How the best climate practices can make great business sense

The UAE is determined to achieve its sustainable development goals

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  Signs from Fridays for Future movement in Berlin, Germany. Ten cities joined New York and London in committing to divest from fossil fuel companies as part of efforts to combat climate change. AP

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  Climate activists march in an attempt to occupy the Garzweiler open-cast coal mine and nearby gas infrastructure on a day of civil disobedience near Grevenbroich, Germany. Getty

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  A child wears plastic bottle waste provided by climate and environmental activists during a protest in Nairobi, Kenya. Reuters

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  A deforested area close to Sinop, Mato Grosso state, Brazil. The number of bushfires raging in Brazil's Amazon increased 61 per cent in September last year, compared to the same period in 2019. AFP

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  Ice sculptures of Donald Trump and Jair Bolsonaro comprise the artwork 'Meltdown', which was on display last September during the UN Summit On Biodiversity in New York City. AFP

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  A Jaguar named Ousado, who suffered second-degree burns during fires in the South American Pantanal region, rests in his cage after treatment in Brazil. AP

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  Cars on the Golden Gate Bridge in San Francisco, California. The US state plans to phase out sales of new, petrol-powered cars by 2035. Bloomberg

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  Deadly bushfires in California burnt more than 16,000 square kilometres of land last year — more than double the previous record for the most land burnt in a single year in the state. AP

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  An aircraft prepares to drop fire retardant while battling a blaze in the Mendocino National Forest, California. AP

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  Filipino climate activists hold placards calling for climate action as a part of global climate change protests in Quezon City. Reuters

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  Debris collects in a river after heavy rains and floods hit Breil-sur-Roya, a French village close to the Italian border. AFP

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  Climate and environmental activists make their way through a forest next to the village of Shipunovo, 170 km south of the Siberian city of Novosibirsk, to extinguish a peat fire. AFP

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  A man holds a banner with the message "United for climate" during a small climate change protest in Brussels. AP

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  British zoologist Andrew Bladon takes the temperature of a butterfly near Pegsdon, England. Whether a butterfly's wings absorb or reflect heat from the sun could be a matter of life and death in a warming world, British researchers said. AFP

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  Members of an environmental group in Seoul, South Korea, take part in a protest against climate change. EPA

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  Activists from various environmental groups take part in a protest against climate change in New Delhi, India. EPA

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  Ugandan climate change activist Vanessa Nakate takes part in a demonstration in the Luzira suburb of Kampala, Uganda. Reuters

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  A climate change demonstration in Vienna, Austria. AFP

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  An iceberg floats past Bylot Island in the Canadian Arctic Archipelago in 2017. AP

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  A polar bear stands on the ice in the Franklin Strait in the Canadian Arctic Archipelago in 2017. AP

The power of collective action is evident in the global response to coronavirus. However, while countries harnessed technology across sectors – health, education and research – the pandemic exposed the fragility of the global economy.

In less than a year, over 1.5 million people have died of Covid-19 and tens of millions have lost their livelihoods.

The projections appear bleak. The number of people living in extreme poverty will increase by 420 million in 2020, according to the United Nations Industrial Development Organisation. To pave the way back from this wreckage, sustainable finance is all the more crucial.

The next decade presents a “use it or lose it” moment for emerging markets that need to reorient their financial sectors.

Globally, to meet the needs of a growing population, investments in infrastructure are expected to reach $90 trillion globally by 2030.

Covid-19 has prompted governments across the world to provide large stimulus packages.

A pedestrian walks past climate protesters, holding a re-useable coffee cup on December 7, London. Getty Images

This is a golden opportunity that should not be wasted. It is important that these packages are invested keeping in mind not just traditional finance metrics but environmental, social and governance (ESG) issues.

The UAE launched its first set of guiding principles on sustainable finance this year at Abu Dhabi Sustainability Week

There need not be a trade-off between financial and non-financial returns. For low and middle-income countries, returns on responsible investment are high, where resilient infrastructure investment is estimated to return $4 on every $1 spent.

To prevent irreversible environmental damage and to stay at the current 1.5 degrees of global warming, countries must drop emissions by 50 per cent over the next decade.

Photographer David Carlier photographs the Swiss Aletsch glacier, the longest glacier in Europe, in Switzerland on July 21. AP

Driven by the growing global commitment to address climate change, over the coming decade we will witness a transformation of the landscape of sustainable finance in emerging markets.

US President-elect Joe Biden sees climate change as an existential threat, saying the US needs to eliminate greenhouse gases by 2050. He proposes spending $2 trillion over four years as a starting point. The EU and China have announced similar ambitions. Financial markets are starting to take note, and to align their models to such goals.

A growing green bond market has grown to help investors position their financial objectives to achieve the targets of the Paris Climate Agreement and Sustainable Development Goals.

In 2018, 80 per cent of the world’s largest corporations used an international independent standards organisation called the Global Reporting Initiative which helps companies, governments and other organisations create a common language to measure and talk about their impact on issues such as climate change.

In keeping with this shift, this year the Dubai Financial Market launched the UAE Index for Environment, Social and Governance to encourage listed companies in the UAE to embrace ESG best practices.

Data, however, is a big challenge in this domain. Globally, sustainable investments require data that is based on ESG metrics but most companies still lack the numbers needed to quantify the impact of their investments. This leads to potential inefficiencies.

A view of the Burj Khalifa,on November 29, in Dubai. Getty

There is also a need for better legislation in emerging markets. Until 2018, sustainable financing was regulated only in China. The situation is improving though and there is more attention being given to standardising regulations that foster capital inflows.

The UAE launched its first set of guiding principles on sustainable finance this year at Abu Dhabi Sustainability Week. Indonesia and Brazil have progressed in this regard too.

Of 180 countries surveyed in the Environmental Performance Index 2020, of the world's 25 top environmental performers, 20 are from Europe.

The rest are in Australia, New Zealand, Japan, US and Canada. But a movement to meet sustainable goals is growing in the emerging markets – the 85 per cent that lies outside North America and Western Europe.

The UAE, which just appointed a special envoy for climate change, is at the heart of this movement in the region as the country aims to be a major force for positive change.

The pandemic shifted the emerging markets’ focus to acute social risks such as health and employment. There is no doubt that economic recovery is a priority for all nations even if it may take years.

It is crucial that this time be also used to address the climate change challenge. Covid-19 has been devastating across the world but instead of wasting this crisis, we must build on the opportunity to create a more sustainable future.

Yasar Jarrar is managing partner at International Advisory Group and adjunct professor at Hult International Business School

Ibrahim Al Zubi is the chief sustainability officer at Majid Al Futtaim