Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
What does a successful COP27 look like?
35 Plays3 years ago
In this episode, Wai-Shin Chan, Head of the Climate Change Centre of Excellence and Global Head of ESG Research at HSBC, talks with Nigel Topping, the UK's High-Level Climate Action Champion, and Jenny McInnes, Group Head of Sustainability Policy & Partnerships at HSBC, about the road to COP27. What has been learned from COP26 and which policies and promises have been acted on? And what can we expect from this year’s event?
To find out how HSBC is supporting businesses on their sustainable ambitions, click here.
Hosted on Acast. See acast.com/privacy for more information.
Recommended
Transcript
Introduction to HSBC Global Viewpoint Podcast
00:00:02
Speaker
Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
00:00:13
Speaker
Make sure you're subscribed to stay up to date with new episodes.
00:00:16
Speaker
Thanks for listening.
00:00:17
Speaker
And now onto today's show.
Introducing Climate Action Leaders
00:00:24
Speaker
Hello, I'm Weishin Chan from HSBC's Climate Change Center of Excellence, where I also head up
00:00:30
Speaker
How exciting.
00:00:32
Speaker
And as ever, there's a lot going on.
00:00:34
Speaker
I'd like to welcome Nigel Topping, a UN high-level champion for climate action COP26.
00:00:39
Speaker
This shows you how serious he is.
00:00:42
Speaker
He's even trying to learn Arabic at the moment.
00:00:45
Speaker
He asked me to emphasize the word crying, but I'm sure that's you being modest.
00:00:48
Speaker
And Jenny McInnes, Global Head of Policy and Partnership Sustainability at HSBC.
00:00:54
Speaker
Thank you for joining me both for this panel.
00:00:56
Speaker
We are going to have a discussion today.
COP26 Initiatives: Coal, Cars, and Trees
00:00:58
Speaker
covering developments behind the scenes, green zone issues, and the all-important oil that facilitates negotiations, climate finance.
00:01:07
Speaker
So at COP26 last year, Nigel, the UK publicized the mantra of cash, coal, cars, and trees, and the first few days had a flurry of announcements to that effect.
00:01:18
Speaker
But what progress have we seen?
00:01:20
Speaker
on these.
00:01:20
Speaker
I'd like to focus on the coal, the cars, the trees initiatives for the moment.
00:01:25
Speaker
We can leave finance later, but in your vantage point, Nigel, what progress have we seen?
Breakthrough Agenda in Energy Transition
00:01:30
Speaker
I think mixed.
00:01:31
Speaker
One of the things which really landed in Glasgow was this idea of the breakthrough agenda.
00:01:36
Speaker
What are we going to do in each of these sectors?
00:01:38
Speaker
That goes beyond coal, cars, cash and trees, which is the Prime Minister's simplified
00:01:43
Speaker
a list of four.
00:01:44
Speaker
I mean, there's many more, right?
00:01:45
Speaker
Steel, aviation, shipping, you know, regenerative agriculture.
00:01:49
Speaker
So we've now got well over 50 countries all committed to that agenda, which means driving the innovation by 2030 so that we're on track.
00:01:57
Speaker
So of course, we've hit some bumps in the road because of Ukraine, but actually all the evidence is that we're accelerating the energy transition, although there's some short-term use of coal and some gas assets and fatibirol
00:02:09
Speaker
was very positive about that trajectory.
00:02:12
Speaker
If you look at cars, and I bang on about this all the time that we need to improve our exponential maths, we've more than 50x the amount of electric vehicles being sold in the last 10 years.
00:02:23
Speaker
That's doubling faster than every two years.
00:02:27
Speaker
And we're now at 10% globally.
00:02:29
Speaker
So if you carry on doubling every two years, that's 80% within three more doublings.
00:02:33
Speaker
So basically, the combustion engine is dead globally by the end of this
00:02:36
Speaker
decade now.
00:02:37
Speaker
And we're starting to see that exponential with real money coming in at the early stage, green hydrogen, green steel, sustained radiation fuels, the first zero carbon ships actually being ordered by Maersk and the other major container shipping vessel.
