The summary of the sixth assessment report by the Intergovernmental Panel on Climate Change (IPCC) was published on Monday 20 March. Adopted by the representatives of its 195 member countries, its conclusions are unequivocal. Five key figures stand out. +1.1°C: the level of global warming observed compared with the pre-industrial period (1850-1900). 97%: the proportion of this warming attributable to human activity. +1.5°C: the maximum warming target for 2100 set at the Cop21 (Paris, 2015). This level of increase in the Earth’s average temperature will be reached from 2030-2035. This is why the IPCC says that “the pace and scale of the measures taken so far are insufficient”. This is an understatement. +3.2°C: this will be the level of warming reached in 2100 if we allow the current gap between CO2 reduction commitments and their actual implementation to persist. 3.4 billion people are already affected by global warming. Who are they? “Disproportionately, those who have historically contributed the least to current warming. In other words, there is no climate justice.
Investors have a crucial role to play in meeting the environmental challenge
There is an urgent need to drastically accelerate the transition of our economies towards greater sobriety, greater energy efficiency and less impact. In this respect, investors are in the front line when it comes to accelerating the ecological transition, because they finance, and therefore feed and support, businesses. In their ability to identify best practice, to support sustainable and responsible business models: in short, to direct their investments towards the companies that make the greatest contribution to the transition.
At a time when climate change is spiralling out of control and we are witnessing the sixth mass extinction of species (the fifth was 65 million years ago and saw the disappearance of the dinosaurs), the IPCC reminds us that “current levels of financial resources dedicated to the climate are highly inadequate and are still largely exceeded by the flows of financing for fossil fuels”. It has to be said that the financial sector has not yet taken the measure of its responsibility.
Reliable environmental assessment solutions exist
Among the many pretexts used to justify a form of status quo, too many investors cite the lack of reliable environmental data that can be used to support sustainable investment strategies. While it is true that there is no perfect environmental assessment methodology, solid tools do exist, provided they meet a number of conditions. The first is scientific rigour. Environmental impact assessment is a matter of rigour and impartiality, and science must always have the last word, ahead of any political or accounting considerations.
Secondly, a holistic approach to environmental issues. This is a physical reality: climate and biodiversity are interconnected, which is why the IPBES (Intergovernmental Platform on Biodiversity and Ecosystem Services) considers climate change to be one of the five drivers of biodiversity loss.
Finally, transparency, as an absolute guarantee of credibility. At a time when mistrust is being generated by attempts at greenwashing by companies more concerned with maintaining their economic model of infinite growth in a world of limited resources than developing sober and resilient economic models, the transparency of indicators must no longer be considered an option: it must be imposed on everyone as a necessary condition of trust and opposability. Some data and methodology providers have understood this and are openly disclosing their methods. This is something that the major North American market leaders in ESG (Environment, Social, Governance) data, among others, are not doing. Investors are free to sort the wheat from the chaff, and to choose their suppliers.
What is not (properly) measured is not (properly) managed. Science-based, rigorous and transparent measurement solutions exist that consider environmental issues in their entirety. Ladies and gentlemen of the investment community, it’s up to you to seize this opportunity, as time is running out.
Clément Bladier is Managing Director of the NEC, a tool that measures the degree of alignment with the green transition.