It’s Like That, Photo by Geoff Livingston on Flickr
Not a moment too early, we can now, finally, celebrate the end of 2020! Heart-warming images of Americans breaking into spontaneous street dancing was a fitting cue to signal the end of the year, or at least the felt sense of an unusually long 12 months.
In today’s newsletter you’ll find a few things to keep watch on for 2021 - from China’s economic recovery to emerging climate narratives from the European far right.
On the podcast front, Season 1 will wrap up this week with a finale featuring a good friend, climate scientist Kim Nicholas. We reflect on the latest trends in climate science in 2020 and sources of hope for 2021. Her new book about climate change and human agency called “Under the Sky We Make” is out in Q1, and believe me, you don’t want to miss this.
Thanks to everyone who filled out the survey that went out in the last newsletter, it's been extremely helpful for planning the upcoming season. You’ll find our key insights along with a preview on what to expect next season later in this newsletter.
Green and sustainable finance highlights
European economies are reeling from a severe second wave of COVID-19, and European Central Bank President Christine Lagarde warned last week that the recovery in Europe will be unsteady, stop-start, and contingent on the pace of vaccine roll-out.
The stricken service sector - half of the 5 million jobs lost in Europe during the first half of 2020 were service jobs - is making existing inequalities a lot worse.
In the first half of 2020, the labour force shrunk 7% for people with low skills, by 5.4% for people with medium skills, and rose by 3.3% for people with high skills.
👉 The worse-than-expected resurgence of the pandemic in Europe this autumn creates the conditions for a future political windfall for the far-right.
And they are ready with new narratives on climate and the environment that have until recently been the sole preserve of left-leaning green parties.
A forthcoming book called Fossil Fascism* sheds light on the emerging narrative tropes on climate and the environment coming from the far-right. Not something that irrigates the streams of #ClimateTwitter too often, so a bit of a wake-up call for me.
👉 Green Nationalism will become increasingly attractive to voters as the climate crisis worsens, the authors warn. What’s more, the European left has been disoriented by the COVID crisis and is vulnerable to incursions from the far-right who seek to gain the upper hand in political discourse on climate.
So here are some of the tropes:
Protecting Nature is protecting identity: keep borders closed to protect Nature.
The ecological divide is not left vs right, but rather local vs global.
Borders should close to refugees from Syria because allowing them in will result in them increasing their carbon footprint.**
*English edition expected in Q1 2021
** Germany’s AfD
👉 In contrast, China is expecting 7% growth in 2021, a big leap forward from a forecast 1.9 % in 2020.
This is based on a so-called “dual circulation” growth model which promotes domestic supply and demand; ie boosting household income and strengthening the social safety net as part of its efforts to boost consumption.
With China’s new goal to reach carbon neutrality by 2060, this sets the scene for China to become a leader in ESG investing.
The building blocks are in place: a growing green credit market that is encouraging companies to invest in ESG-related projects, clearly defined government policies, and companies that are eager to leverage technological advances to deliver better outcomes
One caveat. It’s easy to read the “dual circulation” of the Five Year Plan as China turning away from the global stage, looking inwards. But if you want to grasp the subtle nuance of the Mao-era term “self-reliance”, don’t miss this analysis from China vet Andrew Browne at Bloomberg New Economy.
“Self-reliance” isn’t the same as self-sufficiency. It might even imply more openness, not less. To be self-reliant, China will have to build up its technological capacity. That means greater collaboration with Western tech companies who control many of the core technologies China needs to stand on its own two feet, including advanced semiconductors.
If China is serious about boosting domestic consumption, it will have to redistribute national wealth toward households and away from heavily favored state-owned enterprises that have skewed its economy in a mercantilist direction, challenging the global system of free trade. The Chinese leadership will also have to build a more innovative financial system to improve returns on savings, which will require U.S. know-how.
Sure enough, China is now throwing open its doors to U.S. asset managers. And the more China improves the fundamentals of its economy, the more foreign investment will come rolling in.
Its new A$32 billion Electricity Infrastructure Roadmap will, among other things, support the construction of 12 gigawatts of new renewable energy capacity by 2030. This is six times the capacity of the state’s Liddell coal-fired power station, set to close in 2023.
The roadmap was developed by NSW Environment Minister Matt Kean, and acknowledges that within 15 years, three-quarters of NSW’s coal-fired electricity supply is expected to reach the end of its technical life.
The plan aims to, by 2030, reduce NSW’s carbon emissions by 90 million tonnes via delivery of about 12 gigawatts of new transmission capacity through so-called renewable energy zones in three regional areas.
Also noteworthy, a landmark legal case where a 25-year-old man from Brisbane successfully sued one of Australia's biggest pension funds over its handling of climate change, forcing it to commit to net zero emissions for its investments by 2050.
From the podcast
🎙 We’ve been breaking down your feedback the last few weeks as we prepare to transition from Season 1 to 2. Here’s a sampling of what you wanted to hear more of:
More content from climate experts & scientists
More legal perspectives
More informal chat
We took all of this in and have come up with a few principles for the next season.
👉 2020 has laid bare the weaknesses of the default approaches to decarbonizing the financial sector - over-reliance on voluntary disclosures, self-organizing reporting and accountability systems and vague, aspirational long-term goals. As a theory of change, it’s simply too weak.
So Season 2 will focus on people, ideas and initiatives that have the potential to either challenge or augment the default theory of change in green finance. We’ll dig into the “S” of ESG and talk with thinkers who are challenging the status quo assumptions. We’ll explore concepts like “Just Transition” and find out how it runs the risk of turning into a corporate buzzword. And much more.
📺 I’ve been moderating webinars on sustainable finance with some interesting researchers in Europe and the U.S., and you might like to check out the latest one 👇
See you all on the other side of this crazy year ❤️
From the Gers, France,