Like the UK, Latin America has suffered greatly during the pandemic – perhaps even more so. The World Bank estimates that regional GDP may slip by as much as 8%, with more than four million people slipping back into poverty.
Consequences such as these have propelled our global community towards a major crossroads in 2021, and we arrive knowing that the direction we choose will prove critical for the future of our societies and our planet. Global trends such as digitisation have been vastly accelerated, while the pandemic has also demonstrated the absolute need for international collaboration across governments and institutions in order to solve the challenges we face, including tackling climate change.
The pandemic has killed more than two million people worldwide. This tragic toll should not be diminished but the reality is that climate change is an even greater threat to life on our planet. Having the courage to envisage what our future should look like will help us to know which path to take, and was the main thrust of a new-look virtual Davos last month. That future is clearly coming up fast, with 2020 recently confirmed by NASA as the warmest year on record.
Crucially, we still just about have a choice. As former US Vice President Al Gore remarked, we now find ourselves headed towards a “sustainability revolution”, a global transition empowered by technologies which weren’t at our disposal even a decade ago.
Go green or go home
This exciting proposition means that the financial community now has a clear and obvious decision to make. The frank comments of former Bank of England governor Mark Carney, now the UN special envoy for climate change and action, were particularly resonating in this regard: if you are in the private financial sector and not part of the solution, it’s because “you will have made the conscious decision to not be aligned to net zero”. He made similar remarks when he and I opened the Green Horizon Summit – co-hosted by the City of London Corporation and World Economic Forum – in London in November.
To put it bluntly then, by not pursuing a net-zero future you are therefore choosing to become part of the problem. What was once a risk is now the business opportunity of the century, with the potential to create thousands of jobs and substantial returns – the businesses that put environmental resilience at their core will be highly valued and desirable. In short, money talks, and what it’s saying is “go green or go home”.
I’m already very proud of the leadership that the UK is showing in the green space…
The UK will be similarly clear-eyed with our international partners as we look towards COP26 in Glasgow later this year, and this will also be the message that I’ll be presenting to stakeholders in Brazil and Chile during a virtual visit next month. The window available to us is closing quickly, and – as we’ve seen with the pandemic – this a global situation that requires rapid action.
I’m already very proud of the leadership that the UK is showing in the green space: our financial sector is consistently ranked as one of the most innovative when it comes to green finance, and when I speak with stakeholders from around the world every day, I hear for myself how British ingenuity in sustainability has piqued global interest.
I was also delighted by Chancellor Rishi Sunak’s bold commitments during the Green Horizon Summit in November, such as mandatory TCFD for listed companies and the introduction of a green sovereign bond. The Summit itself was key milestone on the road to COP26, featuring contributions from HRH The Prince of Wales, Bill Gates, IMF Managing Director Kristalina Georgieva, UN Secretary General Antonio Guterres and many others, with more than 2,000 delegates from across the world in attendance. It’s imperative to continue that momentum in the months ahead, and the support of our partners across Latin America in this regard will be vitally important.
LatAm’s clean tech potential
As for Latin America itself – one of the most biodiverse regions on Earth – there has already been great progress, and I believe that an even brighter and more sustainable future could lie just around the corner. Its natural and built endowments make it an attractive option for climate-conscious global investors, while it also has the cleanest energy matrix in the world, mining resources central to the decarbonisation agenda, and dense cities that can easily expand electric and non-motorised transport modes. There are also great options for sustainable low-emissions agriculture and aquaculture.
If governments, businesses and investors across Latin America can use their joint expertise to produce policies that encourage investment in resilience and leverage digital technologies, there’s no doubt that the region can aspire to an inclusive and sustainable economic rebound.
At a global level, it is therefore fundamental that we support such a vision by building a future in which the infrastructure of finance is green by default – one which fully integrates the risk factors of climate change and other sustainable factors. In such circumstances, Latin America would then be well-placed to thrive long into the 21st-century. We’ve already seen some impressive ambition and action: Colombia has set out to reduce emissions by more than half by 2030, while others such as Costa Rica already produce more than 99% of their electricity from renewable sources. If we want COP26 to be the true turning point in the fight against climate change that we know it can be, it’s absolutely key that financial stakeholders across Latin America – as guardians of 22% of the forested areas of the world, and therefore one of its biggest carbon sinks -continue to show such courage and leadership. In doing so, the UK will have a formidable ally in Glasgow later this year.
Thanks to unprecedented global collaboration, 2021 will be the year in which the fightback against the pandemic really picks up speed. As devastating as it has been for our communities, a solemn truth remains – that the path we need to take to beat climate change will require us to surpass even those efforts. It’s clear then that every person, business and country across the world has a role to play.
Crucially though, all of this can only become a reality if policymakers take action today. We no longer have the luxury of time to make ambiguous long-term environmental commitments. Instead, we must take the lessons that we can from the adversity of the last year, and ensure that COP26 is remembered as the point in which the global community spoke with clarity and unity to take decisive and specific action to rewire global finance. It follows that this must be the year that the sustainability becomes intrinsically valued across all elements of the global economy.
The path we need to take is now clear and we have the tools and mechanisms to raise the capital we need to fight climate change, as well as the expertise to know how to invest it appropriately. I therefore call on the businesses, investors and countries across Latin America to join us in the UK as we head down that route together with confidence and ambition. Let’s work together to drive forward our recovery from the tragedy of the pandemic while embracing a prosperous future for generations to come.