The European Commission has adopted a new EU Strategy on Adaptation to Climate Change, setting out the pathway to prepare for the unavoidable impacts of climate change. While the EU does everything within its power to mitigate climate change, domestically and internationally, we must also get ready to face its unavoidable consequences. From deadly heatwaves and devastating droughts, to decimated forests and coastlines eroded by rising sea levels, climate change is already taking its toll in Europe and worldwide. Building on the 2013 Climate Change Adaptation Strategy, the aim of today's proposals is to shift the focus from understanding the problem to developing solutions, and to move from planning to implementation.
European Green Deal Executive Vice President Frans Timmermans said: “The COVID-19 pandemic has been a stark reminder that insufficient preparation can have dire consequences. There is no vaccine against the climate crisis, but we can still fight it and prepare for its unavoidable effects. The impacts of climate change are already felt both inside and outside the European Union. The new climate adaptation strategy equips us to speed up and deepen preparations. If we get ready today, we can still build a climate-resilient tomorrow.”
Economic losses from more frequent climate-related extreme weather are increasing. In the EU, these losses alone already average over €12 billion per year. Conservative estimates show that exposing today's EU economy to global warming of 3°C above pre-industrial levels would result in an annual loss of at least €170 billion. Climate change affects not only the economy, but also the health and well-being of Europeans, who increasingly suffer from heat waves; the deadliest natural disaster of 2019 worldwide was the European heatwave, with 2500 deaths.
Our action on climate change adaptation must involve all parts of society and all levels of governance, inside and outside the EU. We will work to build a climate resilient society by improving knowledge of climate impacts and adaptation solutions; by stepping up adaptation planning and climate risk assessments; by accelerating adaptation action; and by helping to strengthen climate resilience globally.
Smarter, swifter, and more systemic adaptation
Adaptation actions must be informed by robust data and risk assessment tools that are available to all - from families buying, building and renovating homes to businesses in coastal regions or farmers planning their crops. To achieve this, the strategy proposes actions that push the frontiers of knowledge on adaptation so that we can gather more and better data on climate-related risks and losses, making them available to all. Climate-ADAPT, the European platform for adaptation knowledge, will be enhanced and expanded, and a dedicated health observatory will be added to better track, analyse and prevent health impacts of climate change.
Climate change has impacts at all levels of society and across all sectors of the economy, so adaptation actions must be systemic. The Commission will continue to incorporate climate resilience considerations in all relevant policy fields. It will support the further development and implementation of adaptation strategies and plans with three cross cutting priorities: integrating adaptation into macro-fiscal policy, nature-based solutions for adaptation, and local adaptation action.
Stepping up international action
Our climate change adaptation policies must match our global leadership in climate change mitigation. The Paris Agreement established a global goal on adaptation and highlighted adaptation as a key contributor to sustainable development. The EU will promote sub-national, national and regional approaches to adaptation, with a specific focus on adaptation in Africa and Small Island Developing States. We will increase support for international climate resilience and preparedness through the provision of resources, by prioritizing action and increasing effectiveness, through the scaling up of international finance and through stronger global engagement and exchanges on adaptation. We will also work with international partners to close the gap in international climate finance.
Climate change is happening today, so we have to build a more resilient tomorrow. The world has just concluded the hottest decade on record during which the title for the hottest year was beaten eight times. The frequency and severity of climate and weather extremes is increasing. These extremes range from unprecedented forest fires and heatwaves right above the Arctic Circle to devastating droughts in the Mediterranean region, and from hurricanes ravaging EU outermost regions to forests decimated by unprecedented bark beetle outbreaks in Central and Eastern Europe. Slow onset events, such as desertification, loss of biodiversity, land and ecosystem degradation, ocean acidification or sea level rise are equally destructive over the long term.
