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UN Envoy predicts flying start for sustainability agenda post-Covid-19

Ng Qi Siang
Ng Qi Siang12/10/2020 12:26 AM GMT+08  • 4 min read
UN Envoy predicts flying start for sustainability agenda post-Covid-19
United Nations special envoy Mark Carney believes that sustainability will be a key pillar of “build back better".
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As Covid-19 descended, there were some worries that the pandemic would derail efforts to combat climate change. While carbon emissions were limited by a sharp reduction in travel, some feared that firms and governments would be so concerned with the subsequent recovery that they would turn a blind eye to pursuing sustainability in the process. Businesses, after all, have traditionally considered sustainability as an obstacle to growth.

But Mark Carney, United Nations special envoy on climate action and finance, believes that sustainability will be a key pillar of “build back better”.

“If you’d asked me back in March, I would have said on the one hand and on the other hand a bit unsure,” confessed the former governor of the Bank of England. But with firms reconsidering their strategy in light of Covid-19 amid public clamouring for more resilience and sustainability, he now believes that the business world will come out ahead on sustainability.

Carney was participating in a panel discussion at the Singapore FinTech Festival 2020. Entitled The Future of Finance is Green, the panel was moderated by James Crabtree, Associate Professor in Practice at the Lee Kuan Yew School of Public Policy. He was joined on the panel by Ravi Menon, managing director (MD) of the Monetary Authority of Singapore (MAS).

“I have been pleasantly surprised that the momentum on sustainability on the whole has remained very strong,” remarks Menon. Despite the public health and economic challenges the world has been facing in 2020, he reported more pledges for carbon neutrality by both corporates and countries. The MAS MD sees this as indicative of a seriousness of purpose in the business world against climate change and a willingness to stand up and be counted.

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Naturally, says Carney, it will take time for greater sustainability to be realised as economies transition away from existing economic structure towards a green economy. With private finance key to bankrolling such a shift, he wants all private financial decisions to place climate change at its centre to move society ever closer towards sustainability. Mainstreaming sustainable finance is his goal approaching the COP26 climate change summit in Glasgow next year.

For this to happen, Carney has called for pathways towards mandatory climate disclosure, aiming towards a comprehensive and consistent reporting system across jurisdictions that is accessible to investors. He also wants to improve the management of climate risks, including not only the physical fallout, but also the success of climate policies and transition risks related to activities that while economic in the short-term are not truly sustainable. MAS and the Bank of England have already taken the lead in climate stress testing to assess climate risks.

Carney also hopes that capital will be allocated such that they are well-placed to maximise returns in an economy transitioning towards net-zero carbon emissions. Additionally, Carney wishes for the professionalisation of the small and fragmented carbon offset markets, which some fear have become outlets for “green-washing” (i.e. sustainability marketing) than actual change. Efforts are already underway to develop the architecture of such regulations, chaired by Standard Chartered Bank CEO Bill Winters.

SEE: Singapore and Hungary to strengthen ties in FinTech

But this process of transition, Menon points out, also creates significant growth opportunities. This is a sight for sore eyes for beleaguered economies around the world looking for an engine of growth after the Covid-19 recession. The Singapore government, says the MAS MD, is currently looking at new ways of creating economic value and jobs in the green economy.

“Lots of new infrastructure needs to be built, which requires new kinds of expertise,” says Menon. Financial institutions are looking to employ more people to advance the green finance agenda, while the Singapore government’s “Greening our Towns” project has also created new investment opportunities. While de-carbonisation admittedly has short-term costs associated with transition, Menon predicts that pay-offs will be good as soon as the medium-term.

But in a world defined by uncertainty and complexity, perhaps it is fintech firms that will spearhead the shift towards a green economy. “One of the things I get most excited about with Fintech is that I don’t know what they’re going to come up with either,” says Carney, “the degree of innovation is truly astounding.”

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