalition (PDC) welcomed two new and noteworthy members into its ranks: the New York State Common Retirement Fund became the first major public pension fund in the US to set a decarbonization target, and the Unilever Pension Plan, is the first corporate pension plan to join the PDC.

 

• The following US-based investors and financial institutions have publicly committed in recent days to continue supporting climate action to achieve the US commitments under the Paris Agreement. Under the banner of We are still in, they are joining forces with companies, states, cities, and universities, to compensate for the now diminished role of the federal Government in climate action: Allianz, Boston Common Asset Management, Boston Trust/Walden Asset Management, California State Controller, CalPERS, CalSTRS, Calvert Research and Management, ClearBridge Investments, Connecticut Retirement Plans and Trust Funds, Dana Investment Advisors, Domini Impact Investments LLC, Impax Asset Management, Kendall Investments, Mirova, Natixis Asset Management, Sonen Capital, State Treasurer of Maryland, and Western Union.

 

• “Coal is dead,” said Jim Barry, the global head of BlackRock’s infrastructure investment group, in a recent interview. BlackRock, the world’s largest investment group, with $5 trillion in assets, has begun to bet on clean energy. Why? “The thing that has changed fundamentally the whole picture is that renewables have gotten so cheap,” explained Barry. The US alone has shuttered 40 gigawatts of coal plants since 2000. “These [coal plants] will not reopen whatever President Trump does”. Bloomberg New Energy Finance recently said, “nor do we see much appetite among investors for ploughing money into US coal extraction — stranded asset risk will trump rhetoric.”

In many places the transition is now driven by economic and technological, rather than societal rationale:

• In the United States, for instance, the five states that get the largest percentage of their power from wind turbines — Iowa, Kansas, North and South Dakota, and Oklahoma — all voted for President Trump in November of 2016. So did Texas, which produces the most wind power in absolute terms. In fact, 69% of the wind power produced in the US comes from states that Mr. Trump carried. This shows that the transition is no longer happening for political, societal, or ideological reasons; in many places it is happening purely on financial and technological grounds.

 

• In Germany, authorities have recently approved four offshore wind park projects in the North Sea including one that, for the first time, is to be built completely without the state subsidy that has been usual up to now under a scheme aimed at encouraging renewable energy.

 

• In India, wholesale solar power prices have reached another record, faster than analysts predicted and further undercutting the price of fossil fuel-generated power in the country. The tumbling price of solar energy increases the likelihood that India will meet – and by its own predictions, exceed– the renewable energy targets it set at the Paris Agreement.

 

• Sales of electric vehicles grew by 55% from 2015 to 2016. Norway pushed the limits last month with record plug-in electric sales reaching 37% market share in the country’s passenger car market. From 2025, all vehicles sold in Norway will be electric.

 

• In the UK, wind, nuclear and solar power were together generating more electricity than gas and coal combined at 1pm on Wednesday, 9 June, for the first time ever.

 

Erik Solheim’s statement in full.

“The science on climate change is perfectly clear: we need more action, not less. This a global challenge. Every nation has a responsibility to act and to act now.

The US decision to leave Paris in no way brings an end to this unstoppable effort. China, India, the European Union and others are already showing strong leadership. 190 nations are showing strong determination to work with them to protect this and future generations.

There is incredible momentum on climate action from individual states, cities, the private sector and citizens. A single political decision will not derail this unparalleled effort. UN Environment urges all parties to redouble their efforts. We will work with everyone willing to make a difference.

Climate action is not a burden, but an unprecedented opportunity. A shift to renewable energy creates more jobs, better paid jobs and better quality jobs. Decreasing our dependence on fossil fuels will build more inclusive and robust economies. It will save millions of lives and slash the huge healthcare cost of pollution.

Committing to climate action means helping countries like Iraq and Somalia on the front line of extremism and terrorism. It means helping coastal communities from Louisiana to the Solomon Islands. It means protecting food security and building stability to avoid adding yet more refugees to what is already an unprecedented global humanitarian crisis.

The Paris Agreement is founded on clear evidence, solid science and incredible international collaboration. It will put aside differences to tackle a common, monumental challenge. The reversal of damage to the ozone layer proves that such a global effort can succeed. Ultimately, this is an investment in our own survival that no-one can afford to abandon.”