Climate change adaptation and mitigation can be expensive in terms of upfront investment. Overtime that investment will protect life and well being, enabling communities and economies to survive and flourish. Such expenditure will also be far less than the costs that would be incurred if no action were taken and the climate crisis were allowed to spiral out of control.
Unless governments and international organisations take responsibility for this, the poor and most vulnerable are going to suffer the most. In the UK the poorest members of our population are typically those with poorly insulated homes, those least able to replace household equipment with low energy models, those with least access to cooling green spaces, those least able to afford food as prices accelerate etc.
Globally it is the poorest and least developed counties who are suffering the harshest impact of climate change, and they are the least able to afford the costs of mitigation and adaptation. Often these countries are heavily indebted to richer countries or institutions and spend far more of their annual budgets on interest on these loans than they can on improving living standards through public health infrastructure, eduction, and medical care.
This is why many charitable organisations are calling for both debt relief and debt cancellation for these countries and for substantial grants from the wealthier nations to enable these vulnerable countries both to adapt and mitigate vis a vis climate change and, as needed, to pay for reconstruction when extreme weather events and other climate events have inflicted disaster on these countries.
If petrol, diesel and biodiesel fuels are incompatible with net zero carbon targets, how should transport be powered?
On the roads, electric vehicles (EVs or sometimes ZEVs) are one answer, and one favoured by many governments. With the stimulus of subsidies and legislation establishing an end date for the sale of combustion engine cars, EVs are gaining in popularity.
“The UK’s EV sector is gaining momentum, with pure electric cars capturing 21.8% of the market in May 2025. For the first five months of the year, EVs held a 20.9% share, falling short of the government’s 28% zero-emission vehicle mandate target. Including plug-in hybrids and petrol-electric hybrids, electrified vehicles accounted for 47.3% of all registrations last month. Meanwhile, petrol car sales dropped 12.5% year-on-year to 71,000 units, representing 47.5% of the market, while diesel sales fell 15.5% to 7,900 units, just 5.2% of total registrations.” (1)
Not only does the UK have a zero sales date for combustion driven cars of 2030, the UK also has a mandatory 45% emissions reduction target for trucks by the same date. Already electric trucks are being developed with ranges of 500km. (2)
“Sales of electric trucks increased 35% in 2023 compared to 2022, meaning that total sales of electric trucks surpassed electric buses for the first time, at around 54 000. China is the leading market for electric trucks, accounting for 70% of global sales in 2023, down from 85% in 2022. In Europe, electric truck sales increased almost threefold in 2023 to reach more than 10 000 (>1.5% sales share).” (3)
There would seem therefore to be a strong economic case for businesses to invest in electrical vehicles and associated infrastructure, rather than for businesses to be using their market power to relentlessly promote the continued use of combustion engines which are known to make a significant contribution to climate damaging greenhouse gas emissions.
“Advanced economies will need to lay at least 23 million kilometres of power lines by 2040 to meet their renewable energy goals, according to a recent report, and on a global level, 80m km of cable will be needed. “If we want clean electricity, we need not only clean methods of generation, but we need to build grids. It has been a blind spot of governments’ clean energy transition programmes of,” said Birol.
“Global demand for components such as high-voltage cables, pylons and converter station equipment threatens to outstrip manufacturing capacity, pushing British energy companies into an international race to secure supplies.
“Electricity demand in the UK is forecast to more than double by 2040 as fossil fuel heating systems and internal combustion engines are swapped for electric vehicles and heat pumps. Heavy industry must also switch away from fossil fuels in favour of clean power. To meet the demands of an electrified economy, the government wants to quadruple the UK’s offshore wind power capacity to 50 gigawatts by 2030, and solar farms and battery facilities storing power generated by wind and solar are expected to mushroom across the country.
“Money makes the world go round” goes the saying. But where does that money come from? National and international banks, the World Bank, the investment arms of pension and insurance companies – all looking for a healthy financial return. Choosing where to invest, gives these organisations a highly influential role in shaping the world. If they invest in airlines, then airplanes are built. If they invest in oil, then oil wells are dug. If they invest in wheat and palm oil, then wheat and oil palms are grown – clearing away rainforest if that is in the way.
But surely they could alternatively invest in wind turbines? Or solar panels? Or railways? Or indigenous crops? Or public health schemes? Or education systems?
Who decides? Could it be us?
Currently there are various campaigns encouraging us as individuals to choose banks/ pension funds/ insurance policies that work in favour of, rather than against, the environment.
