Global: G20 Leaders Agree to Triple Renewable Energy Capacity
On September 9, 2023, during the New Delhi Leaders’ Summit, G20 officials agreed to “pursue and encourage efforts to triple renewable energy capacity globally” by 2030. Leaders further committed to “urgently accelerate […] actions to address environmental crises and challenges including climate change.”
While this achievement has been lauded, the G20 leaders were unable to make meaningful commitments to reduce the usage of fossil fuels and cut greenhouse gas emissions. Aside from acknowledging the importance of phasing down unabated coal power, there was no progress in relation to commitments to reach net zero before 2050. Among other issues, the G20 leaders noted that the global progress towards achieving the Sustainable Development Goals (“SDGs”) has “only 12 percent of the targets on track,” prompting the G20 to “recommit” to achieve the SDGs in time, by 2030.
Collectively, the G20 countries produce over 80% of global emissions, making their commitments essential in fighting climate change.
Global: ITLOS Hears Climate Change Request Filed by Nine Small Island Nations
On September 11, 2023, the International Tribunal for the Law of the Sea (“ITLOS”) began hearings on the request for an advisory opinion submitted by the Commission of Small Island States (“COSIS”) on climate change and international law.
The request seeks to obtain a non-binding opinion from the ITLOS on whether the United Nations Convention on the Law of the Sea (“UNCLOS”) creates obligations for states to: (i) prevent, reduce and control pollution of the marine environment due to anthropogenic greenhouse gas emissions causing climate change-induced damage; and (ii) protect and preserve the marine environment from climate change impacts. COSIS, which filed the request, is an organization formed by nine island nations, including Antigua and Barbuda, Tuvalu and the Bahamas. COSIS members have been disproportionately affected by climate change impacts ranging from loss of coastlines and increased uninhabitable land to loss of fresh drinking water, while emitting just 1% of greenhouse gases globally.
While the advisory opinion will not determine states’ liability, it is hoped that it will clarify the scope of states’ UNCLOS obligations and increase pressure on signatories to reduce emissions and take further action. In parallel, the International Court of Justice was asked by the UN General Assembly to advise on governments’ legal obligations regarding climate change and the consequences for failing to meet those obligations.
Global: Nature Action 100 Initiative to Begin Initial Engagement with Target Companies
Nature Action 100 has finalized its list of target companies and will begin sending out initial baseline engagement letters later this month. Nature Action 100 is an initiative led by a group of global investment firms launched at the December 2022 COP15 Biodiversity Conference to encourage companies to take more ambitious actions to protect nature. The initiative is sister to Climate Action 100+.
To identify target companies, Nature Action 100 focused on eight sectors that it deemed to be systemically important to reversing nature and biodiversity loss by 2030. The sectors are biotechnology and pharmaceuticals, chemicals, household and personal goods, consumer goods retail, food, food and beverage retail, forestry and paper and metals and mining.
In order to tackle the nature and biodiversity crisis and mitigate financial risk, participating investors have outlined six key expectations for target companies: (i) making public commitments; (ii) assessing and disclosing nature-related impacts, dependencies and risks; (iii) setting science-based targets for nature; (iv) implementing an organization-wide strategy; (v) establishing board and management-level governance systems; and (vi) engaging with relevant external stakeholders on the issue.
Nature Action 100 website
U.S.: The U.S. and Peru Agree on Debt-for-Nature Swap
On September 11, 2023, the United States and Peru agreed on a deal to help preserve the Amazon rainforest within Peru’s territory. The deal also involves four non-governmental organizations (“NGOs”), Conservation International, The Nature Conservancy, Wildlife Conservation Society and World Wildlife Fund.
Under the agreement, known as a debt-for-nature swap, the U.S. will cut US$20 million of Peru’s debt over the next 13 years in exchange for Peru’s efforts to conserve and restore the Amazon. The debt swap is supported by a contribution of US $15 million by the U.S. government under the Tropical Forest and Coral Reef Conservation Act and a donation of US$3 million from the NGOs. In exchange, Peru will redirect payments that would have been made toward debt obligations to a conservation fund. The fund will then award grants to local organizations in support of projects directly benefitting the Peruvian Amazon. Such projects will involve activities like preserving protected areas, improving management of natural resources and helping to develop sustainable livelihoods for communities relying on the Amazon.
While this is the third debt-for-nature swap between the U.S. and Peru, it is the 22nd such deal under the Tropical Forest and Coral Reef Conservation Act. According to the U.S. Treasury’s press release, “[o]ver time, these debt-for-nature programs together will generate more than $380 million to protect tropical forest.”
U.S. Treasury Statement
EU: ECB Finds Credit Risk Could Double by 2030 if Climate Action Is Delayed
Recently, the European Central Bank (“ECB”) released its climate stress test report, titled “The Road to Paris: stress testing the transition towards a net-zero economy,” which evaluates how responses to climate change may impact households, businesses and financial institutions in Europe.
The ECB tested three responses to climate change: (i) an “accelerated transition,” where investments are made immediately to meet the Paris Agreement goal of limiting the temperature increase to 1.5°C or less by the end of the century; (ii) a “late-push transition,” where the same goal is achieved but investments are delayed until after 2025; and (iii) a “delayed transition,” where investments are made to limit the temperature increase to 2.5°C by the end of the century.
The ECB found that European banks’ credit risk could double if initiatives to meet the Paris Agreement goals are delayed until after 2025. The test also showed that the costs and risks to households and businesses would be higher and last longer if climate action is delayed. While more immediate climate action would result in higher near-term costs, financial and physical risks over the mid and long term would be mitigated. Alternatively, delaying initiatives would have lower near-term costs but would result in higher costs in the mid and long term and have lasting financial and physical risks.
ECB Stress Test Report