Ahead of the upcoming COP26 Climate Change Conference in Glasgow, an important subtopic of Environmental policy has gathered recent attention.
‘Greenwashing’, a deceptive marketing tool that businesses use to convince consumers that their product or business is environmentally friendly. This term can be scaled up for governments too, many of which have provisionally committed to environmental policies but crucially, have yet to deliver. COP26 represents the chance to end greenwashing and progress towards meaningful goals and commitments to undo the damage caused.
A vital component in the race to turn the tide of global warming is the utilisation of Finance. So far, the vast majority of this has come from the public sector. Whilst developed countries have the luxury of being able to afford climate finance (including President Biden’s recent doubling of US climate aid) less developed countries lack that capability. The UK government has been leading the way in terms of commitment in acting on climate change, so it’s no surprise that the COP26 message has a strong undertone aimed towards all other countries. There has been a decrease of 44% in emissions between 1990-2019, the fastest in the G7. In addition, they have ensured a doubling of their climate finance to £11.6 billion specifically to assist with developing nations. However, this is not enough. Prime Minister Boris Johnson has told leaders that it’s time to ‘grow up’ as ‘history will judge’ the richer countries who don’t commit to significant climate finance. A telling sign that more can be done is evident in China’s unwillingness to commit to attending, despite accounting for the biggest proportion of Carbon Dioxide emissions. Although the coronavirus pandemic decreased global emissions significantly, the 2016 Paris Agreement target of a net zero globe by 2050 is projected to be missed by a considerable distance.
Mobilising Private Sector Finance
Therefore, in a bid to act responsibly towards climate change and remove the speculation of greenwashing, a large proportion of climate finance commitments must now fall onto the shoulders of the private sector. Businesses of all sizes have the cumulative ability to unleash trillions of pounds to approach net zero by 2050 with much greater optimism. For this to happen all financial decisions must now incorporate the climate, no matter how great the cost to profitability. Ahead of COP26, over 1500 businesses, regions and cities have committed to the Race to Resilience – a forum for and a requirement of the financial sector to start pulling their weight regarding climate finance. The financial sector must now enact change from within, prioritising wholesale changes that places a demand on providing adequate support for a greener future.
Currently as many as 40% of online climate change claims made by businesses could be misleading, thus enhancing the potential of greenwashing overstating genuine attempts of reducing emissions. Despite this the CMA have recently published a Green Claims Code that looks to remove any doubt over business pledges to a greener future. Consumers are increasingly concerned with products or services that incorporate cleaner and greener methods. Therefore, the arrangement of institutions that allow for businesses to commit to climate finance in addition to a regulatory framework that holds them accountable, creates a dual-purpose desire to tackle carbon emissions and meet those all-important goals.
So, what does Action look like for Traditum?
Private Equity businesses as part of the private sector must target a greater percentage of cleaner and greener investments or companies. Traditum’s current involvement with Novo Mundo provides a great example of seeking to reduce carbon emissions through a waste to energy scheme. Approaching greener businesses with an active ESG model allows Traditum to add value whilst advocating a demand for more businesses to explore similar mindsets.