2020 has been a relatively turbulent year but one consistent theme is the need for Environmental, Social and Governance (ESG) factors to be a serious consideration within the financial sector and many other industries.
This has been amplified by the effects of the Covid-19 pandemic and the significant reduction in carbon emissions and total energy demand felt globally, especially during Q1 2020. This is mainly attributed to the restrictions on global economic activity and mobility, particularly during lockdowns.
According to The Global Carbon Project, global energy demand for Q1 2020 declined by around 3.8% in comparison to Q1 2019. The Project anticipates that annual energy demand will drop by 6% in 2020, making this the biggest decline in over 70 years. Although this data appears positive at face value, the Global Carbon Project datasets estimate that countries such as China are reverting to old habits as they rebounded so much that by late 2020 their level of daily emissions closely matches that of their 2019 output, with estimates suggesting Chinese emissions may increase for the year in 2020 relative to 2019, despite the pandemic.
One thing we can all surely agree upon is that the global Covid recovery needs to be focused on sustainable projects and renewable energy as opposed to fossil fuels. With renewable energy demand increasing globally by around 1.5% in Q1 2020 due to the output of new wind and solar projects, a ‘green recovery’ seems achievable.
The G20 Riyadh Summit held in November 2020 saw 45 countries offering new climate plans with President Xi Jinping committing to net zero emissions by 2060 while the UK announced a new carbon cutting target of 68% by 2030, which will hopefully lead the way to zero emissions by 2050. Boris Johnson reiterated this commitment with the release of the UK’s Ten Point Plan for a Green Industrial Revolution. The Plan outlines the UK’s strategy with Johnson pledging to establish ‘Task Force Net Zero’ whose sole aim will be to ‘to take forward this national priority’ of reaching the legal obligation to achieve net zero carbon emissions by 2050. Johnson suggested that the ten-point plan will also result is the creation and support of 250,000 green jobs.
Chris Stark, the UK chief executive of the Committee on Climate Change, feels this is a realistic goal with renewable energy prices decreasing considerably within the last decade, resulting in wind and solar energy costing less than fossil fuels.
However, this has come under scrutiny from experts and green campaigners with Rishi Sunak’s spending review and infrastructure strategy failing to align with Johnson’s 10-point plan, with £27bn of the £100bn UK infrastructure budget being spent on road-building schemes alone.
With the UK hosting the UN Climate Change Conference in Glasgow in November 2021, greater efforts are likely needed to make Johnsons ‘ambitious’ ten point plan a reality.