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Column: IPCC report shows we need to intensify our efforts

Efforts to reduce our CO2 emissions are insufficient. The financial institutions have a responsibility to facilitate the transition to a more sustainable economy, writes Hans Stegeman.

We have to intensify our efforts to limit climate change as much as possible, writes Hans Stegeman in this column. [Photo: JumpStory]

By Hans Stegeman

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Just eight years after the Paris Agreement, the world’s leading climate scientists agree: we will not limit global warming to 1.5 degrees in the near term.

Since signing the Paris agreement, global greenhouse gas emissions have continued to increase.

Despite considerate effort to reduce emissions, our overall performance on this challenge can only be described as inadequate.

‘Deep, rapid and sustained emissions reduction’

Triodos Bank believes that this recent IPCC report is a call to urgent action; we need to intensify our efforts to limit climate change as much as possible. We need to do what it takes now to realise rapid and sustained global greenhouse gas emissions reduction. This means minimising the use of fossil fuels and halting deforestation, building renewable energy capacity, improving energy efficiency and electrifying energy systems as soon as possible.

Financial sector is driver of change

The financial sector needs to facilitate this transition. As the IPCC report points out, large financing gaps persist both on adaptation and mitigation. This can and should not all come from public finance. Private financial institutions need to redirect financing in order to create a more sustainable economy. In practice, this means ending finance of fossil assets first. They should also set realistic and ambitious targets to reduce the greenhouse gas emissions related to all loans and investments. Triodos Bank has set its ambition to be net-zero for all loans and investments and its operations in 2035 at the latest. We call this our ‘As One To Zero’ ambition.   

‘Reducing emission-intensive consumption’

Equally important is to reduce demand. This requires a change of mindset, lifestyle and our social contract. The IPCC report points out that we need rapid and far-reaching transitions across all sectors and systems to secure a liveable and sustainable future for all. It asserts that we need to prioritise equity, climate justice and inclusion.

Overall, it highlights the need for social renewal. For transitioning to a society that prioritises wellbeing for all within planetary boundaries. This means coming together as a society to separate what’s necessary and what’s not; to establish what is right and what is wrong, taking into account the short and the long term.

Triodos Bank has identified five transitions – food, energy, resources, wellbeing, society – towards which it will steer its activities. These transitions are interlinked and reinforce each other. Together, they can lead rich countries on the road to a post-growth society, which we see as the only way emission reductions can be as deep, rapid and sustained as life on earth demands.

Hans Stegeman studied Economics at Maastricht University and has acquired over twenty years of experience as an economist, working on different fields of economics, long-term forecasting and scenarios, strategy and business models before joining Triodos Investment Management in 2017. Since 2022, he is Chief Economist at Triodos Bank.

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