The EU Green Deal is a unique and timely opportunity on which we must capitalise. The time to act is now
As we emerge from the shadows of the coronavirus pandemic, a green recovery will help stabilise and grow our economies for a more resilient future. The EU Green Deal puts Europe on course to reach net zero by 2050, and includes €1 trillion ($1.2tn) of investment in climate action. But our political leaders need all of us to make that happen.
And indeed, alongside important policy commitments, we have already seen admirable emissions targets from leading companies across the continent. As a next step, a multi-stakeholder approach will enable faster progress towards transversal and holistic solutions to a systemic problem. As we look to accelerate movement on climate goals, four pillars will support our shared ambition.
More "mission-possible" partnerships
We need cross-industry solutions to accelerate the reduction of carbon emissions, especially for critical sectors of our regional economy. The cost of transitioning is affordable at value chain level, but not uniformly distributed within it. We cannot let the answer be individually addressed. That is why 120 companies across the maritime, energy, infrastructure and finance sectors are working collaboratively on the reduction of shipping emissions as part of the Getting to Zero Coalition, which aims to decarbonise shipping in a way that drives green growth.
The co-benefits expand well beyond the EU region: the successful development of low-carbon technology and zero-emission marine fuels could help build investment in new energy projects in emerging markets. European ports at the heart of the global supply chain, like Helsinki and Hamburg, are also working with the shipping industry to lower emissions through reduced usage fees. This integrative approach will produce holistically sustainable answers.
The Race to Zero initiative championed by COP26 – the United Nations Climate Change Conference to be held in Glasgow in November 2021 – offers an opportunity for many more industries to establish their own partnerships to make net zero “mission possible”.
Clear, quantitative interim targets
In the pursuit of making the EU carbon neutral by 2050, both companies and governments should be transparent in seeking specific, ambition appropriate intermediate targets to avoid falling back on quick wins or worse, future loading execution.
In this context, we principally need to agree that the focus must shift from carbon offsetting practices (which do not address footprint issues) towards carbon reduction and carbon capture priorities (which change the way we consume, operate and contribute to the problem, whilst removing the already excessive stock of CO2 in the atmosphere).
By 2050, the carbon removal industry is expected to grow to the size of today’s oil and gas industry. To reach that point, we need to invest in scaling up new technologies such as direct air capture and assign value and economic incentives to natural carbon sequestration methods − while in the meantime, pursuing ambitious emissions reduction through the use of cleaner energy and fuels, boosting the circular economy and promoting sustainable consumption.
Harmonisation of practices, policies and standards
Alignment on climate initiatives across leading companies can be a powerful lever for bringing our efforts to the mainstream and accelerate adoption by all enterprises – of any size, in any sector. It’s important for us, as corporate pathfinders, to lead by example for both supply chains and the general public.
Take, for instance, the Net-Zero Asset Owner Alliance − a group of more than 30 institutional investors representing $6.6tn in assets committed to transitioning their investment portfolios to net zero by 2050. In part, this will be achieved by advocating for stronger public policy and corporate commitments on decarbonisation.
The Principles for Responsible Investment, meanwhile, created in 2006 to embed environmental considerations into corporate policies and practices, now have more than 3,000 signatories responsible for over $100tn in assets. Thanks to the involvement of the investment community, intergovernmental organisations and civil society, the principles are helping to make investment more sustainable.
More robust public-private partnership frameworks
As we live up to our collective responsibility to work together and take action, we also need stronger frameworks and more agile policy development processes to help accelerate the transition to a low-carbon or net-zero economy, whilst recognising that physical adaptation to climate risk is just as much of an urgent imperative and it is severely underfunded.
In particular, we need faster and more creative approaches to defining such frameworks. Traditional, lengthy consultation and top down political deliberation processes are ill-suited for the urgent task at hand. Capital markets will respond quickly to clear future signaling but industrial and sectorial transitions need to be accompanied over the next decade for an inclusive and orderly transformation of our economies. Physical adaptation of public assets and fiscal resilience of public finances need to gain centre stage, especially after the COVID fight duress.
The European Investment Bank’s funding of climate action and environmental sustainability over the next decade gives Europe’s public and private sector the opportunity to make substantial progress towards a carbon-neutral, climate resilient future; let's seize this opportunity with both hands.
At Swiss Re, we believe in the power of evidence based arguments, and have worked with governments around the world on innovative solutions that produce tangible co-benefits, such as a dyke reinforcement to protect against rising sea levels around Texel Island in the Netherlands. By mitigating the risk of this project with the appropriate insurance cover and nature-based adaptation, we helped to create co-benefits including improved climate and water quality regulation.
We have learned the importance of these four pillars through 20 years of working towards sustainable growth. We have worked on partnerships and solutions on climate change, on ESG business practices, on net-zero investment targets and more recently, on concrete pathways to the decarbonisation of critical sectors of the economy where we are a risk-bearing partner.
So it is particularly exciting for us to witness the added momentum of the World Economic Forum’s CEO Action Group for the European Green Deal − a group brought together in January 2020 to help catalyse a transformative green agenda. I am delighted that Swiss Re is part of the European Carbon+Farming Coalition with a bold plan to decarbonise Europe's food system and recognise the value of soil and forestry as carbon sinks.
As the leaders of corporations from diverse industries across the continent, we see the EU Green Deal as a unique and timely opportunity on which we must capitalise. We also know we will be judged by our actions − rather than just our statements − in creating a zero-carbon world. Together, we have the chance to help drive the creation of new industries, new employment and new growth, in line with the United Nations Sustainable Development Goals agenda and with the Paris Agreement.
The eyes of nearly 450 million people across Europe are on us. The time to act is now.