Venice provides a fitting backdrop as policymakers aim to build momentum on the road to Glasgow.
Expectations for coordinated progress on climate policy are muted ahead of this weekend’s meeting of finance ministers and central bank governors from Group of 20 nations in Venice. This is partly due to the lack of a notable breakthrough at the recent G7 summit in Cornwall, notwithstanding finance ministers’ backing for mandatory climate-risk disclosures. But also because the assembled officials must wade through a weighty tax-led agenda before Sunday’s International Conference on Climate Change.
Italy, which holds the 2021 G20 presidency, did not choose this weekend’s location randomly. Venice has long battled against the elements, holding back the annual ‘Acqua Alta’ as it sinks majestically into the Adriatic mud. Amid the worst floods in 50 years, the city’s mayor made the headlines in November 2019 for pointing out that climate change was also now accelerating its decline through rising sea levels. Venice has conducted joint research with New Orleans on the common challenges facing low-lying cities, but it’s other aspects of climate change that are focusing minds in North America this week.
Some are hoping for strong indications both from the G20 communique on Saturday and the Italian Presidency’s closing comments on Sunday, seeing meaningful commitments on public and private finance, fiscal support for vulnerable countries and supervisory initiatives as laying the necessary groundwork for October’s G20 Leaders summit. Perhaps even carbon pricing frameworks might make it onto the agenda, or at least the training programme.
Much work is under way of course. The Financial Stability Board has asked G20 finance ministers and central bank governors to endorse its roadmap for tackling climate-related financial risks, focused on disclosures, data, vulnerabilities analysis, and regulatory and supervisory approaches. Meanwhile, this week’s Asia-Pacific Climate Week, hosted by Japan, underlined that much of the risk and opportunity to address climate change lies beyond the G20.
This week, policymakers and regulators accelerated the pace of change in the finance sector, with the European Commission’s updated Sustainable Finance Strategy adding to expectations that stress tests will lead to punitive risk weightings on assets vulnerable to climate change. The Commission also aimed to boost the greening of the bond markets with its new ‘gold standard’, and confirmed requirements for Taxonomy-aligned reporting of sustainability performance, while the UK continued the roll-out of its climate-first regulatory reforms, recognising too the need for a wider shift in stewardship of financial assets.
Meanwhile, Australia provides an object lesson in the risks of government policy falling out of synch with private-sector priorities. It emerged this week that many global asset managers feel increasingly unable to maintain their investments in the country – still to commit to net-zero 2050 targets – while respecting their own commitments, and the wishes of their clients, to decarbonise their portfolios. Judging by the lively debate sparked by Impax CEO Ian Simm’s recent blog – which suggests managers should take more of a principles-led approach to net-zero alignment, rather than a literal one – this issue will run and run.
Film buffs will know ‘That Sinking Feeling’ was the directorial debut of Bill Forsyth set in his hometown of Glasgow. Perhaps higher on the watch list for COP26 delegates will be ‘Local Hero’, in which Forsyth pitted a remote Scottish fishing community against a Texas-based oil magnate.