As climate risks grow, businesses should take action to ensure their future survival: Michael Bloomberg

Businesses need to quickly and accurately assess the risks from climate impact but also the opportunities it provides them. PHOTO: ST FILE

SINGAPORE - The private sector is shifting to clean energy but to speed up this transition, firms need to be able to price the true costs and benefits of making the shift away from fossil fuels, so that banks and investors can accurately assess their risks and opportunities, said Mr Michael Bloomberg, UN Special Envoy for Climate Ambition and Solutions.

"The more they know about those risks and opportunities, the faster they will shift their portfolios. Providing them with the right data and information - and the tools to use it - is a very big piece of the climate puzzle," he told The Straits Times on Wednesday (June 8) morning.

Mr Bloomberg is also co-chair of the Glasgow Financial Alliance for Net Zero (GFANZ), which opened its Asia-Pacific network office in Singapore on Wednesday.

The alliance has more than 450 member firms including banks, insurers, asset owners, asset managers and financial service providers spanning 45 countries. The aim is for members to take concrete actions to cut their emissions to net zero by 2050 and to ensure their investments achieve the same target.

Getting there though is not easy because it requires a major change in the way some businesses operate and how they invest, but the global effort to reduce the threat from climate change cannot succeed without the muscle of private finance, according to GFANZ.

"The private sector is already moving to clean energy. That's the future. Technology is making the idea of burning fossil fuels for most of our needs obsolete. The only question is: How do we dramatically accelerate that transition?" Mr Bloomberg told ST.

But the green transition is going to take time and the shift away from fossil fuels, which provide the majority of the world's energy, will not be easy. The United Nations climate panel says deep emissions cuts need to happen this decade if the world is to avoid warming beyond 1.5 deg C, a threshold beyond which the world risks experiencing far greater weather extremes.

As the risks grow, so does the need for businesses to be transparent about their actions to cut emissions. They also need to quickly and accurately assess the risks from climate impact and the opportunities it provides them with, such as investing in green energy.

"They understand that doing nothing will have enormous repercussions for the global economy - and for their bottom lines. The more companies start reporting emissions and their plans to cut them, and the more they start measuring and reporting the climate-related risks they face, the more others will be compelled to join them, because not doing so would put them at a competitive disadvantage," Mr Bloomberg said.

GFANZ has faced accusations of being big on rhetoric and short on actions, with some members being criticised for being major funders of fossil fuel projects and others for not being ambitions enough to align their investment portfolios to limit global warming to 1.5 deg C.

A report by think tank InfluenceMap in March 2022 found that the world's 30 biggest listed finance groups provided US$740 billion (S$1 trillion) to fossil fuel producers in 2020 and 2021, and held billions more in investments. GFANZ member JP Morgan is among the leading financiers.

Vanguard, the world's second largest asset manager and GFANZ member, copped a lot of flak in the media for its statement in May that only US$290 billion, or 17 per cent of the firm's US$1.7 trillion in actively managed assets, will be in line with net zero by 2050.

The firm has also been criticised by Reclaim Finance, a non-governmental organisation that tracks and analyses the activities of financial institutions, for its fossil fuel investments.

In response to growing concerns about corporate greenwashing, French President Emmanuel Macron and Mr Bloomberg last Friday (June 3) announced the creation of a new committee as part of efforts to enhance transparency to monitor business climate actions through an open data platform, Reuters reported.

The proposed new committee will bring together international organisations, regulators, policy makers and data service providers charged with designing an open-data public platform that will collect and standardise net-zero transition data in the private sector.

Mr Bloomberg said the new platform would make it "much harder for companies to 'greenwash' or make empty promises that don't actually cut emissions, by forcing them to back up words with action", Reuters reported.

In his statement to The Straits Times, Mr Bloomberg said it was also critical that governments stop subsidising fossil fuel investments to the tune of hundreds of billions of dollars a year.

"As long as governments are tipping the market scales in favour of fossil fuels, there will be investors that respond. We need to do more to ensure there's a level playing field for clean energy," he said.

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