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[Event Recap] [BASIC Event] The Road Does Not End with Paris: A Review of COP 21 and Where We Go Next

Juliana Cusack

Geeta Aiyer and Sue Reid - Photo Courtesy of Laura Devenney
The Road Does Not End with Paris: A Review of COP 21 and Where We Go Next

On Wednesday, January 20, 2016, the Boston Area Sustainable Investment Consortium held a discussion on COP 21 and its implications for the investment community. The event was held at the Unitarian Universalist Association in Boston’s Innovation District. The panelists included Geeta Aiyer, President and Founder of Boston Common Asset Management, and Sue Reid, VP of Climate and Energy Programs at Ceres, who both attended the recent climate talks in Paris.

Aiyer and Reid started the discussion with reflections on the unique aspects of the conference. From particle board stages to the green illumination of the Eiffel Tower, sustainability was fully engrained into every aspect of the event. Representatives from a variety of stakeholders were present for the talks, including heads of public pension funds, members of the Obama Administration, and business leaders from firms like Facebook and Timberland. Given the long journey of international conferences since 1990, a universal agreement amongst 195 nations is a remarkable achievement.

Aiyer recognized that the solution to reducing carbon emissions is multi-faceted, requiring a mix of legal and cultural changes, as well as finance and investment. Part of the solution will come from identifying and scaling new technologies. Eighty percent of energy currently comes from fossil fuels but the challenge of offsetting emissions becomes more manageable when you consider the scale of wasted energy and opportunities for energy efficiency improvements, particularly in the transportation and energy generation sectors. Once these first order issues are solved, more complex issues of agriculture, animal husbandry, and chemical use will have to be addressed. Finally, we will need to take a close look at large carbon emitters that are less obvious, such as in finance.

Reid identified two main considerations for the investment community as the world turns towards a low-carbon, clean-energy economy: 1) the new opportunities created by this shift, and 2) the risk remaining in carbon assets. Carbon asset risk needs to be examined and eradicated for companies with valuations closely tied to resources that need to stay in the ground (such as coal and oil and gas companies) in order for the world to achieve its goal of limiting warming below 2 degrees centigrade. Clean energy has already become much more affordable and yet there is still a significant gap in clean energy penetration levels needed to limit global warming. Although a daunting gap, this presents a massive opportunity for the finance and investment community.

One of the achievements of the agreement, Reid said, was to reduce that mentality of the trade off between the economy and sustainability, particularly given the benefits available to leaders of this transition. Mark Carney, governor of the Bank of England, stressed this point during the discussions, reminding companies and investors that they need to be stress-testing and demonstrating their business strategies that will bring us to carbon neutrality.

There persists some concern that the US, which is still the largest per capita emitter by a factor of two to three times, will hamper progress by preventing consensus and bringing down the lowest common denominator. However, Reid said that the general attitude at the conference was that the world would be moving on with or without the US. 

Through all this, there is certainly room for optimism!  The commitments agreed upon in Paris are to be seen as a floor—as opposed to a ceiling—and they will also be revisited and ratcheted up every 5 years. Both panelists agreed that it’s time for the capital markets to push onwards and play their part in fulfilling the agreement. 

Thanks to Laura Devenney for the photo above of Geeta and Sue, and to Juliana Cusack for recapping the event!