00:02:53
Speaker
So good progress and not enough progress in emerging markets.
00:02:57
Speaker
And that's perhaps more of a finance conversation
00:03:02
Speaker
which we'll come
Enhancing Climate Policies and NDCs
00:03:03
Speaker
to later.
00:03:03
Speaker
I think the last thing I'd say is we've seen some very big policy shifts in the last few months.
00:03:08
Speaker
Obviously, the Inflation Reduction Act in the States, I mean, there's a kind of a feeding frenzy going on right now in the States.
00:03:13
Speaker
Everyone's just falling over themselves to access the largely carrot-driven transition there.
00:03:20
Speaker
But also Australia, you know, that's a big deal in terms of a major renewables and green hydrogen play.
00:03:26
Speaker
But of course, Europe also accelerating now, talking about possibly even upping their headline 2030 targets.
00:03:32
Speaker
Well, at the end of COP26, the Glasgow Climate Pact was signed.
00:03:35
Speaker
Countries were asked to revisit and strengthen their climate pledges or those nationally determining contributions.
00:03:41
Speaker
I count 23, with the latest being the UK and Indonesia, and as you said, the EU talking about it.
00:03:48
Speaker
they weren't quite the step up that we were looking for.
00:03:51
Speaker
Is the situation different on the ground?
00:03:53
Speaker
Jenny, perhaps we can turn to you for this question.
00:03:56
Speaker
How are countries closing the gap between climate targets with realistic policy setting and implementation?
00:04:05
Speaker
Yeah, thanks, Bajid.
00:04:05
Speaker
I think it's a really important question.
00:04:07
Speaker
And when we were going into COP26, I was working for the UK government and I really thought about ambition and ambition raising.
00:04:16
Speaker
in a number of different ways.
00:04:17
Speaker
Obviously, NDC enhancement in terms of increasing the actual target within the NDC is a really important metric.
00:04:25
Speaker
And it's important that we're able to show that the ratchet process that the Paris Agreement baked in works, it's viable, because every country that submitted an NDC in Paris should be able to go further because we've built so much confidence over the last few years by the fact that every country is part of this agreement.
00:04:45
Speaker
But I think there are other measures of ambition and we need to take them all into account.
00:04:50
Speaker
So, for example, improving the quality of NDCs.
00:04:54
Speaker
A lot of countries that put forward NDCs initially were, you know, they were a two-page piece of paper.
00:05:00
Speaker
They hadn't gone through national parliament.
00:05:02
Speaker
They hadn't been ratified domestically.
00:05:05
Speaker
They didn't have the ministry institutional capability to actually drive through the NDC.
00:05:11
Speaker
And that translation of the headline target into real implementation plans is a really core part of ambition.
00:05:19
Speaker
And I think we've seen a lot of progress on that.
Importance of Long-term Strategies for Emerging Economies
00:05:23
Speaker
A number of countries have embedded their NDCs and net zero commitments into legislation, into new climate change act.
00:05:32
Speaker
And that's really important because it helps to buffer against political change as well.
00:05:36
Speaker
Like in the UK, we have net zero legislation.
00:05:39
Speaker
We were the first country in the world to develop the Climate Change Act and then the net zero legislation.
00:05:45
Speaker
And that presents a huge range of benefits in terms of establishing the institutional framework for being held to account on progress and really forcing the difficult policy decisions that are required to meet that commitment.
00:06:03
Speaker
I think another way of countries sharing ambition is by thinking longer term.
00:06:10
Speaker
We need short term NDCs.
00:06:12
Speaker
We have to take a huge chunk out of the global carbon emissions before 2030.
00:06:17
Speaker
But we also need countries to be thinking longer term.
00:06:20
Speaker
And for some countries in particular, that's important because we anticipate some growth in emissions, for example, in emerging economies between now and 2030.
00:06:29
Speaker
And we need to see a rapid growth.
00:06:31
Speaker
scale back on the back of that.
00:06:33
Speaker
I think a number of other things have happened.
