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September 19, 2023

Editor’s note: net zero needs public funds and policy, not ‘heroism’

sustainable agriculture harvesting
Funding largely available for the agricultural sector is struggling to be deployed towards new technologies, says a banker at Climate Week NYC (Photo: Ybernardi/Pixabay)

The latest edition of our Sustainable Views newsletter

Dear reader,

Greetings from New York, where I’m spending the next few days talking to entrepreneurs, investors and a few policymakers too during Climate Week NYC, the big annual gathering that, according to some, is reaching maturity.

“The quality of discussions is going up,” a senior sustainability professional told me during a private gathering. This, apparently, was exemplified by the fact that banks are not just being challenged on their lending to fossil fuel companies at the many side events taking place this week. 

Questions are becoming more and more specific, and now consider capital regulatory requirements and other more technical details, she said.

If the quality of discussions is growing, so too seems to be the level of frustration with climate policy. From specialist asset managers to global financial groups, most of the conversations I joined or listened to yesterday ended up calling for greater and better public sector support to solutions that may be considered unsexy. 

Charlie Donovan, an academic who advises Impax Asset Management, told a Climate Week audience that climate-related financial risks are “deeply underpriced”. This means that attracting private sector capital to net zero technologies is that much harder.

Further, transforming grids to meet the needs of renewable energy is essential for the green transition, Donovan added – but it requires policy decisions before it does investment. 

Perhaps yesterday’s release of the Taskforce on Nature-related Financial Disclosures recommendations might help – at least in terms of providing more complete information to analysts pricing risk. Philippa has all the details.

Risk and policy peppered many other conversations here in New York. During a private event, a banker said he was “very concerned” about the future of sustainable agriculture without government funding ready to back early-stage innovation. The funding largely available for the agricultural sector was struggling to be deployed specifically towards new technologies.

Without innovation, he added, the current high-polluting system could lead to “food deglobalisation”. This would be a non irrelevant problem for economies and businesses relying on the international trade of foodstuff and agricultural commodities.

As an entrepreneur said during the same gathering: “we’re very good at heroism”, reacting to an immediate crisis, “but no one wants to work [on fixing systemic problems]”. 

She wasn’t specifically referring to policymakers but, with US presidential elections less than two months away, and the EU choosing a new parliament next year, fears are that heroic (ie, impactful but short-lived) policies might be irresistible, at the expense of longer-term but harder-to-sell decisions.

Will policymakers prove these assumptions wrong?

I’ll keep you posted on my chats – public and private – here in New York. Meanwhile, the team will continue with our regulator coverage from London, Brussels and beyond.

Get in touch, wherever you are, with your own sustainable views.

Silvia

Silvia Pavoni is the editor of Sustainable Views

 

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