A sobering United Nations report calling for urgent and more ambitious action to combat climate change has stressed there is a “clear way ahead”, with sufficient global capital to rapidly cut greenhouse gas emissions if existing barriers are reduced.
Five years after the Intergovernmental Panel on Climate Change highlighted the unprecedented scale of the challenge to keep warming below 1.5C, the same body warned this week that the magnitude of the task has become even greater due to persistently rising emissions.
In short, the pace and scale of remedial efforts so far, as well as current plans, were insufficient to tackle the problem.
NAB Chief Climate Officer Jacqueline Fox said the IPCC report amounted to a “final call to action”.
“But I’m definitely optimistic that the pool of global capital is deep enough to rapidly reduce greenhouse gases, but it requires focused reallocation and prioritisation,” Ms Fox said.
“It’s not just about removing existing barriers; it’s also about policy and strategic alignment to ensure the right investment choices are made to accelerate the transition.
“There is a clear commercial imperative and opportunity for Australian businesses and the next decade is critical to mobilise the capital and make the structural changes to set us on a path to grow, create jobs and ensure a sustainable future for our communities.”
The synthesis report by the IPCC said a “deep, rapid and sustained” cut in emissions across all sectors was required to restrict warming to 1.5C in excess of pre-industrial levels.
Emissions, it said, should now be falling, and needed to be slashed by almost half by 2030 to maintain the 1.5C cap.
Barriers to mobilisation of capital had to be reduced, with governments to play a key role through public funding and clear signals to investors.
“Investors, central banks and financial regulators can also play their part,” the IPCC report said.
“If technology, know-how and suitable policy measures are shared, and adequate finance is made available now, every community can reduce or avoid carbon-intensive consumption.
“At the same time, with significant investment in adaptation, we can avert rising risks, especially for vulnerable groups and regions.”
A Deloitte report commissioned by NAB found in July last year that $70bn in structural changes was required over the next decade, and $420bn in new investment over the next 30 years, to position the nation for growth in a low emissions world.
NAB chair Phil Chronican said achieving carbon neutrality by 2050 was a system-wide challenge, where capital would be reallocated from emissions-intensive assets and to low-emissions technologies.
However, the transition would not be successful if left to power and fossil-fuel companies alone.
Ms Fox said companies needed an informed strategy and business plan incorporating climate considerations such as abatement and/or adaptation measures, as well as forecasts covering the short, medium and long-term implications for the business.
“As a bank, our role is to support our customers and communities through the transition and fund the investments needed to create a strong and sustainable future for Australia,” she said.
NAB has so far set interim 2030 targets and 2050 net-zero targets for four key sectors – thermal coal, oil and gas, power generation and cement.
Similar work is underway in six other sectors – aluminium, iron ore and steel (including metallurgical coal), transport, commercial real estate, residential real estate and agriculture.
“The work is really important because it deepens your understanding of the sector implications and informs your commercial response at a strategic level,” Ms Fox said.
“But there’s definitely strong momentum, and the transition is recognised across the bank as both a risk and an opportunity.
“We can’t delay. Our customers are transitioning, as we are, and we’re focused on how we can support them.”