It could also be us if we choose to press the bigger players – big banks, the insurance companies, national charities, churches and dioceses – to similarly opt for financial arrangements that benefit the environment and transition away from fossil fuels. Christian Aid earlier this year announced its decision to drop Barclays as its bank, whilst many National Trust members still object to the Trust’s continued use of Barclays.
Faith for the Climate has been pressing Lloyds of London to end their insurance of fossil fuel projects. XR and CCA continue to campaign against Barclays – Europe’s largest fossil fuel investing bank.
There are also campaigns to persuade sporting and art event organise against accepting sponsorship from environmentally unfriendly investors – eg opposing Barclays’ sponsorship of Wimbledon.
Back in 2021 the UN environment programme reported that not enough money was being put into the Global Biodiversity Framework fund – there was an annual funding gap of $6 – 8 billion. Given that to achieve the objective of protecting and enhancing biodiversity, investment would need to triple by 2030 and quadruple by 2050, they concluded that public sources of finances would be insufficient.(1) Private finance would need to carry more of the responsibility. Indeed business has a vested interest in doing so, for biodiversity risk = business risk. At the same time, working with and for nature offers opportunities for jobs and business returns.
A new GBFF was launched at the Kunming-Montreal Biodiversity COP15 held in December 2022. To engage business finance in this fund, ‘investors are calling on governments to adopt measures within the post-2020 Global Biodiversity Framework which would set a clear mandate for the alignment of financial flows with the preservation of global biodiversity, like Article 2.1(C) did within the Paris Agreement (a legally binding international treaty on climate change)’. (2)
Business investors need governments to provide reliable, effective and enforceable green policies.
Christina Figueres, former Executive Secretary of the UN Framework Convention on Climate Change, diplomat and renowned climate leader, says “Let’s remember what the industry could and should be doing with those trillions of dollars: stepping away from any new oil and gas exploration, investing heavily into renewable energies and accelerating carbon capture and storage technologies to clean up existing fossil fuel use. Also, cutting methane emissions from the entire production line, abating emissions along their value chain and facilitating access to renewable energy for those still without electricity who number in their millions.”
Exploring (and hopefully understanding) the terminology and acronyms of the investment world used in and around the issue of climate change. Many of the changes we are going to need to both reduce and to live with, the impacts of climate change require considerable sums of money. If that money doesn’t come through government from taxation, it has to come from the financial markets.
“Climate change is having an ever-increasing impact on global capital markets. It presents a wide and complex range of risks from physical impacts such as flooded factories, to regulation risk such as the imposition of expected carbon taxes, litigation risk and transition risk as company cash flows and profits are affected by the move to a low-carbon economy. There is also mounting evidence that companies who care about their broader eco-systems, tend to financially outperform those who do not. ” https://www.transitionpathwayinitiative.org/investors
IPCC – Intergovernmental Panel on Climate Change, organised by the United Nations. The UN currently has a membership of 193 nations.
COP – conference of the parties being “the supreme governing body of an international convention (treaty, written agreement between actors in international law). It is composed of representatives of the member states of the convention and accredited observers. Scope of the COP is to review the “implementation of the Convention and any other legal instruments that the COP adopts and take decisions necessary to promote the effective implementation of the Convention” https://en.wikipedia.org/wiki/Conference_of_the_parties
The 28th United Nations Climate Change Conference will take place in Dubai in November this year and is commonly referred to as COP28. Other COPs also take place such as the 15th United Nations Biodiversity Conference which met in Montreal in December 2022.
Paris Agreement (sometimes referred to as the Paris Accords) – “an international treaty on climate change. Adopted in 2015, the agreement covers climate change mitigation, adaptation, and finance. The Paris Agreement was negotiated by 196 parties at the 2015 United Nations Climate Change Conference in Paris. The Paris Agreement’s long-term temperature goal is to keep the rise in mean global temperature to well below 2 °C above pre-industrial levels, and preferably limit the increase to 1.5 °C, recognising that this would substantially reduce the effects of climate change. Emissions should be reduced as soon as possible and reach net-zero by the middle of the 21st century. To stay below 1.5 °C of global warming, emissions need to be cut by roughly 50% by 2030. This is an aggregate of each country’s nationally determined contributions.” https://en.wikipedia.org/wiki/Paris_Agreement
Net zero targets – a zero target would reduce carbon/ greenhouse gas emissions to absolute zero. Net zero would reduce emission on balance to zero – ie remaining emissions that could not be avoided being offset by processes that absorb unwanted emissions. If the desired effect of curtailing global warming is be achieved, these offset amounts need to be minimal.
