23rd September 2019
Written by Juan Palenzuela (Researcher)
Juan Palenzuela looks at a refreshing new perspective on sustainable policies as boosters of productivity and innovation that are starting to plague the minds of business and political leaders ahead of the Climate Action Summit held today in New York.
We would all agree that more multilateral action is needed if we are to meaningfully tackle the climate emergency. Despite the Paris agreement of 2015, emissions continue to rise, making previous pledges look like wishful fantasies. Meanwhile, the consequences of the crisis continue to rage and are becoming more and more apparent, as evidenced by stronger storms, increased flooding, and year-round wildfires.
This week, though, gives us reasons to be optimistic as Climate Week kicks off. Kicking it off is the Climate Action Summit held today at the UN’s headquarters in New York.
António Guterres, the UN’s Secretary-General, is expected to call on all nations to present their concrete and realistic plans to reach their nationally determined emission goals by 2020. Ultimately, he hopes that the summit will pave the way to a reduction of greenhouse gas emissions by 45% over the next decade, and to net zero emissions by 2050. “Don’t come to the summit with beautiful speeches” said Guterres in an interview, stressing the need for real solutions.
But, we’ve seen such efforts before. Few nations ratified the Kyoto protocol of 1997, and after years of negotiation, the multilateral effort of the Paris agreement has been undermined by four nations in particular: the US, Brazil, Saudi Arabia and Russia. But change is, in fact, taking place.
At the beginning of the millennium, most political and business leaders around the world agreed that it would be good to do something about the changing climate, but they also anticipated trade-offs and a certain level of compromise. Slowly but steadily, that view is changing. Many leaders today believe that instead of trade-offs, sustainability policies in fact stimulate efficiency and innovation over the long-term. Such a changing ethos was clear in the letter signed by top CEOs earlier this month.
During the summit, the spotlight will be on China and India in particular. Although their per capita emissions are way below their industrialised peers, they are, as a whole, the first and third emitters of anthropogenic greenhouse gases respectively. It will be extremely promising to see this new ethos take root in the minds of these states, as they set more ambitious targets and modify their climate attitudes.
Divisions over the Labour party’s Brexit strategy are mounting pressure on Jeremy Corbyn. Party insiders, including Shadow Secretary Emily Thornberry and deputy leader Tom Watson have called for Labour to adopt a full remain stance, while Corbyn has persistently refused to be drawn either way on the issue.
Labour Party delegates also voted to for a motion yesterday that would abolish private schools by removing their charitable status and redistributing their endowments, investments and properties to the state sector. The motion also added that universities would be limited to admitting the same proportion of private school students as in the wider population, currently 7%.
In another blow to free speech, two Bloomberg journalists appeared on an Istanbul hearing accused of “undermining Turkey’s economic stability” for writing an article about the Lira last year. The judge rejected all requests for acquittal and set the next hearing for January next year.
Business & Economy
After a last-ditch attempt was made over the weekend to secure the £200m it needed to remain afloat, Thomas Cook ceased operations overnight. Over 150,000 British holidaymakers are now in limbo, and 21,000 people are set to lose their jobs worldwide, including 9,000 in the UK. Repatriation efforts have already begun. In a statement, the Department for Transport said that all Thomas Cook customers will be brought back to the UK on special free flights or be booked onto another scheduled airline at no extra cost on a date close to their booked return. The flights will start operating from today.
Walmart, the biggest retailer in the US, announced it will stop selling e-cigarettes. The move comes after a spate of deaths and recent calls, including from the US president, to scrutinise vaping further. The retailer said the move was due to “growing federal, state and local regulatory complexity”.
Marks & Spencer suffered a new blow after chief financial officer Humphrey Singer announced that he is quitting after just 14 months in the job. In a statement, M&S said that a succession process is now underway to replace Singer. The retailer is due to be relegated from the FTSE100 today because of its falling market capitalisation.
The week ahead
After a turbulent week, the US’s Federal Reserve will reconvene to coordinate their actions and understand what is going on in the market. New York Fed President John Williams will speak today at the US Treasury Market Conference; and San Francisco Fed President Mary Daly will deliver remarks in Salem, Oregon. The cost of borrowing cash overnight in exchange for US Treasuries in the repo market, which is crucial for banks and investors to cover their short-term funding needs, nearly quadrupled to 10% on Tuesday, prompting the New York Fed to inject cash into the financial system.
On Friday, the Fed will also unveil Core Personal Expenditure data, one of the preferred measures of inflation. It is expected to be around 1.8%, the strongest it has been since January.
In the UK, Labour will be holding its annual conference until Wednesday. All eyes will be on its future Brexit position, as well as its future strategy for the next general election.
On the other side of the globe, Afghanistan will hold presidential elections on Saturday, an occurrence that is often plagued with logistical difficulties and security risks. The election has been further complicated by Trump's last-minute cancellation of the peace negotiations with the Taliban, after an attack left 12 dead in the capital Kabul, including one US soldier. Regardless of who wins, the focus will be on the resumption of the peace talks
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Columns of Note
Writing for the Financial Times, Nick Butler defends nuclear energy and suggests that it could provide a bridge to support a shift to a low-carbon economy. New nuclear developments in France, the US and the UK have almost come to a halt given the high risks associated with nuclear energy, and growing costs are drying up private investment. To be able to remain competitive, nuclear needs a revamp, he argues. Smaller and more efficient reactors are currently being developed, and the operating lifetimes of others are being extended. This will take time, though. Nuclear energy should be given the opportunity to provide low-cost, low carbon solutions.
In Bloomberg, Nisha Gopalan argues that China’s Sovereign Wealth Fund is falling into a dangerous game as it dives into illiquid investments in real estate, infrastructure and private equity. Unfortunately, the Wealth Fund has lost key managers over the past two years, undermining the talent pool that’s necessary for successful hedge-fund and private-equity investing, and its overseas acquisitions are facing tougher scrutiny amid rising trade tensions with the U.S. The Chinese should perhaps sacrifice the prospects of higher returns and reconsider their holdings of alternative investments, argues Gopalan.
Did you know?
Cement production is responsible for around 10% of the world's anthropogenic carbon dioxide emissions.
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