Forum Views - September 2023
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FORUM VIEWS - SEPTEMBER 2023
uring the last few months, we have witnessed intense
heat and devastating rainfall causing major damage to
Dpeople’s health and environment around the globe. July
was the hottest month ever recorded on earth. This underlines
the increasing urgency of cutting greenhouse gas emissions.
Finance is a critical enabling factor for the low-carbon
transition and climate transition plans are a vital tool to
demonstrate the strategic move to capital markets.
For the world to limit the global warming, we will need nothing
less than a net zero revolution. It may be comparable with the
scale of the industrial revolution, but the speed will need to be
significantly faster. And there is no longer a choice. Virtually
every company in every sector will have to rise to the
challenge and transform its business model, requiring
investments of over $100 trillion in the next three decades.
Climate-related transition plans are actually relevant to all
jurisdictions and entities, regardless of the level of ambition of
their own decarbonisation commitments. A truly strategic
approach to transition planning looks beyond an entity’s own
decarbonisation actions to also consider how it can use the
levers available in its business model and its products and
services to contribute to the decarbonisation of others - and
thereby embed and accelerate an economy-wide transition.
This is the case in both developed and developing economies,
though many developing and emerging market countries are
typically most at need of appropriate transition financing.
The international business and financing environment is
rapidly evolving as part of a system-wide transition to a lower-
carbon economy. The transition is driven by international
treaties and commitments such as the Paris Agreement, the
Global Biodiversity Framework, UN Sustainable Development
goals and a general change in stakeholder expectations. Those
commitments often begin with net zero objectives of
countries, cascading down to entities transition plans.
TRANSITION PLANNING -
KEY TOOL TO ACHIEVE NET ZERO
Johanna Fager Wettergren
Head of Sustainable Finance
Finansinspektionen
There is a growing international momentum around private
sector transition plans, both from the private sector and
policymakers. Over the last six months alone, G7 leaders have
come out in support of private sector transition plans. Across
the globe, companies are increasingly signing up to ambitious
climate targets, committed to achieving net zero carbon
emissions by 2050 the latest. Over 8300 companies and 595
financial institutions have so far signed up to the UN Race To
Zero, which is a global campaign to rally leadership and
support from businesses, cities, regions, investors for a
healthy, resilient, zero carbon recovery that prevents future
threats, creates decent jobs, and unlocks inclusive,
sustainable growth.
Transitioning to net zero as rapidly as necessary and as
smoothly as possible requires a well-functioning financial
sector. In that sense, climate-related financial reporting is key,
for the simple reason that what gets measured gets managed.
Better disclosure in combination with heightened sense of
urgency creates strong incentives to a transformation of
climate risk management. Building on the foundations of
reporting and risk management, the financial system can look
During the last few months, we have
witnessed intense heat and
devastating rainfall causing major
damage to people’s health and
environment around the globe. July
was the hottest month ever recorded
on earth. This underlines the
increasing urgency of cutting
greenhouse gas emissions. Finance is a
critical enabling factor for the low-
carbon transition and transition
planning is a critical tool.
(Stockholm County, Sweden)
Global Insights
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