00:06:35
Speaker
We've seen a few countries lead the development of their own energy
Energy Transition Plans and Investor Confidence
00:06:40
Speaker
transition plans.
00:06:41
Speaker
And that's important because this has to be a country-led process.
00:06:45
Speaker
It can't be imposed on countries from either the UNFCCC or from donors and finances.
00:06:55
Speaker
So it's really helpful when a country defines their long-term energy transition plan because it gives confidence to investors on the direction of travel.
00:07:05
Speaker
There's been a number of other things over the last couple of years, like investments in cities, in cleaner, greener cities with immediate health benefits.
00:07:14
Speaker
And that's particularly relevant in, you know, as we sort of
00:07:17
Speaker
transition hopefully out of the pandemic and recognise the interoperability between health and local climate.
00:07:27
Speaker
And we're also seeing a massive increase in the market for green finance.
00:07:31
Speaker
Lots and lots of countries, including emerging economies, have been developing taxonomies and green bond standards that help to align with global benchmarks and again help to give confidence to investors on the potential for investing in those countries.
00:07:47
Speaker
Thank you, Jenny.
00:07:48
Speaker
Nigel, in your role as a sort of UN high-level champion, what are you seeing that is outside of this policy setting that Jenny talks about, outside of politics and outside of the complications of getting legislation
Private Sector Collaborations in Climate Action
00:08:01
Speaker
passed?
00:08:01
Speaker
What about the real climate action from companies?
00:08:04
Speaker
Well, I talked about the breakthrough agenda, which was launched by the UK presidency, but we actually launched the 2030 breakthroughs sort of non-stack, as for the private sector, the year ahead of the COP.
00:08:16
Speaker
And the private sector is getting itself pretty well organized.
00:08:19
Speaker
Pretty much every major emitting sector, you've got a serious collaboration or collaborations along the value chain.
00:08:26
Speaker
the massive collaboration around getting to zero shipping.
00:08:30
Speaker
Fuel providers, port operators, shipping manufacturers, freight owners, there's a zero emissions freight alliance with Unilever and IKEA and Amazon saying they'll only buy zero emissions freight by 2040.
00:08:47
Speaker
There's a whole series of first movers coalitions, which is a mixture of countries and companies giving forward market commitments to buying green steel, green cement, green hydrogen, sustainable aviation fuel.
00:09:00
Speaker
So I think that pre-competitive, you know, we're very used to this in the tech sector, right?
00:09:04
Speaker
We're so used, you know, Moore's law, right?
00:09:06
Speaker
It's not a law, as you know, it's an assertion of belief in our ability to innovate, which when enough people step up and say, yeah, we can do that, then it's amazing what we can do.
00:09:15
Speaker
And you're right, we're starting to see a Moore's law and pretty much, you know, so in hydrogen, we're looking at getting to $1.50, then $1 a kilogram before 2030.
00:09:22
Speaker
There's like mass, you know, when we launched the green hydrogen catapult a year before COP,
00:09:28
Speaker
The members were targeting 25 gigawatts by 2026.
00:09:32
Speaker
But a year later, they increased their target by 80% to 45 gigawatts 2026 and 700 by 2030.
00:09:35
Speaker
That's that exponential increase.
00:09:41
Speaker
kicking in.
00:09:41
Speaker
So I think that's a really, that interplay between more and more countries stepping up, as Jenny said, it's not just with NDCs and long-term strategies, but sometimes policies like that.
00:09:52
Speaker
I don't think the Indian tender for 50,000 e-buses, which is a $10 billion tender, is captured in NDCs or long-term strategies.
00:10:01
Speaker
Yeah, I don't think the sort of Reliance or Adani, tens of billions into renewables and green hydrogen is necessarily captured in the dynamism.
00:10:08
Speaker
So I think one of the things we won't see every country submit a new NDC every year, especially quite a lot of work for a lot of countries.
00:10:15
Speaker
But, you know, we've got very significant step up in the States.
00:10:19
Speaker
You know, the EU probably are talking about increasing their headline figure, maybe after even countries like Egypt, who just haven't got a very ambitious NDC, but are working on turning the plans into financeable propositions.