Offsetting – a process whereby one invests in a project that will remove greenhouse gas emissions from the atmosphere and absorb them in such a way that they are not re-released. This removal might be achieved through planting trees which over their life time will absorb CO2 (the main greenhouse gas) from the atmosphere via their leaves and ‘lock’ them away in the trunk, roots and branches of the tree. It might equally be achieved by growing other plants including seaweeds. Greenhouse gases can also be ‘locked’ into the soil by developing peat bogs, by creating grasslands (that will not be tilled as this will release the gases from the soil) or by pursuing regenerative methods of farming. Some offsetting projects don’t plant new forests but rather concentrate on maintaining existing forests where trees will not be routinely cut for timber. This may particularly apply in regions of virgin rainforest where the investment can be an alternative income to that obtained from clearing the forest for agriculture. The idea behind offsetting is that where emissions from an operation cannot be reduced to zero, that the residual amount of produced by the operator is offset by an equivalent re- capturing of gases. To be of value, carbon offsetting schemes need to be scientifically proven to be effective, and to be certified so that the offsetting cannot be resold. Offsetting should always be a last resort.
Climate Transition Plan – an action plan that outlines how an organisation will develop or change its use of assets and resources, and its entire business plan to meet agreed climate targets – typically halving greenhouse gas emissions by 2030 and reducing them to net zero by 2050. In November 2021 the UK Government set up a Transition Plan Taskforce (TPT). As of 2023 listed UK companies are required to publish transition plans with guidance from the TPT using rules agreed with the Financial Conduct Authority (FCA) – although apparently it doesn’t have to have net zero as its target.
Just Transition – “ A ‘just transition’ means moving to a more sustainable economy in a way that’s fair to everyone – including people working in polluting industries.“ Greenpeace. In the financial world the Impact Investment Institute this year produced a set of Just Transition Criteria to enable investors make better judged investments that will fulfil the objectives of a just transition – https://www.impactinvest.org.uk/wp-content/uploads/2023/05/Just-Transition-Criteria.pdf (This pdf is an interesting read)
IEA – International Energy Agency is an “autonomous intergovernmental organisation, established in 1974, that provides policy recommendations, analysis and data on the entire global energy sector. The 31 member countries and 13association countries of the IEA represent 75% of global energy demand. The IEA was set up under the framework of the Organisation for Economic Co-operation and Development (OECD) in the aftermath of the 1973 oil crisis to respond to physical disruptions in global oil supplies, provide data and statistics about the global oil market and energy sector, promote energy savings and conservation, and establish international technical collaboration on innovation and research. Since its founding, the IEA has also coordinated use of the oil reserves that its members are required to hold.” https://en.wikipedia.org/wiki/International_Energy_Agency. In May 2019 the IEA reported that investors should not fund new oil, gas and coal supply projects if the world wants to reach net zero emissions by mid-century – “The pathway to net zero is narrow but still achievable. If we want to reach net zero by 2050 we do not need any more investments in new oil, gas and coal projects,” said Fatih Birol, the IEA’s executive director. “It is up to investors to chose whatever portfolio they prefer but there are risks and rewards.”
Transition Pathway Initiative (TPI) – supported by research from the LSE and the Grantham Research Institute, this scheme assesses the performance of major companies using publicly available data so as to rate the companies on their Management Quality (ie how well their business plans relate to measuring and controlling their greenhouse gas emissions) and Carbon Performance (how well their business plans align with the UN Paris Agreement goals). This information is then made available to anyone who is interested and in particular to investors who want to ensure that the companies they invest in are transitioning appropriately to net zero. https://www.transitionpathwayinitiative.org/
NIBs – National Investment Bodies – the Church of England has three such bodies comprising:-
Church of England Pensions Board – “We provide retirement housing and pensions, set by the Church of England, for those who serve or work for the Church. We assist over 42,000 people across almost 700 employers with their pensions, carefully stewarding the funds under our care of around £3.2 billion.
Church Commissioners for England – “ The Church Commissioners manages a £10.3bn investment fund. The money it makes from those investments contributes to the cost of mission projects, dioceses in low-income areas, bishops, cathedrals, and pensions. The Church Commissioners also provides administrative support for the Church. We contribute about £1.2bn every three years to various parts of the Church of England, around 20% of the Church’s annual running costs, which makes us one of the largest charitable givers in the UK.”
CBF funds which are managed by CCLA (Churches, Charities and Local Authorities (CCLA) Investment Management Limited). These are the fund managers who look after most parish investment monies.
Fiduciary Duty – A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence — Lord Millett, Bristol and West Building Society v Mothew A fiduciary duty in terms of finance sense exist to ensure that those who manage other people’s money act in their beneficiaries’ interests, rather than serving their own interests. (https://en.wikipedia.org/wiki/Fiduciary) For example, money given by its congregations and other donors must be managed for the benefit of the Church of England, and within that for example, many given to the Pensions Investment Board must be managed to benefit present and future C of E pensioners.
