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COP26: How can data, technology, and the private sector fight climate change?

COP26: How can data, technology, and the private sector fight climate change?

For the first time, finance is a key COP theme – reflecting the vital role the industry will play in transitioning the economy to net zero. As a physical attendee of COP26, Finextra listened in to the first of the Green Finance Institute’s ‘Green Horizon Summit’ wake-up shows, which – in collaboration with the City of London Corporation – run every morning throughout the conference.

Tuesday morning’s panel, chaired by Axel Threlfall, Reuters’ editor-at-large, included Ruth Porat, chief financial officer of Google's parent company, Alphabet; Lord Stern, chair, Grantham Research Institute on Climate Change and the Environment; Mark Carney, UN special envoy for climate action and finance; and Emma Howard Boyd, chair, Environment Agency and interim chair of the Green Finance Institute.

These expert speakers considered how the private sector can help accelerate the transition to net zero, and how important robust data and green technology will be in tackling climate change.

Mobilising capital

After day one of the World Leader’s Summit, a raft of governmental commitments to fighting climate change was unveiled.

Here are just a few:

  1. The UK pushed a plan to halt global deforestation by 2030, and will fund $3 billion worth of green investments in developing economies;
  2. The Rockefeller and Ikea foundations created a Global Energy Alliance for People and Planet, which has pledged US$10 billion to supporting renewable energy;
  3. India pledged to reach net zero by 2070 - although this will likely come forward as the country moves along the ‘green’ path;
  4. Brazil will cut its greenhouse gas (GHG) emissions in half by 2030;
  5. The US will crack down on methane - beginning with oil and gas rules; and
  6. The UK and India will finance a 140-country renewable solar grid.

Despite the promise of these declarations, many agree that public finance is not going to be enough. Private green finance opportunities need to be scaled up to ensure global capital flows are reoriented towards climate and nature-friendly investments.

Speaking to the mood of the conference thus far, Carney said: “We are action oriented - there are more announcements to come. The money is here for the world to limit global warming to 1.5 degrees by mid-century. While a lot of work is yet to be done to mobilise it, we are seeing strong commitments.”

To allocate capital effectively, and pull adjustment forward, Carney conceded that clear commitments from policy holders, and a price on carbon (to a tune of $75 per ton by 2030) will be critical.

No siloed solutions

To kick off the discussion, Porat underlined the importance of collaboration between the private and public sector. Data, meanwhile, was cast as the engine of change.

“There is no siloed solution,” Porat argued. “The public and private sector must work together and cross-pollinate ideas. Data will be critical. We have the tools we need today, but we need to use them.”

As of 29 October, the UK Government made it mandatory for large companies to disclose data in alignment with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) - becoming the first G20 nation to enshrine the regulation into law.

“TCFD should be made mandatory across the board, in order to solve the data problem,” said Carney. Indeed, with the dizzying array of standards out there, TCFD will be an important tool in enabling stakeholders to compare corporate commitments and performance. Panellists agreed that if we don’t get this right, we won’t move forward.

Having been carbon neutral since 2007, and crowned the first major company to match 100% of its annual electricity use with renewable energy in 2017, Google expressed strong support for TCFD in April this year.

“Last year we announced a new set of targets and launched our third decade of climate action: offer one billion people new ways to live more sustainably via our core products by 2022; become the first major company to operate on 24/7 carbon-free energy by 2030; and help more than 500 cities and local governments reduce a total of one gigaton of carbon emissions annually by 2030,” said Porat.

Google, crucially, made these climate commitments before being mandated to. Corporates should not be waiting for their governments, Porat stressed. “Raise the bar on yourself. We didn’t need to be told. We wanted to encourage others to do this,” she added.

Technology’s role in the transition

The work of Google throws into sharp relief how technology can serve to pull the brakes on climate change. But how can this be applied to the operations of other companies?

“With geospatial data, and using data analytics, you can look across the supply chain,” said Porat. “You can understand the impact of assets, globally.”

Technology can also be deployed to benefit consumers. A year ago, for instance, Google pledged to help a billion users make smarter decisions in their daily lives. “As an example, if you are searching for flights, you can see carbon footprint of alternate options,” Porat noted.

Lord Stern echoed this sentiment. Consumers need the info to make informed decisions, he argued. But how do we scale these solutions now, so we can solve the climate crisis today, he asked. “We need understanding interwoven with the data analysis. This is the growth and development story of the 21st century.”

Once again, sustainability discussions return to the importance of a gamut of data - providing entities and individuals with the opportunity to make positive decisions.

“If we anchor everything in data,” Stern said, “the rest will follow. We will get consistency of reporting, and accountability.”

The applications of AI

The application of artificial intelligence (AI) to many of these problems, is exciting. Working with computer programs company, DeepMind, Google challenged itself to see if it could improve energy efficiency in its data centres. The technology application was successful, and Google reduced its energy output by around 30%. “This is the type of thing that manufacturing companies more broadly can use,” Porat said. “And so again, application of AI to these big problems, will be a critical element of driving change.”

Once again, however, no entity operates in a vacuum. Progress in this complex area will also mean thinking about scope 3 emissions, sourcing consistent data across the chain, and working closely with partners. “It’s not just about my operations, it’s you too - there’s no freeriding here and time is against us,” claimed Porat.

As John Stuart Mill suggested, democracy and decision-making works best if people can discuss issues in an informed way. So, while information on oneself is useful, information about what we can all do is transformational.

The collusion between finance and technology

With a surge in demand for sustainable investing - and an undersupply of product - there is much momentum potential in the private and public sectors. The entire supply chain, and scope 3, is taking centre stage. As this morning’s panel demonstrated, finance - alongside technology - can ensure the goals of the Paris Agreement are met. And, while today’s solutions are far from perfect today, the best minds in each field are here and engaged.

So, what do we need to see from COP26 in the coming days? Enough money must be committed - over 100 trillion dollars over the next three decades, to be proximate. What’s more, banks need a clear path to make decisions - or, more crudely, who to back and who to shun. As ever, this process will be fuelled by data, so that all stakeholders - non-governmental organisations, scientists, consumers et cetera - are confident in the process.

COP26 is the last chance we have on this scale. For finance, it’s the first best chance.

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