Sir James Bevan argues net zero transition is set to dramatically accelerate in the wake of the COP26 Climate Summit
The boss of the Environment Agency has declared that coal and oil are “no longer safe bets” for investors, warning that banks that failed to divest from fossil fuels would be left behind by the market.
In a stark address delivered last week to the Association of Foreign Banks, Sir James Bevan noted that the message to come out of the COP26 Climate Summit was that “there was no future in carbon” and that businesses and investors had to “adapt or die”.
He said investors that continued to invest in fossil fuels were exposing themselves to major financial risks.
“Would you really bet against the climate emergency itself, which is driving the actions of politicians and the market?” he said. “Would you bet against the ingenuity of humans, who have a habit of coming up with game-changing solutions to seemingly impossible technological problems? Would you bet against the courts? Or the consumers? Or public opinion? That’s a pretty big coalition to risk your money on.”
Bevan predicted the pace of the net zero transition was going to increase rapidly in the wake of the COP26 Climate Summit, which ended just over a week ago with the agreement of the Glasgow Climate Pact that calls on governments to strengthen their national climate action plans next year and step up efforts to “phase down” unabated coal power plants and end fossil fuel subsidies. The Summit also saw a raft of multilateral and public-private pledges to accelerate clean tech deployment, decarbonise investment portfolios, phase out coal financing, end deforestation, and tackle methane emissions. In addition a small group of states launched the Beyond Oil and Gas Alliance, pledging to end new oil and gas exploration.
Bevan warned the various commitments should send a clear signal to the banking sector. “Throughout history, the most important and disruptive changes have gone through the same cycle,” he said. “First they are unthinkable, then they look impossible. After that they begin to become feasible, and then they start to happen – slowly at first and then suddenly.
“Action on climate which may look politically difficult today could become a massive vote winner after the next devastating firestorm or flood.”
Bevan warned that the finance sector had a crucial role to build on the progress delivered in Glasgow by funding country and company efforts to decarbonise. As such, he urged bankers to not only divest from fossil fuels but ramp up their clean technology investments.
“On its own, COP26 could never put out the planet’s fire,” he said. “But it offers us a path to do so. When historians look back at Glasgow, how they judge it will depend on what we all do now.”