TCFD – Task Force on Climate-related Financial Disclosures: when buying and selling investments one needs accurate information that enable you to assess the risk of making or loosing money. A new risk is that of climate change, and investors need accurate and standardised information so that they can fairly value what they are buying and selling. Ensuring such information is forthcoming – is disclosed – is the function of the TCFD. https://www.fsb-tcfd.org/about/
Climate Action 100+ is a group of 700 global investors – including the Church of England Pensions Board – who undertake to to engage with the major companies* that will play a significant role in the transition to a net-zero emissions economy. Individual or small groups of these investors engage with a particularly company to monitor performance, and develop and implement company specific strategies that will ensure they meet the necessary targets on the route to net zero. https://www.climateaction100.org/about/
Paris Aligned Investment Initiative -“ Paris Aligned Asset Owners are a global group of 56 asset owners, with over $3.3 trillion in assets. They have committed to transitioning their investments to achieve net zero portfolio GHG emissions by 2050, or sooner, drawing on the Net Zero Investment Framework to deliver these commitments”. The Church of England Pensions Board is a member of this group. https://www.parisalignedassetowners.org/ The Initiative is delivered by four investor networks covering the different regions of the globe. The network for Europe is The Institutional Investors Group on Climate Change (IIGCC).
Net Zero Investment Framework – The Net Zero Investment Framework, published in March 2021, provides a common set of recommended actions, metrics and methodologies through which investors can maximise their contribution to achieving global net zero global emissions by 2050 or sooner. Its primary objective is to ensure investors can decarbonise investment portfolios and increase investment in climate solutions, in a way that is consistent with a 1.5°C net zero emissions future.
Net Zero Climate – an Oxford University based which “brings together principles and policies, practical tools, and progress tracking to help businesses and policymakers achieve that [net zero emissions] goal.” https://netzeroclimate.org/ As well as hosting the Net Zero Asset Owners alliance, they provide tools for organisations including ‘How to set a net zero target’ :
1. Pledge at the head-of-organization level to reach net zero GHGs as soon as possible, and by mid-century at the latest, in line with global efforts to limit warming to 1.5C. Recognise that this requires phasing out all unabated fossil fuels as part of the transition.
Set an interim target to achieve in the next decade, which reflects maximum effort toward or beyond a fair share of the 50% global reduction in CO2 by 2030.
Targets must cover all GHGs, including Scopes 1, 2, and 3 for businesses and other organisations, all territorial emissions for cities and regions, all portfolio/financed/facilitated/insured emissions for financial entities, and all land-based emissions.
2. Plan Within 12 months of joining, publicly disclose a Transition Plan, City/Region Plan, or equivalent which outlines how all other Race to Zero criteria will be met
Include what actions will be taken within the next 12 months, within 2-3 years, and by 2030.
3. Proceed Take immediate action through all available pathways toward achieving net zero, consistent with delivering interim targets specified.
Where relevant, contribute to sectoral breakthroughs.
4. Publish Report publicly both progress against interim and long-term targets, as well as the actions being taken, at least annually.
Report in a standardised, open format, and via platforms that feed into the UNFCCC Global Climate Action Portal.
5. Persuade Within 12 months of joining, align external policy and engagement, including membership in associations, to the goal of halving emissions by 2030 and reaching global net zero by 2050.
Net Zero Engagement Initiative – launched by this Initiative expands the number of companies with whom investors are actively engaging vis a vis net zero targets beyond the Climate Action 100+ list. This should enable mot investors to develop portfolios where an even greater number of the companies they invest in, are aligned with the Paris Agreement. For more details visit their website – https://www.iigcc.org/resource/net-zero-engagement-initiative/
Net Zero Standard for Oil and Gas – Convened by members of IIGCC and informed by the Transition Pathway Initiative (TPI), this standard “sets minimum expectations for what must be included in net zero transition plans from oil and gas companies, to create a level playing field in corporate reporting and meet investor expectations for credible and comparable company net zero transition plans.” https://www.iigcc.org/resource/net-zero-standard-for-oil-and-gas-companies/
The standard notes “time is very much against all of us and we need to accelerate the pace and scale of commitments… These calls to action from industry groups and scientists alike, must translate into real, drastic, and immediate emissions reductions in all sectors. Emissions reductions across the board means significant fossil fuel demand destruction… Therefore it is essential that oil and gas company boards know that those with credible independently verified net zero* strategies will be supported by their investors. Equally important sis that this without will be challenged.” *Further on the standard specifies that these net zero strategies should include scope 3 emissions as well as scopes 1 and 2.
