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Growth of Climate Finance Cooled Off in 2020, 2021
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Welcome back. Dollar figures that sound fantastical to some ears are common in the world of climate change. In July, South Africa's environment minister said the world’s wealthiest countries should provide🔒 more than $750 billion a year to pay for poorer nations to shift away from fossil fuels and protect themselves from global warming. Some Western officials said they weren't ready to discuss such a sum. That bone of contention may be crucial to the outcome of negotiations at the COP26 climate
conference in Scotland. In the U.S., Centrist Democratic Sen. Joe Manchin balked at the $3.5 trillion price tag of a package of legislation aimed in part at tackling climate change. And the numbers get far higher. The International Renewable Energy Agency's estimate for the clean-energy investment required to keep global warming under 1.5 degrees Celsius is $131 trillion by 2050.
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That would require a big step up in investment. The Climate Policy Initiative, a research group, said this week that climate-related funding rose to record levels in 2019 and 2020. But the growth rate actually slowed. “Over the past few years, we’ve seen a flurry of initiatives targeting net-zero emissions and aligning finance with the Paris agreement,” CPI said. “However, real economy investment volumes and emission trends are yet to show.”
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This week: Your COP26 cheat sheet; Transition Pathway Initiative raises its ambition; forever chemicals.
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Content from our Sponsor: DELOITTE
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Getting On Board to Decarbonize, Transform Energy
Action and collaboration are necessary for organizations to achieve ambitious energy transition targets. Carlos Maurer, executive vice president at Shell, discusses trends and challenges with Deloitte Netherlands’ Tarek Helmi.
Learn More ›
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COP26 Perspectives: Arame Tall
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In the runup to the COP26 conference in Glasgow, we're publishing interviews with people who can shed light on a key aspect of the climate agenda. This week: a World Bank climate adaptation expert.
Much of the focus at COP26 will be on efforts to galvanize investment in renewable energy and other climate-change adaptation work. Some advocates of climate action are also hoping for commitments to spend more on flood defenses, resilient infrastructure, extreme weather early-warning systems and other adaptation measures.
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Experts say investment is lagging behind what is needed to protect people from extreme weather and other threats. Most of the money available comes from the public sector, and some policy makers want private actors to play a bigger role.
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Arame Tall, a senior climate-change specialist at the World Bank, was recently a lead author of a report by the bank on the barriers to greater private-sector involvement in climate adaptation. Dr. Tall shared her thoughts with The Wall Street Journal on how policy makers can create the conditions for private funding.
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Leaders, financiers and environmentalists are trying to hammer out an agreement at COP26 to cut fossil fuels, reduce carbon emissions and limit climate change. Here's your annotated cheat sheet🔒 to the key people, organizations and debates at the summit.
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TPI's new research center will be based at the London School of Economics. PHOTO: HAN YAN/ZUMA PRESS
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TPI's new ambition. The investor-backed Transition Pathway Initiative currently scores about 400 companies on their management of climate change. It is setting up a research center next year with the aim of increasing that number to 10,000. The TPI rates companies on the measures their management have put in place to act on climate, and on how their carbon reduction plan aligns with the objectives of the Paris Agreement to limit the earth’s warming. TPI also added BlackRock to its list of investor backers.
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✍️ Feedback on this newsletter? We would love to hear from you, so please get in touch.
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Biden administration targets ‘forever chemicals.’ Toxic PFAS chemicals—it stands for perfluoroalkyl and polyfluoroalkyl substances—have found their way into drinking water and the food supply through a range of sources, including industrial operations, food packaging and firefighting foam. A White House plan to designate some PFAS chemicals as hazardous substances🔒could make manufacturers and distributors of the chemicals liable for cleaning up contaminated sites.
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“If robots are not part of the solution🔒to the climate emergency, then they’re part of the problem.”
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— Alan Winfield, a professor of robot ethics at the University of the West of England, on efforts to make robots from recycled, biodegradable and replaceable parts.
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On Nov. 17 WSJ Pro will be hosting the first Sustainable Business Forum, looking at the critical issues facing business professionals as they incorporate sustainability into their strategy and operations. Discussion topics will include innovation, reporting, governance, green finance, supply chain and risk models. Register to attend here.
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Toyota Invests $3.4 Billion in Electrification Drive
Toyota Motor said Monday that it would invest $3.4 billion through 2030 in the production of car batteries. The move strengthens Toyota's ESG profile due to its positive environmental, social and business-innovation implications. The car maker will build a plant in the U.S., aiming to start local battery production by 2025 while creating 1,750 jobs. The battery production fits within Toyota's total $13.5 billion investment in battery development and production announced in September.
This is a sample of exclusive analysis of sustainability news from the Journal’s environment, social and governance (ESG) research analysts, whose work is primarily published by Dow Jones Newswires to help institutional investors and wealth managers integrate ESG factors into portfolio models, risk management programs and financial advice. The commentary by our research analysts is independent of the news coverage by reporters at the Journal. For more information about Dow Jones Newswires, click here.
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Bitcoin miners have earned a bad reputation for guzzling cheap electricity in the pursuit of profit. Now some are trying to go green, to a point. (WSJ)
Andrew Forrest, founder of Australia's Fortescue Metals, wants to turn the iron-ore miner into a clean-energy giant. (New York Times)
Saudi Arabia, Japan and Australia are among countries pushing back on U.N. recommendations for action on climate. (BBC)
Lower interest rates mean forecasts might be underestimating the future economic cost of climate change, a report by the San Francisco Fed found.
Global banks and asset managers have provided $119 billion of financing to 20 major agribusinesses linked to deforestation since 2016, according to the Global Witness advocacy group.
New Zealand introduced a climate change disclosure law for banks. (Axios)
Some European banks "systematically fail" to connect their stated long-term climate ambitions with their concrete actions, a senior European Central Bank official warned. (Bloomberg)
Here are 22 startups trying to decarbonize the world. (Quartz)
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We would like to hear your tips, suggestions and feedback. This newsletter was written by Ed Ballard. Contact the WSJ ESG research team at ESGresearch@wsj.com
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