Now is the time for Argentina to show real green finance leadership
As the G20 summit moves to South America for the first time, all eyes will be on Argentina this spring, hoping that the country shows real leadership on climate action – especially as President Macri has affirmed his desires to bring Argentina into a new role in global politics through the G20 presidency.
Now is the time to make good on that desire. As a leader among emerging economies, Argentina must galvanise momentum at the summit and show real leadership to promote a development model that is compatible with the long-term goals of the Paris Agreement by phasing out fossil fuel subsidies by 2020 and providing support to those most vulnerable to climate change impacts. Doing so will be an opportunity to usher in a transformational change for a prosperous and resilient future for all.
Meeting the aims of the Paris Agreement is fundamental to tackling many of the world’s problems: according to a 2017 World Economic Forum survey, 750 of the world’s top economists agree that extreme weather events is the most pressing potential long-term risk to the global economy; its potential impact is second only to weapons of mass destruction. A failure to rapidly shift to a zero-emissions growth trajectory can exacerbate poverty, increase food insecurity and render adaptation efforts impossible in the years to come.
Institutional investors have been showing clear dedication to climate action. Last year, for example, nearly 400 global investors representing more than US$22 trillion in assets signed a letter coordinated by the PRI to the governments of the G7 and G20 nations reiterating their belief that the mitigation of climate change is essential to the safeguarding of their investments. They urged all nations to stand by their commitments to the Paris Agreement and to put in place policy measures to achieve their nationally-determined contributions (NDCs) with the utmost urgency.
It is imperative that governments respond to this dedication by advancing efforts to stop funding fossil fuels and start a real conversation of a managed decline of the fossil fuel industry in line with climate science.
With COP23 announcing the Talanoa Dialogue in 2018, this year is a critical one for countries to permanently tip the scale towards faster action and stronger ambition when they assess their NDCs. They must signal an intent to step up and enhance ambition by 2020 in their revised NDCs to keep warming below 1.5 degrees Celsius.
In July 2017, 19 of the 20 G20 leaders demonstrated their support to act on climate change when they signed onto the Climate and Energy Action Plan for Growth at the G20 summit in Hamburg. This sent a clear signal that the G20 economies understand the need to take action on climate. The Argentine presidency must strengthen and build on this existing framework and work with the other G20 nations towards its effective implementation in the run up to the heads of state summit on 30 November 2018. It’s up to the Argentinian presidency to move from commitment to action – especially after the previous host, Germany, failed to confront their own fossil fuel subsidies through the last G20 process.
Despite this setback, G20 nations have already taken significant strides forwards to tackle the climate issue. China, for example, has been on the frontlines of pushing for green finance to be at the heart of economic development policies, championing it both domestically and internationally during its G20 presidency. The country has had a meteoric rise to green finance leader. In 2016, China issued US$36 billion of green bonds – up from almost none the year before. Two percent of bonds issued last year by Chinese domestic entities were classified as ‘green’ – against 0.2% of bonds issued internationally. And last year, the country set up five “green finance” pilot zones – areas where financial institutions will be given a number of incentives to provide credit and special funds for environmentally-friendly industries.
Developing G20 nations are also displaying firm climate commitments. Brazil’s central bank, for example, has created detailed and advanced environmental regulations independent of the country’s Environment Ministry. And the Brazilian labelled green bonds market reached US$3.67 billion in 2017 – with over 60% of bond proceeds going to renewable energy projects, and agriculture and forestry.
So, it is with an increased optimism that Argentina takes the G20 reigns. The country has an extraordinary opportunity to demonstrate they are serious about climate action and lead the G20 to make a clear commitment to mainstreaming climate action.