The European Commission announced this new, more ambitious EU Strategy on Adaptation to Climate Change in the Communication on the European Green Deal, following a 2018 evaluation of the 2013 Strategy and an open public consultation between May and August 2020. The European Climate Law proposal provides the foundation for increased ambition and policy coherence on adaptation. It integrates the global goal on adaptation in Article 7 of the Paris Agreement and Sustainable Development Goal 13 action into EU law. The proposal commits the EU and Member States to make continuous progress to boost adaptive capacity, strengthen resilience and reduce vulnerability to climate change. The new adaptation strategy will help make this progress a reality.
Big business seeks unified, market-based approaches ahead of climate summit
Corporate executives and investors say they want world leaders at next week’s climate summit to embrace a unified and market-based approach to slashing their carbon emissions, write Ross Kerber and Simon Jessop.
The request reflects the business world’s growing acceptance that the world needs to sharply reduce global greenhouse gas emissions, as well as its fear that doing so too quickly could lead governments to set heavy-handed or fragmented rules that choke international trade and hurt profits.
The United States is hoping to reclaim its leadership in combating climate change when it hosts the 22-23 April Leaders Summit on Climate.
Key to that effort will be pledging to cut US emissions by at least half by 2030, as well as securing agreements from allies to do the same.
“Climate change is a global problem, and what companies are looking to avoid is a fragmented approach where the US, China and the EU each does its own thing, and you wind up with a myriad of different methodologies,” said Tim Adams, chief executive of the Institute of International Finance, a Washington-based trade association.
He said he hopes U.S. President Joe Biden and the 40 other world leaders invited to the virtual summit will move toward adopting common, private-sector solutions to reaching their climate goals, such as setting up new carbon markets, or funding technologies like carbon-capture systems.
Private investors have increasingly been supportive of ambitious climate action, pouring record amounts of cash into funds that pick investments using environmental and social criteria.
That in turn has helped shift the rhetoric of industries that once minimized the risks of climate change.
The American Petroleum Institute, which represents oil companies, for example, said last month it supported steps to reduce emissions such as putting a price on carbon and accelerating the development of carbon capture and other technologies.
API Senior Vice President Frank Macchiarola said that in developing a new U.S. carbon cutting target, the United States should balance environmental goals with maintaining U.S. competitiveness.
“Over the long-term, the world is going to demand more energy, not less, and any target should reflect that reality and account for the significant technological advancements that will be required to accelerate the pace of emissions reductions,” Macchiarola said.
Labor groups like the AFL-CIO, the largest federation of U.S. labor unions, meanwhile, back steps to protect U.S. jobs like taxing goods made in countries that have less onerous emissions regulations.
AFL-CIO spokesman Tim Schlittner said the group hopes the summit will produce “a clear signal that carbon border adjustments are on the table to protect energy-intensive sectors”.
Industry wish lists
Automakers, whose vehicles make up a big chunk of global emissions, are under pressure to phase out petroleum-fueled internal combustion engines. Industry leaders General Motors Co and Volkswagen have already declared ambitious plans to move toward selling only electric vehicles.
But to ease the transition to electric vehicles, US and European automakers say they want subsidies to expand charging infrastructure and encourage sales.
The National Mining Association, the US industry trade group for miners, said it supports carbon capture technology to reduce the industry’s climate footprint. It also wants leaders to understand that lithium, copper and other metals are needed to manufacture electric vehicles.
“We hope that the summit brings new attention to the mineral supply chains that underpin the deployment of advanced energy technologies, such as electric vehicles,” said Ashley Burke, the NMA’s spokeswoman.
The agriculture industry, meanwhile, is looking for market-based programs to help it cut its emissions, which stack up to around 25% of the global total.
Industry giants such as Bayer AG and Cargill Inc have launched programs encouraging farming techniques that keep carbon in the soil.
Biden’s Department of Agriculture is looking to expand such programs, and has suggested creating a “carbon bank” that could pay farmers for carbon capture on their farms.
