Fragmented standards, inconsistency in taxonomy and lack of clear direction are barriers to true climate change action
SINGAPORE (Dec 27): It can be said that 2019 has been marked by some of the most urgent and panicked reactions to the climate change crisis in recent memory. From the divisive yet undeniably impactful video of teen climate activist Greta Thunberg’s tearful admonishment of world leaders, to the large-scale climate change action demonstrations across the world by groups such as the Extinction Rebellion, there is no doubt that sustainability is a topic that can no longer be avoided.
Across the globe, the statistics are downright alarming. According to the United Nations, from 1880 to 2012, the average global temperature rose 0.85°C. Temperatures have been rising more quickly in the past decade than in any other decade in human history, however, with 0.7°C in 2010 to 0.9°C in 2017, according to NASA records.
As a result, oceans have warmed, resulting in the rapid melting of snow and ice, which causes sea levels to rise. From 1901 to 2010, the global average sea level rose 19cm because of warming and ice melting. Furthermore, the UN has warned that, given current concentrations and ongoing emissions of greenhouse gases, it is likely that, by the end of this century, global mean temperature will continue to rise above the pre-industrial level.
The world seems paralysed by panic and, amid historic levels of global emissions, only 57 countries (representing 60% of global emissions) are on track to meeting their emissions reductions commitments by 2030.
And, in a huge blow to the effort to arrest climate change, the US, led by climate change-denier President Donald Trump, began the formal process to exit the Paris Agreement in November. The Paris Agreement for climate change is a pledge from nearly 200 nations to cut greenhouse emissions and to help poor countries cope with the worst effects of an already-warming planet.
With the US holding the ignominious title as the world’s largest producer of greenhouse gas emissions per capita, this is ill news for the way forward for the environment.
Off-track
More damning still, pundits have said that the world is nowhere close to achieving the United Nations’ Sustainable Development Goals.
The SDGs, which were established as the blueprint to achieving a better and more sustainable future for the world, encompasses 17 goals on addressing poverty, inequality, climate, environmental degradation, prosperity, and peace and justice.
Yet, as it stands today, no country is on track to achieving them for the 2030 deadline, says Julia Walker, co-author of Sustainable Development Goals: Harnessing business to achieve the SDGs through finance, technology and law reform, has said.
“Every country has signed up to the SDGs, but what’s come out now is that no country is on track to achieving them. If we don’t achieve them, we leave millions to die, because it’s serious. We need to go into the great acceleration, and that means the private sector has to step up,” she tells The Edge Singapore.
A Refinitiv report, in fact, found that, for many of Asia’s largest companies, there is still a gap between intention and action, where many companies implement policy change without establishing targets.
For example, it found that nearly two-thirds (63%) of global companies have a policy to reduce emissions, but only one-third (35%) of companies have specific reduction targets around emissions. This means many companies are setting policies without backing up their intentions with tangible and actionable goals. As such, they are also less likely to truly make a difference within their operations.
Indeed, as an expert bluntly put it, Asia (especially Southeast Asia) is lagging behind in sustainability efforts despite being most vulnerable to climate change. According to Rintaro Tamaki, president of the Japan Center for International Finance, the Asean countries still have far to go in terms of a region-wide, integrated environmental policy to tackle the threat of climate change, despite numerous cross-border environmental issues.
Tamaki in September had told The Edge Singapore that little attention is being paid to the use of fossil fuels and carbon emissions in this region, with the exception of Singapore as the first (and only, for now) country in the region to introduce a carbon tax.
“Businesses are still sticking to ‘business as usual’. There are exceptions, but as a whole, they are sticking to their usual practices,” he said. “Many countries in the region are emerging economies, and they are seeking growth first, quality of life later — but these two should come at the same time.”
Indeed, the stumbling blocks to creating a sustainable future are manifold, not least among them a lack of universally agreed-upon taxonomy in which to determine what even counts as sustainable.
Until now, despite increasing conversations and adoption of sustainable practices — especially sustainable financing — there is no universal taxonomy of how to report, track or measure sustainability goals.
A recent Sustainability Reporting Survey by consultancy firm McKinsey & Co found that a majority of investors and company executives were frustrated with the lack of standardisation in sustainability reporting. The survey found that 82% of investors and 66% of company executives said companies should be required by law to issue sustainability reports. At the same time, 89% of investors say there should be fewer reporting standards than currently exist, while 75% want to see just one standard introduced to make giving investment advice easier.
Companies now need to sit up and pay attention: Investors surveyed by McKinsey also say they cannot readily use companies’ sustainability disclosures to inform investment decisions and advice accurately.
Concerted effort
All is not lost, though. While still fragmented and piecemeal in many places, efforts are being taken to right the boat and avoid the collision course the world is on; increasingly, many players in the sustainability space are recognising the importance of both sustainable financing and a coherent and universal taxonomy in which to define what counts as “sustainable”.
For starters, European Union (EU) negotiators recently announced that a provisional deal on the taxonomy of environmentally sustainable activities has been agreed upon. The taxonomy is long-awaited and intends to form the basis on which investors selling financial products will have to back up any environmental sustainability claims; representatives of the European Parliament and the EU Council will now have to approve it. This taxonomy marks the first time any number of countries have agreed on a sustainability reporting and disclosure taxonomy; it looks set to bring consistency and order to the industry.
And, the money is coming in — Data firm Refinitiv reports that the growth of sustainable financing has been incredible, with more than US$86.3 trillion in investable assets committed to the Principles of Responsible Investing. In Asia-Pacific and Japan, a record high of US$21.9 billion was raised in green bonds, up 29.6% from a year ago. According to the report, Southeast Asia also gained momentum with US$3.3 billion worth of proceeds in 1H2019, up 36.1% y-o-y.
Closer to home, sustainability and climate change are at the top of the agenda for the government, with Prime Minister Lee Hsien Loong focusing on the topic of sustainability in his National Day Rally speech, and pledging during the United Nations Climate Action Summit in September that Singapore would do its “full part to mitigate climate change”.
Across the globe, the existential panic is slowly but surely turning into action. The younger generation is more aware of climate threats than ever before, and is doing its part to halt their advance. Only time will tell whether our current trajectory will succeed — if we have the time at all.
