Developing Global Climate Policy to Catalyse Global Climate Action
Developing Global Climate Policy to Catalyse Global Climate Action
Dr Rory Sullivan and Robert Black
Private capital has a critical role to play if we are to successfully transition to the low carbon economy and respond effectively to unavoidable physical climate change. Encouraging and enabling private capital flows has become an increasingly central theme of international, regional and domestic monetary and fiscal policy.
One of the most striking developments has been the growth in the level of policymakers’ ambition, with examples including the US Inflation Reduction Act, the European Union’s Fit for 55 and RePowerEU plans, Japan’s Green Transformation (GX) policy, and China’s 1+N policy framework. Climate change is starting to move from a stand-alone policy issue to one where policymakers are now thinking about how to make climate policy an integral part of long-term economic development.
We have been working with the Investor Agenda to analyse this new generation of policy measures and to identify the core features that should underpin climate policy going forward. This analysis – presented in a new report The Changing Climate Policy Landscape: Considerations for Policymakers and the Needs of Investors – suggests that effective climate policy frameworks (i.e. frameworks that enable and accelerate the investment needed to meet the goals of the Paris Agreement) should:
1. Contain clear commitments to action on climate change by governments.
2. Contain clear short-, medium- and long-term targets, underpinned by comprehensive, enforceable legal mechanisms for delivery.
3. Be comprehensive and at scale, covering all major areas of the economy, and all major carbon intensive sectors.
4. Be supported by sector-specific policies, including measures to ensure that ‘green’ investments are financially attractive.
5. Provide the right incentives to encourage changes in the real economy and to encourage investors to provide the capital needed to enable these changes.
6. Be socially just (i.e. a Just Transition), ensuring that efforts to green the economy are as fair and inclusive as possible, creating decent work opportunities, and leaving no one behind.
7. Be transparent.
8. Be underpinned by comprehensive transition plans where organisations – companies, investors and public sector bodies – and policymakers develop plans setting out what actions they intend to take, how much these actions will cost, when the actions will be taken, what the outcomes will be and who is responsible.
The Investor Network and its partner organisations will continue to work – e.g. through the annual global investor statements and other policy calls, through sharing examples and case-studies of effective climate finance policy, through encouraging companies and other actors to develop credible transition plans – to ensure that all countries have developed robust policy frameworks that meet all eight of these principles.
Notes
1. The Investor Agenda is a common leadership agenda on the climate crisis that is unifying, comprehensive, and focused on accelerating investor action for a net-zero emissions economy. The founding partners of The Investor Agenda are seven major groups working with investors: Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment and UNEP Finance Initiative. Together, these investor groups collaborate to bring together and elevate the best investor guidance on tackling the climate crisis and advocate collectively for public policy to accelerate the net-zero transition.