Accounting for Climate Change

LONDON – This year’s United Nations Climate Change Conference (COP26) in Glasgow has brought a marked shift in focus from the responsibilities of governments to the power of the private sector. If national governments cannot find a way to reconcile their interests and commit to collective action, can the private sector pick up the slack?

This is not merely a question of how much difference individual or coordinated emissions reductions by firms would make, though the answer is probably significant. Rather, it is a question about the potential of the market. Can it be harnessed to deliver the crucial public good of rapid and large-scale emissions reductions?

Lack of financial capital is unlikely to be a problem. Mark Carney, the UN Special Envoy for Climate Action and Finance, made a splash at the meeting by announcing a commitment of $130 trillion toward the goal of reaching net-zero greenhouse-gas emissions. This eye-watering sum is to be made available by the Glasgow Financial Alliance for Net Zero (GFANZ), a coalition led by Carney that includes some 450 financial institutions accounting for 40% of the world’s assets.