The climate crisis in figures, Environment News & Top Stories

After the United Nations climate conference known as COP26 in Glasgow, Scotland, we expect to see continued high-level announcements of new electric vehicle adoption targets, plans to phase out electric vehicle adoption. coal-fired energy as well as pioneering environmental, social and governance (ESG) initiatives.

COP26 promises to unlock important information on the role of financial markets, investments and infrastructure development as well as the future adaptations that will be needed in the transition to net zero.

To shed light on the current state of affairs on these varied but very connected themes, Refinitiv has developed a breakdown in figures of cross-cutting issues that were discussed at COP26.

Among our main findings:

  • As the world continues to focus on the topic of sustainable investing, data accuracy, consistency of information and standardization of ESG reporting will be critical for investors.

  • Data shows a trend of reducing global dependence on fossil fuels, but the persistent use of oil and gas raises the question of whether broad climate goals are achievable.

  • A global “green crime” network of poachers, illegal loggers and trash traffickers has created a hugely lucrative industry exploiting natural resources.

  • The data-driven approach of COP26 from Refinitiv includes statistical information on finance, energy, “green” crime and infrastructure.

Finance

Investors are now much less likely to ignore ESG risks or to maintain that they are outside of their fiduciary duties. Our data shows that 43% of compliance and risk professionals say the pandemic has increased the importance of ESG factors for their businesses.

ESG investments have exploded and ESG funds have outperformed non-ESG funds in seven of the past 10 years. Total assets under management in global ESG-linked mutual funds and exchange-traded funds (ETFs) hit a record US $ 4.7 trillion (S $ 6.4 trillion) in the second quarter of this year.

“Green” bonds, which finance products specifically designed to support climate or environmental projects, raised US $ 365 billion in the first three quarters of this year.

Clearly, accurate data is the cornerstone of the ESG challenge. If investors are to assess the climate risk or desirability of a particular asset, they need climate-related data that is comprehensive and presented in a comparable way. They require comprehensive data across all industries and countries, whether it is data for investors or for companies listed on the capital markets.

Energy

Much like the trend of ESG-linked investment vehicles, renewable energy sources have become a topic of great interest to investors and increasingly watched.

The 12-month forward price-to-earnings ratio for global alternative or renewable energy companies is currently 32.4 times current earnings. This compares to a forward P / E ratio of 11.9x for the traditional world oil and gas index.

While the focus is on renewable sources, research shows that industries such as shipping still depend on fossil fuels and the cost of CO2 emissions continues to rise. According to the Refinitiv Carbon Market Research, higher price expectations in key markets make the cost of CO2 a crucial factor in investment decisions.

“Green” crime

The criminal exploitation of natural resources around the world is estimated at US $ 256 billion per year. The UN and Interpol cite wildlife crime as one of the five most lucrative illicit activities in the world.

Here again, data is essential to meet the challenge. The criminal networks behind these environmental crimes often use legal business structures and complex commercial property models to disguise their illegal activities.

Their ability to do so is often aided by lax approaches to due diligence. Refinitiv research shows that 43 percent of third parties are not subject to due diligence checks and 60 percent of respondents do not fully monitor third parties for ongoing risks.

Delegates to COP26 who are serious about finding a solution will be eager to use large datasets and powerful analysis to eradicate green crime.

Infrastructure

The trend towards investing in sustainable infrastructure has the power to create a whole new class of assets and correct many of the root causes of climate change along the way.

The world’s major economies and some of the largest institutional investors are reimagining utilities, transportation networks and city centers as efficient and sustainable resources. This could be the precipice of a sustainability revolution.

According to projects tracked by Refinitiv, in 2020 alone, US $ 272 billion was invested in sustainable infrastructure projects, nearly double the levels seen a decade ago. The most significant growth has come from wind projects, where US $ 55.3 billion was injected last year. Globally, around 35% of all new infrastructure projects announced last year were sustainable, down from just 10% a decade ago.

The stakes are high at COP26 – literally life or death. New research from Refinitive develops the context by analyzing the efforts of each major country to reduce national emissions and resist the effects of climate change.


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