00:10:33
Speaker
We had a big conference out there, which is really encouraging.
00:10:36
Speaker
And HSBC has been very involved.
00:10:39
Speaker
out there but their head the minister for renewable energy is already saying next year they're going to review their targets because i think that people get it's a question of confidence right that exponential is is built on confidence of people saying what they're doing and then doing it quicker and cheaper and then and then people go in with a bigger target and a shorter time frame the next time so i think in particular we're seeing that alignment of the private sector along the value chain and
00:11:03
Speaker
around it with the finance sector, with all the members of GFANS, doing the hard work of turning headline commitments into detailed plans, as HSBC, for example, has been doing.
00:11:15
Speaker
You can't implement at the level of net zero by 2050.
00:11:18
Speaker
You've got to implement that.
00:11:20
Speaker
How do we finance this sector through the transition?
00:11:24
Speaker
Doing it on the ground, so to speak.
00:11:26
Speaker
Exactly.
00:11:26
Speaker
And as countries improve, so the UAE a couple of weeks ago, the peer pressure will be there.
00:11:33
Speaker
That momentum will follow through.
00:11:35
Speaker
But a slightly different question for you, Nigel, if I may.
00:11:37
Speaker
I mean, many of the initiatives you spoke about tend to focus on mitigation, net zero, one and a half degrees.
00:11:42
Speaker
Very important for the sort of future transition and building the infrastructure surrounding that.
00:11:46
Speaker
But the extreme weather events of 2022 so far, right?
00:11:49
Speaker
I mean, the heat wave in Europe, the droughts in China, the floods in Pakistan, these continue to highlight the importance of adaptation.
00:11:57
Speaker
Indeed, Egypt in its representation as COP27 hosts representing the African continent will be focusing on adaptation.
00:12:05
Speaker
So what adaptation actions are you seeing from companies, Nigel?
00:12:09
Speaker
That's a really
Adaptation and Resilience in Climate Strategy
00:12:10
Speaker
good point.
00:12:10
Speaker
And it is something that the Egyptian presidency is particularly focused on.
00:12:14
Speaker
And as have we been for some time, I mean, the mitigation work is better organized and further advanced intellectually and operationally.
00:12:21
Speaker
Actually, we just launched this idea of the mitigation breakthroughs, like the 2030, like we need
00:12:29
Speaker
70 green steel plants to be built by 2030.
00:12:32
Speaker
That's the figure that comes from the mission possible work on steel.
00:12:36
Speaker
And we can see 47 of them in various stages of planning already.
00:12:39
Speaker
So you can start to be pretty confident that we'll hit that 70 or maybe surpass it.
00:12:45
Speaker
But on adaptation resilience, there hasn't been that clarity of landscape.
00:12:48
Speaker
So we end up talking in abstract terms about the problem, but not getting down on the ground, as you say.
00:12:53
Speaker
So we just launched a series of adaptation resilience breakthroughs, which define the deployment target for various
00:12:59
Speaker
solutions, whether it's insurance, closing the protection gap, because that's one of the big things which allow, for example, smallholder farmers to be more resilient, or whether it's investment in water infrastructure in urban areas in sub-Saharan Africa, or clean cooking solutions, or mangrove restoration.
00:13:15
Speaker
And each of those has millions of lives and livelihoods made more resilient.
00:13:21
Speaker
And most of them also have a mitigation aspect as well, like if you're restoring mangroves or using clean cooking stoves instead of cutting down forests, you have all sorts of
00:13:29
Speaker
benefits, but also importantly, they have developmental employment and economic growth aspects.
00:13:35
Speaker
And one of the most important things that we're working on now is trying to kill the myth that there's no investment case in adaptation of resilience.
00:13:41
Speaker
It's just not true.
00:13:42
Speaker
It's kind of so obviously not true.
00:13:45
Speaker
When you just think about what everybody agrees is that when we get to a resilient net zero world, it'll be a much bigger economy.
