Members of the banking industry including founding signatories of the Principles for Responsible Banking,
Ladies and Gentlemen
I am pleased to welcome you to the launch of a powerful new commitment towards the realization of development and climate goals, the Principles for Responsible Banking and their implementation Framework. The Principles were developed by UNEP and a core group of 30 banks from around the world, many of which are represented here today. They guide banks as they strive to align themselves with the Sustainable Development Goals and the Paris Agreement on Climate Change.
The presence earlier of the Secretary-General, ahead of the Climate Action Summit, demonstrates the significance of the Principles, and their potential to transform the global economy. We desperately need this transformation to address three main challenges that will hold humanity back from delivering a brighter future for all. And when we do so, we will make wise investments that move us towards an inclusive society.
The first challenge is climate change.
Leading economists call climate change the greatest market failure in human history. If unchecked, climate change could lead to a loss equal to 5-20 percent of global GDP each year. It is already damaging the well-being, economic development, and financial stability of current and future generations. The summer heatwaves many of us experienced drove this point home. But this summer was just a taste of a wider menu of climate impacts, from extreme weather of all kinds, to rising seas. These impacts will hit poorest communities hardest.
But solutions are within our grasp.
Investments in renewable energy, particularly solar, are beginning to edge out fossil fuels. The Global Trends in Renewable Energy Investment report found that investment in renewable energy capacity from 2010 to the end of 2019 is likely to hit US$ 2.6 trillion. In 2017, renewables avoided an estimated 2 billion tonnes of carbon dioxide emissions. Just imagine the impact we could deliver if we shift more investment away from fossil fuels to renewables. We can slow climate change, create sustainable jobs and bring clean, renewable energy to communities across the world.
The second challenge is ecosystem and biodiversity loss.
As we convert land for agriculture, infrastructure and urban expansion, we damage the natural foundations that make prosperity possible. We already use 72 percent of the planet’s ice-free surface to feed, clothe and support ourselves. This has destroyed ecosystems and habitats. Now we face the potential loss of at least one million out of the nearly eight million species on earth. As we lose biodiversity and ecosystems, we lose the food, water, energy, raw materials and climate regulation services they provide. In purely economic terms, the impact is massive. Land degradation cost 10 percent of 2010 GDP, through the loss of biodiversity and ecosystem services and land productivity. In human terms, it is potentially catastrophic.
And here again, solutions are within striking reach.
Backing nature to do its job by investing in nature-based solutions is an economic and business decision based on common sense. We know that we require US$ 800 billion to restore 350 million hectares of degraded landscapes. But such action could generate US$ 9 trillion in ecosystem services by 2030. Societies will gain at least US$ 10 for every US$ 1 invested in restoration. Restoration, together with other nature-based solutions, could also help to solve more than one-third of the climate crisis, making investments here a multiple win.
The third challenge is pollution of the land, air and sea.
Air pollution is the single biggest environmental health risk, causing roughly 7 million deaths annually. These pollutants from transport, industry and agriculture, place a huge economic burden on healthcare systems and lower labor productivity.
And we know what we need to do.
I could again point to renewables, as this is another double win that cuts climate change and improves air quality. And investments in reforming food systems can positively impact all three challenges. A Recent Food and Land Use Coalition report found that investing in reforming food systems would cut pollution. Healthier diets, less waste, more efficiency in food production and sustainable farming techniques would mean a reduction and agro-chemicals and other pollutants associated with our current systems.
The cost? US$ 300-350 billion per year. The return? US$ 5.7 trillion for societies and new business opportunities worth up to US$ 4.5 trillion a year by 2030. Such investments are clearly not philanthropy. They will benefit business, societies and banks themselves.
Ladies and Gentlemen,
We need to change course. And we have to follow with conviction the course of action charted out in the Paris Agreement and Agenda 2030. As the Secretary-General is making clear at the Climate Action Summit, promises must turn into action. Ambition in every area needs to rise. Most pertinent today, this ambition needs to be matched with a step change in the pace and scale of green and sustainable finance. We need trillions of dollars every year to implement the SDGs and the Paris Agreement. We aren’t even close to hitting these levels. To close the investment gap, we need the banking sector. Responsible for more than two-thirds of all financing globally, the sector has a hand on the tiller of the global economy. This is why the Principles and their framework are so important.
130 banks, collectively holding US$ 47 trillion in assets are signed up to the Principles. These Founding Signatories acknowledge that “only in an inclusive society founded on human dignity, equality and the sustainable use of natural resources” can their clients, customers and businesses thrive. The Principles are not merely words. They are supported by a strong implementation framework that sets clear accountabilities. This includes ambitious target setting in areas of greatest sustainable development impact, and transparency through public reporting. We now have the commitment and means to spark a transformation of the entire banking system.
Because we know that banks that are not resilient to climate change will struggle to survive. Because we know that banks that do not respond to the demands of a young and growing population who want their money to work for the planet, will see their client base shrink. And because we know that banks that position themselves ahead of these risks will both drive, and benefit from, the emerging sustainable development economy.
Ladies and Gentlemen,
We should not pretend that the task ahead will be quick and easy. We are talking about system-wide shifts. But UNEP is well-positioned to guide banks, and the wider financial sector, through the transition, with the Principles serving at the heart of our work. I welcome the personal commitment of more than 100 bank CEOs, including 40 or so of you here with us today. I am sure this leadership will continue as the work of redirecting investment to where it can do the most good begins.
We are counting on you to drive real, transformational change. Your clients are counting on you. The planet is counting on you. I look to celebrating many successes with you in the years to come.
Executive Director of the UN Environment Programme
(As prepared for delivery)