Danilo Türk: Innovation and Adjustment in Development of the Green Financing

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Danilo Türk: Innovation and Adjustment in Development of the Green Financing

2021-07-13



Distinguished participants, honourable guests,


It is a distinct privilege, as well as a pleasure to address the Eco Global Forum Guiyang 2021.


Over the last decade, the Eco Global Forum Guiyang has held ten successful sessions and has become one of the leading - and globally important - forums for discussion on the vital themes of protection of the natural environment and of sustainable development.


The level of achievement of the Forum has grown over the years. This has helped the broader efforts of China to address the issues of sustainable development. Moreover, this work has contributed to developing a new vision of development - the vision of a New Era of Eco – Civilization declared by President Xi Jinping. With the Eco Forum Global Guiyang this vision is already enjoys a precious opportunity for serious consideration of policy priorities and for the identification of practical steps that will help making this vision a reality.


At the heart of all the policy priorities for the building of the New Era of Eco Civilisation is the question of financing. This is also the theme of this year’s Eco Global Forum Guiyang. Financial sector is important in any type of economic and social development. It is of vital importance for the realization of the vision of the New Era of Eco – Civilisation.


First of all, financing must be linked to projects that serve the achievement of the objective to reduce the emissions of greenhouse gasses significantly over the next decade. This is necessary to achieve carbon neutrality, an essential ingredient of the New Era of Eco Civilization.


Some among the current expert estimates for China envisage that China’s carbon dioxide emissions could peak even before 2025 and that the share of non-fossil fuels could be scaled up to 25 per cent by 2030. In other words, there exists an opportunity to accelerate action and to achieve significant progress in China during the current decade - and carbon neutrality in 2060.


In Europe too we now see the opportunities to speed up climate action. The European Commission, the executive branch of the European Union, plans to cut greenhouse gas emissions by at least 55 per cent by 2030. This sets Europe on a realistic path to becoming carbon neutral by 2050, ten years before China.


The financial instruments for achieving these ambitious objectives have to be developed accordingly. Importantly, the post COVID 19 recovery represent an opportunity.  Financing the recovery after the current COVID 19 Pandemic has to include finance for technological transformation and for investment in clean energy. The massive European Recovery Plan adopted by the European Union envisages financing in the amount of about two trillion Euros. The largest part of that financing, about 30 per cent will be devoted to fighting climate change.


At the global level, the financial instruments will also have to be adjusted to the needs of a fundamental redirection of development towards ecological and social sustainability. This must include both public and private funding. The principles on Ecological, Social and Governance factor financing (ESG Financing) should be adjusted so additional financial resources will be made available to allow financing in low carbon projects.


The role of regulation and regulators is significant in this context. Development of an Eco-Civilisation will require “climate proofing” - ideally of all future investments. All new projects should pass appropriate tests regarding their compatibility with the mid-term objectives of reduction of greenhouse gas emissions.  Admittedly this is a gigantic task, but also one that is becoming increasingly needed.


Measures like “climate proofing” and providing significant additional finance represent a major part in the spectrum of instruments for the future. On the other side of the spectrum there is the need to reduce and gradually phase out investment in fossil fuels. Progress is needed on both sides of the spectrum.


The two sets of strategic tasks in the field of finance – the one devoted to expansion of the green financing and the other to phasing out fossil fuel financing are very demanding.  They will be well served by careful, when necessary confidential consultations among all actors involved – the governments, the businesses and financial institutions. I would call this consultations “safe space consultations”. Their purpose would be to devise realistic, yet ambitious practices of change. They need to be organised both within states and internationally and should allow both – a realistic assessment of risks and an ambitious decisions of change.


This year’s Eco Forum Global Guiyang represents an important opportunity for such consultations. I wish the participants all success and I hope to be able to take part in one of the future meetings of the Eco Forum Global Guiyang in person.


I thank you for your attention.


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