00:13:51
Speaker
So there must be a way of
00:13:53
Speaker
unlocking a business case.
00:13:54
Speaker
It requires some innovation financially and some of the things that HSBC is involved in like fast infra labeling for robust resilient infrastructure investment or the Coalition for Climate Resilient Investment, which is making really good progress on helping governments understand the longer term fiscal case for investing more in resilient infrastructure and generating a bigger fiscal return
00:14:18
Speaker
But that's quite technical, right?
00:14:19
Speaker
And so it's really pleasing to see some of the leading banks like yourselves and the rating agencies and data providers coming together.
00:14:28
Speaker
And I think we'll see a lot more of that in Egypt and in this decade to come.
00:14:31
Speaker
Actually, there is a case to invest in resilience.
00:14:34
Speaker
It just needs to be made skillfully.
00:14:37
Speaker
And that's not a flippant statement.
00:14:40
Speaker
There's a lack of skills in a lot of those markets to help make that case.
00:14:45
Speaker
How do we know what a good climate plan looks like for a company?
00:14:49
Speaker
Well, I mean, I'm sure Nigel has views, but it's a really good question.
00:14:53
Speaker
And I think credibility in that is absolutely key.
00:14:58
Speaker
So GFANS is helpfully producing a set of guidance for financial institutions in considering, you know, how to develop transition plans and what should be in them.
00:15:11
Speaker
you know, we will need to build up our assessment really, really rapidly and have a really clear view of what credibility looks like.
00:15:20
Speaker
And we're thinking about that a lot at the moment in the context of our energy company transition plans, which we've already requested and which will be absolutely key as we look to implement our energy policy, our new net zero aligned energy policy that will be published at the end of this year.
00:15:37
Speaker
Because
00:15:40
Speaker
We need to be able to differentiate between the countries that are the clients that are actively seeking to transition and have a credible roadmap to get there, but perhaps need some help.
00:15:50
Speaker
And those that have set targets, but have no plans to get there and understand how we work with them to really try and drive that transition.
00:16:01
Speaker
I don't know whether Nigel, you want to answer that.
00:16:04
Speaker
I mean, that's one of the reasons we launched the Race to Zero a couple of years ago was to try and distinguish between flaky greenwashing announcements and targets and science-based plans.
00:16:15
Speaker
There's over 8,000 companies and financial institutions now in the Race to Zero.
00:16:18
Speaker
So they've all committed to setting robust science-based targets, which means immediate 2025, 2030 goals, not just five CEOs down the road, a miracle's going to happen.
00:16:29
Speaker
But on my watch as CEO, I promised to operationalize
00:16:35
Speaker
this target.
00:16:36
Speaker
I think that increasingly we're seeing good work on sectoral pathways, the Mission Possible Partnership and SBTI have done a lot of work on some of those hard to abate sectors or innovate to abate, we prefer to call them now like steel, shipping, I think I just published something on chemicals.
00:16:53
Speaker
So judging whether a company has aligned their plans, at least with those sort of free competitive plans, much like in the sort of
00:17:02
Speaker
tech world, there's a pre-competitively agreed technology roadmap to go from 4G to 5G.
00:17:07
Speaker
We're starting to see that happen in more and more of these sectors.
00:17:10
Speaker
So pre-competitively agreed roadmap, then compete like hell in implementing it.
00:17:15
Speaker
One really important thing to note is to benchmark against those plans which get to net zero rather than the key providers of forecast
00:17:23
Speaker
information.
00:17:24
Speaker
Forecasts are always wrong on the low side for technology.
00:17:28
Speaker
So you need to look at normative scenarios, not forecast.
00:17:31
Speaker
Whether it's BNF or the IEA, the technology forecasts are always wrong.
00:17:34
Speaker
They don't take into consideration the dynamics that we know of this feedback process.
00:17:39
Speaker
They try and model bottom up.
00:17:40
Speaker
That's why they always have to correct outputs every year.
00:17:42
Speaker
But I think the most important thing is demonstration of allocation of capital.
00:17:46
Speaker
So an oil company is talking about being serious about the transition, but only allocating a couple of percentage points of their capex to the energy transition.
