The World Economic Forum (WEF) Annual General Meeting is taking place this week in Davos, Switzerland where many important global issues will be discussed. Last week the WEF released its Global Risks Report 2020 where climate and environmental concerns made up the top 5 global risk issues identified. The report says – “Climate change is striking harder and more rapidly than many expected. The last five years are on track to be the warmest on record, natural disasters are becoming more intense and more frequent, and last year witnessed unprecedented extreme weather throughout the world. Alarmingly, global temperatures are on track to increase by at least 3°C towards the end of the century—twice what climate experts have warned is the limit to avoid the most severe economic, social and environmental consequences. The near term impacts of climate change add up to a planetary emergency that will include loss of life, social and geopolitical tensions and negative economic impacts”.
In KPMG, we believe that the physical and transitional risks of climate change represent an unprecedented challenge for all parts of society. Our mission is to do our part and use our skills and expertise to become part of the solution. Globally we are active on the public policy, innovation and mobilization of capital agendas.
Much of the public debate on climate has focused on the critical importance of government policy to affect the type of transformational changes that are needed to decarbonize global economies by 2050. However, in a series of blogs prepared by a number of expert KPMG colleagues as part of Davos 2020, we highlight the vital role that the private sector can play either on its own or working hand in hand with the public sector. Indeed, we address how the private sector is responding to the whole question of climate risk. Also, we focus on the very real actions being taken by the corporate world and the changing mindset of investors which is helping to drive real change. As the financial repercussions and risks associated with climate change become ever more real, it is clear that the private sector is starting to mobilize in an unprecedented way. However, we should be under no illusion just how much transformational change is required at all levels of society over the next 10 years - beginning now!
The blogs we will issue over the coming week include the following:
These blogs have been written by a diverse group of KPMG partners and directors representing our energy and natural resources, sustainability and infrastructure practices from around the world reflecting the deep expertise gained from advising public and private sector actors on climate change and decarbonization strategies.
The cold reality is that we are only at the beginning of a journey and all of these solutions and initiatives are only in their infancy. Yes many investors are now embracing the ESG agenda to force action on climate change but many more have not yet made the connection between a sustainable investment policy and financial returns. For some it will eventually be too late. This is why an initiative such as the Task Force on Climate-related Financial Disclosure (TCFD) is so important as it helps investors understand the real risks they are facing with investee companies. Corporations all over the world have started to decarbonize but it is one thing to declare an ambition, and an entirely different matter to make it happen as the solutions are not always obvious especially in some sectors.
We believe that closer alignment between the public and private sector is of utmost importance. For example, climate change innovation is going to require huge acceleration to achieve a net zero carbon society but it remains a chronically underfunded sector. While there is public funding available, the correct market mechanisms to enable this funding to reach the deserving projects are not in place. It is only by both the private and public world working together that these issues can be overcome. This is why we have featured the importance of the blended finance concept in our blog series – it is a really effective way of using public monies to leverage substantially more private investment into climate solutions.
This is why Davos 2020 is such an important event for the climate agenda. While many important global issues will be discussed at Davos, it is already clear that climate will be one of the most important issues particularly in light of the results of the WEF Global Risks report. Davos creates the forum to enable the public and private sectors.
Mike Hayes, Global Renewables Leader, KPMG International