Progress on climate change since last year’s COP26 convention is “woefully inadequate,” with massive adjustments needed in the financial services system, according to a UN report issued Thursday.
The United Nations found that recently made nationally determined contributions, or NDCs, setting out objectives to be achieved by 2030, will cut less than 1% from projected global greenhouse gas emissions. Countries have made such pledges since last year’s Conference of Parties to the UN Framework Convention on Climate Change, or COP26, held in Glasgow.
Pledges not adding up
As of September, there were 166 nations with NDCs, up from 152 at the time of last year’s COP26 event. The countries that have made pledges account for 91% of all emissions, according to the UN.
While many, including G20 members, have taken steps to help meet the emissions reduction targets they set, the group is falling short of what’s necessary to significantly curb global warming. The Paris Agreement sought to limit the average global temperature increase to 1.5°C by the end of the century, but current policies will likely result in a rise of 2.8°C, the report noted. With the total NDCs in place, warming could be limited to a more optimistic 2.4°C.
“Implementation of all NDCs plus net-zero commitments made by an increasing number of countries point to a 1.8°C increase,” the UN report stated. “However, this scenario is not credible, based on the discrepancy between current emissions, near-term NDC targets and long-term net-zero targets. To get on track to meet the Paris Agreement goal, the world needs to reduce greenhouse gases by unprecedented levels over the next eight years.”
That necessitates massive changes in electricity supply, transportation, infrastructure, agriculture and financial systems, the UN said.
“Even if the transformation fails to fully bridge the 2030 emissions gap, every fraction of a degree matters,” the report noted. “Launching the transformation is necessary to move towards a carbon-neutral future that will allow us to limit global warming and deliver other social and environmental benefits, like clean air, green jobs and universal energy access.”
Financial system
Globally, action by financial institutions on climate change has been sluggish, in part because short-term interests are being prioritized over risks that few appreciate, the report noted.
Moving toward a low-carbon economy would require at least $4trn being invested in the change annually, which means about 25% more financial resources in that area. Raising that funding would mean more cooperation from governments, banks and investors.
The UN pointed to six aspects of reform need in the financial sector. Those include:
- Making financial markets more efficient through increased transparency and other reforms
- Carbon pricing, such as cap-and-trade
- Regulation, policy and tax incentives to encourage better “financial behavior”
- Building markets for low-carbon technology, with appropriate funding
- Getting more central banks on board with regulations to help stem climate change
- Partnerships between countries to encourage international financial projects, including commitments such as sovereign guarantees
Across the sectors of electricity supply, industry, transportation and buildings, the financial services industry must engage with or divest from emissions-heavy companies, including oil and gas firms. At the same time, it should invest in zero-emissions infrastructure and vehicles, the UN report stated.
Changes needed
The UN report also called for considerable changes to the world’s food systems, with the biggest reductions in temperature rise happening through switches to vegan diets, reducing deforestation and decarbonizing the supply chain.
The top emitter by total greenhouse gas volume is China, with an estimated 15 gigatons of carbon dioxide equivalents in 2020, followed by the US, at nearly 6 gigatons. However, the US leads the world in per capita emissions, with nearly 15 tons a person, according to the report. Behind that is Russia, at about 13 tons per capita, and China, with roughly 10 tons per person.