00:17:53
Speaker
So say it's just blah, blah, net zero, but look, follow the money.
00:17:58
Speaker
So you can see that in the automotive industry, all the money is going into R&D and product development for electric vehicles.
00:18:03
Speaker
So you can see that's a serious transition.
00:18:06
Speaker
You can judge how serious, but in other companies, you can see that it's not serious because the money is not flowing yet.
00:18:12
Speaker
What developments are we seeing to align the financial system to sort of net zero goals, to transition and to adaptation from your vantage point, Nigel?
Inadequacy of Current Climate Financing
00:18:20
Speaker
Well, you just laid out the negotiation agenda, right?
00:18:24
Speaker
And that, of course, relevant, but it's far from sufficient.
00:18:27
Speaker
I mean, Mahmood would say that climate financing is insufficient, inefficient and unfair.
00:18:34
Speaker
And we know it's insufficient.
00:18:35
Speaker
And part of the problem is that we've over focused on the negotiations agenda.
00:18:39
Speaker
like to be blunt the difference between 80 billion and 120 billion it will be will be almost unnoticeable for most emerging markets so it's that's that's not to um try and um mathematically wave away the trust issue around the delivery of 100 billion but it's really a trust issue and and and there's a trust deficit because there's a that promise hasn't been met it's really it's
00:19:03
Speaker
Yeah, it really undermines trust in the whole process.
00:19:06
Speaker
So we're waiting to see the updated plan of how that 100 billion is going to be reached.
00:19:10
Speaker
But we know that the real figure is more like 3 trillion for emerging markets, excluding China.
00:19:16
Speaker
It's based on the Vivid and the Brookings Institute seem to converge around that.
00:19:21
Speaker
level.
00:19:22
Speaker
So one thing which MacMood and I and the presidencies have asked, Nick Stern and Vera Songwe, Vera Songwe was around the UN Economic Commission in Africa until recently, and a group of global economists, is to give us a better picture of the overall landscape in terms of the overall quantum, so that three trillion, but then break it down by multilateral, bilateral, sovereign, domestic savings mobilization.
00:19:45
Speaker
That's an interesting thing that's been talked about a lot more now in Africa and the islands, that this kind of
00:19:52
Speaker
lazy capital sitting around not being used or it's being put into T-bills and treasury bills rather than investment in local infrastructure.
00:20:01
Speaker
So what's the total amount?
00:20:02
Speaker
How does the stack break down?
00:20:05
Speaker
And then also what are some of the debt issues around it?
00:20:08
Speaker
We need to see more catastrophe clauses to have automatic
00:20:15
Speaker
Repayment holidays, particularly when the small vulnerable countries have like a 50 to 200 percent of GDP event.
00:20:23
Speaker
It's kind of insane to expect them to keep paying debt whilst trying to concentrate on rebuilding after a hurricane.
00:20:31
Speaker
Significant extensions in insurance coverage, some good progress being made in parametric insurance rollout in the Caribbean.
00:20:37
Speaker
Relooking at the laws of qualification of ODA for some of those countries that have
00:20:42
Speaker
graduated to middle income, but still very vulnerable compared to the size of their economy.
00:20:46
Speaker
Barbados would be the poster child for that.
00:20:48
Speaker
And then particularly looking at the leverage ratios that we need.
00:20:51
Speaker
So for me, the thing I'd like to see most is I'd like to ban MDBs from talking about their front of pipe deployment measure and only allow them to talk about what they're actually
00:21:01
Speaker
So that's why I use that example of EG, the 500 million public to 10 billion private.
00:21:06
Speaker
That's a pretty good leverage ratio.
00:21:09
Speaker
In emerging markets, the current leverage ratio from public to private is one to 0.19.
00:21:13
Speaker
So we're getting 19 cents for every dollar of public money.
00:21:16
Speaker
19 cents private is rubbish.
00:21:19
Speaker
And it needs to be one to three because we need to go to about 75% private to reach that 3 trillion.
00:21:25
Speaker
So I think we're getting a better sense of the landscape.