The big oil companies are expanding their exploitation of gas and oil reserves in response to the short falls in supply from Russia. The rapid rise in gas prices is prompting some African nations to consider developing the gas reserves under their land. To explore and develop these reserves investment is needed and, it seems, is readily available from western investors.
In some ways it is not illogical. If you are a company whose raison d’être is finding, extracting and selling oil, that if you hear of new oil deposits, you go after them. Ditto if you are an investment company that has always invested in oil because it has always earns large dividends, then that is what you keep on doing. People and companies are wary of change, or perhaps become so immersed in the comfort of where they are, that they don’t look outside their own silo to be aware that change is already happening. This can be short sighted. Vis a vis oil, there are two black clouds on the horizon. Peak oil – that point in. Time when demand for oil will start to drop and co to use to drop. Many commentators suggest that we have already passed peak oil back in 2019. The decline in oil use arises when cars switch from petrol to electrical power (something that is happening aster than expected), as more plastics are made from recycled plastic rather than virgin oil, as users of oil become more efficient in their use of an expensive raw material, and as users find renewable energy is cheaper. The second dark cloud is the climate crisis. As concern about the crisis takes root more people, companies and countries are going to be cutting back on their use of oil in an attempt to limit global temperature rises. If such moves are not successful then the world will experience rising sea levels, widespread drought, extremes of weather and widespread loss of life and incomes. And this of itself will severely reduce demand for oil. Either way it seems that long term the future for the oil industry is not good – but for in the short term their dominance of the global economic systems shields them. This has been highlighted by the war in Ukraine. So the oil industry continues to be heavily subsidised by governments. “Since the Paris Agreement, the government has provided £13.6 billion in subsidies to the UK oil and gas industry. From 2016 to 2020 companies received £9.9 billion in tax relief for new exploration and production, including £15 million of direct grants for exploration, and £3.7 billion in payments towards decommissioning costs.” https://www.ethicalconsumer.org/energy/paid-pollute-fossil-fuel-subsidies-uk-what-you-need-know
So we are seeing large numbers of oil companies and oil investors focusing on exploring and extracting oil and gas from the African continent. Despite the long term risks of declining demand, these companies seem convinced that there is money to be made. The idea of making rich profits from oil is certainly seen as attractive by some governments in Africa – oil would seem to offer rewards in licence fees and taxes. But who will benefit? Possibly governments, big businesses, banks and the like. Probably not the ordinary person in the street, the small scale farm or business, and definitely not the rich biodiverse natural environment.
Given the high price of oil, the availability of more oil will more likely benefit the big users of oil in the western world, not the person on the street in Luganda or Accra or Windhoek, not the small farm and the rural villager, nor the small businesses. What they need is cheap and accessible electricity , electricity that can be produced locally without reliance on an expensive national grid, electricity that comes from local wind turbines and solar panels? What they need is a move away from polluting vehicles and power plants. What they don’t need is the pollution and disturbance caused by drilling for oil, building pipeline and running oil refineries.
What the nations of Africa do need is investment in renewable energy. Ideally not in large projects such as hydro electric dams but in multiple smaller scale projects that will connect to and supply local towns and communities.
“The potential for wind and solar is 400 times larger than Africa’s total fossil fuel reserves and it comes pollution-free and creates more jobs, but there is finance gap…That is why there is so much attention at this COP to changing the global capital allocation system,” Mr Gore
What the nations of Africa need is protection for their remaining areas of natural habitat – rain forests, wetlands and savannahs. Again this is an area in need of large scale investment that will protect habitats and provide sustainable incomes for local people.
“The area of land allocated to oil and gas activity in Africa is set to quadruple, threatening critical forests that help combat climate change, according to a new report by two environmental groups. Rainforest Foundation UK and Sacramento, California-based Earth InSight used mapping technology to show that gas and oil blocks overlap with about 30% of the continent’s dense tropical forests and more than a third of the Congo Basin, the world’s second-largest rainforest after the Amazon. The Democratic Republic of Congo, which accounts for about 60% of the basin, launched a bidding round in July for 30 oil and gas permits, several of which overlap with the basin. Congo, one of the world’s poorest countries, has defended its right to explore for oil and develop its economy.” KBloomberg UK
Can the big fossil fuel companies reinvent themselves? Can they recalibrate their raison d’être as energy companies? Can they become suppliers of renewable energy technology that can enable communities to control their own energy sources? Can they create new business models that can invest the money from our banks, pensions funds and insurers, to protect and enhance the natural environment?
The Green Tau 