For their part, money managers and banks want policymakers to help standardize accounting rules for how companies report environmental and other sustainability-related risks, something that could help them avoid laggards on climate change.
“Our industry has an important role to play in supporting companies’ transition to a more sustainable future, but to do so it is vital we have clear and consistent data on the climate-related risks faced by companies,” said Chris Cummings, CEO of the Investment Association in London.
Kerry calls for close EU US co-operation to set ambitious climate goals in Glasgow
President Biden’s Climate Envoy John Kerry arrived in Brussels for the second stop on his visit to Europe, after London. Executive Vice President Timmermans said that he was convinced that the United States and Europe working together: “We can move mountains.”
Kerry said that he was delighted to be meeting the European Commission’s College of Commissioners, reassuring that the US and President Biden were fully committed to address the issue with what he described as “an all of government effort”.
Kerry said that the science is screaming at us and growing every year. While describing the situation as a crisis, he also said that it presented the greatest opportunity that we've had since perhaps the Industrial Revolution, to build back better and to renew ourselves and our economies.
“We have no better partners than our friends here in Europe and the EU,” said Kerry. “It is important for us to align ourselves now, because no one country can resolve this crisis alone. It will take every country and it will be more than governments. It will take civic society of our states, our nations and it will take the private sector. Every single economic analysis makes it clear.
“It is more expensive for our citizens not to respond and do what we need to do than it is to do it. Glasgow is the last best opportunity that we have, that best hope that the world will come together and build on Paris.
“Paris does not alone get the job done. If all of us did what's in Paris, we still see a warming 3.7 degrees or more. And we're not doing all that we set out to do in Paris. So this is the moment for countries, common sense governments people to come together and get the job done. We can do it.”
Show us the plan: Investors push companies to come clean on climate
In the past, shareholder votes on the environment were rare and easily brushed aside. Things could look different in the annual meeting season starting next month, when companies are set to face the most investor resolutions tied to climate change in years, write Simon Jessop, Matthew Green and Ross Kerber.
Those votes are likely to win more support than in previous years from large asset managers seeking clarity on how executives plan to adapt and prosper in a low-carbon world, according to Reuters interviews with more than a dozen activist investors and fund managers.
In the United States, shareholders have filed 79 climate-related resolutions so far, compared with 72 for all of last year and 67 in 2019, according to data compiled by the Sustainable Investments Institute and shared with Reuters. The institute estimated the count could reach 90 this year.
Topics to be put to a vote at annual general meetings (AGMs) include calls for emissions limits, pollution reports and “climate audits” that show the financial impact of climate change on their businesses.
A broad theme is to press corporations across sectors, from oil and transport to food and drink, to detail how they plan to reduce their carbon footprints in coming years, in line with government pledges to cut emissions to net zero by 2050.
“Net-zero targets for 2050 without a credible plan including short-term targets is greenwashing, and shareholders must hold them to account,” said billionaire British hedge fund manager Chris Hohn, who is pushing companies worldwide to hold a recurring shareholder vote on their climate plans.
Many companies say they already provide plenty of information about climate issues. Yet some activists say they see signs more executives are in a dealmaking mood this year.
Royal Dutch Shell said on Feb. 11 it would become the first oil and gas major to offer such a vote, following similar announcements from Spanish airports operator Aena, UK consumer goods company Unilever and U.S. rating agency Moody’s.
While most resolutions are non-binding, they often spur changes with even 30% or more support as executives look to satisfy as many investors as possible.
“The demands for increased disclosure and target-setting are much more pointed than they were in 2020,” said Daniele Vitale, the London-based head of governance for Georgeson, which advises corporations on shareholder views.
While more and more companies are issuing net-zero targets for 2050, in line with goals set out in the 2015 Paris climate accord, few have published interim targets. A study here from sustainability consultancy South Pole showed just 10% of 120 firms it polled, from varied sectors, had done so.