00:21:27
Speaker
We're starting to have better conversations around
00:21:30
Speaker
sort of normatively what the changes are that are needed.
00:21:32
Speaker
You've seen me and Motley and others talking in the General Assembly about some of those changes that are needed.
00:21:38
Speaker
But we need more public capital, and whether that's from more special drawing rights or some of the work reviewing the capital adequacy of the MDBs.
00:21:48
Speaker
And we need to leverage it better.
00:21:50
Speaker
And we need to tackle the debt in a more structural way.
00:21:53
Speaker
So it's a pretty big agenda.
00:21:55
Speaker
But I do think the quality of the conversations
00:21:57
Speaker
improving and hopefully we go beyond just what's the successor to the 100 billion, having a more sophisticated overall conversation, which includes much more of the private sector capabilities as well.
00:22:09
Speaker
There are lots of linkages between a lot of different areas.
00:22:12
Speaker
One of the ones that is emerging, Jenny, is between climate change and biodiversity, it's basically being recognised.
00:22:18
Speaker
What role does biodiversity and nature-based solutions have in helping us to get to net zero faster?
00:22:25
Speaker
Yeah, I mean, I was thinking exactly that when we were talking about demand side, because we're also developing our deforestation policy this year alongside our energy policy.
00:22:35
Speaker
And the challenges are completely different because for the deforestation policy, we really need the whole value chain or other critical actors in the value chain and other competitors or other banks to move in the same direction to really send the signal that's needed to tackle deforestation.
00:22:54
Speaker
I mean, it's not new, the concept climate and nature are intrinsically linked.
00:23:01
Speaker
You know, the evidence is absolutely there now and it has been for the last couple of decades.
00:23:07
Speaker
So we will not achieve net zero without serious efforts to protect nature, to restore nature and the ecosystem services, to value the ecosystem services that nature provides.
00:23:21
Speaker
So that's why we're really focused on our net zero line deforestation policy this year.
00:23:27
Speaker
We need to rapidly understand how we can have that value chain impact.
00:23:32
Speaker
And it is a multiplier impact.
00:23:33
Speaker
That's the exciting thing about it, is if we can send the right signals to the value chain by sending a demand signal in terms of the commodity link deforestation that's potentially financed by HSBC and other banks,
00:23:49
Speaker
then that has an impact on the whole value chain.
00:23:53
Speaker
What we need to ensure is that it doesn't result in a shift in trade flows away from emerging economies, who are the biggest producers of commodities and who are the ones that need support to tackle deforestation.
00:24:10
Speaker
So it does need some, it can't just send a demand signal.
00:24:15
Speaker
There needs to be work with government to shore up that producer country regulatory environment and enforcement.
00:24:22
Speaker
What do you think COP27 will be known for and how will it support or pave the way for COP28?
00:24:28
Speaker
30 seconds each.
00:24:30
Speaker
Why don't we start with Nigel?
00:24:32
Speaker
I think it would be known for a focus on resilience and on
00:24:35
Speaker
Some of the innovations needed both public and private, both international and domestic, to mobilise the trillions needed to make the just transition in emerging markets.
00:24:45
Speaker
Thank you.
00:24:45
Speaker
And Jenny?
00:24:46
Speaker
And I think it's a really, when the question was about COP27, looking through to COP28 as well, it's really important that we take that two-year view.
00:24:55
Speaker
And it's got to build confidence in the process and in the commitments that have been made by the public and private sector.
00:25:03
Speaker
and the fact that those are being implemented and delivering impacts on the ground.
00:25:09
Speaker
Wonderful.
00:25:10
Speaker
That's all we have time for.
00:25:12
Speaker
What amazing insights from the ground, from the world of finance, from Nigel and Jenny.
00:25:18
Speaker
Thank you so much for your time.
00:25:33
Speaker
Thank you for joining us at HSBC Global Viewpoint.
00:25:36
Speaker
We hope you enjoyed the discussion.
00:25:38
Speaker
Make sure you're subscribed to stay up to date with new episodes.