“There’s too much ambiguity and lack of clarity on the exact journey and route that companies are going to take, and how quickly we can actually expect movement,” said Mirza Baig, head of investment stewardship at Aviva Investors.
Data analysis from Swiss bank J Safra Sarasin, shared with Reuters, shows the scale of the collective challenge.
Sarasin studied the emissions of the roughly 1,500 firms in the MSCI World Index, a broad proxy for the world’s listed companies. It calculated that if companies globally did not curb their emissions rate, they would raise global temperatures by more than 3 degrees Celsius by 2050.
That is well short of the Paris accord goal of limiting warming to “well below” 2C, preferably 1.5.
At an industry level, there are large differences, the study found: If every company emitted at the same level as the energy sector, for example, the temperature rise would be 5.8C, with the materials sector - including metals and mining - on course for 5.5C and consumer staples - including food and drink - 4.7C.
The calculations are mostly based on companies’ reported emissions levels in 2019, the latest full year analysed, and cover Scope 1 and 2 emissions - those caused directly by a company, plus the production of the electricity it buys and uses.
Sectors with high carbon emissions are likely to face the most investor pressure for clarity.
In January, for example, ExxonMobil - long an energy industry laggard in setting climate goals - disclosed its Scope 3 emissions, those connected to use of its products.
This prompted the California Public Employees’ Retirement System (Calpers) to withdraw a shareholder resolution seeking the information.
Calpers’ Simiso Nzima, head of corporate governance for the $444 billion pension fund, said he saw 2021 as a promising year for climate concerns, with a higher likelihood of other companies also reaching agreements with activist investors.
“You’re seeing a tailwind in terms of climate change.”
However, Exxon has asked the U.S. Securities and Exchange Commission for permission to skip votes on four other shareholder proposals, three related to climate matters, according to filings to the SEC. They cite reasons such as the company having already “substantially implemented” reforms.
An Exxon spokesman said it had ongoing discussions with its stakeholders, which led to the emissions disclosure. He declined to comment on the requests to skip votes, as did the SEC, which had not yet ruled on Exxon’s requests as of late Tuesday (23 February).
Given the influence of large shareholders, activists are hoping for more from BlackRock, the world’s biggest investor with $8.7 trillion under management, which has promised a tougher approach to climate issues.
Last week, BlackRock called for boards to come up with a climate plan, release emissions data and make robust short-term reduction targets, or risk seeing directors voted down at the AGM.
It backed a resolution at Procter & Gamble’s AGM, unusually held in October, which asked the company to report on efforts to eliminate deforestation in its supply chains, helping it pass with 68% support.
“It’s a crumb but we hope it’s a sign of things to come” from BlackRock, said Kyle Kempf, spokesman for resolution sponsor Green Century Capital Management in Boston.
Asked for more details about its 2021 plans, such as if it might support Hohn’s resolutions, a BlackRock spokesman referred to prior guidance that it would “follow a case-by-case approach in assessing each proposal on its merits”.
Europe’s biggest asset manager, Amundi, said last week it, too, would back more resolutions.
Vanguard, the world’s second-biggest investor with $7.1 trillion under management, seemed less certain, though.
Lisa Harlow, Vanguard’s stewardship leader for Europe, the Middle East and Africa, called it “really difficult to say” whether its support for climate resolutions this year would be higher than its traditional rate of backing one in ten.
Britain’s Hohn, founder of $30 billion hedge fund TCI, aims to establish a regular mechanism to judge climate progress via annual shareholder votes.
In a “Say on Climate” resolution, investors ask a company to provide a detailed net zero plan, including short-term targets, and put it to an annual non-binding vote. If investors aren’t satisfied, they will then be in a stronger position to justify voting down directors, the plan holds.
Early signs suggest the drive is gaining momentum.
Hohn has already filed at least seven resolutions through TCI. The Children’s Investment Fund Foundation, which Hohn founded, is working with campaign groups and asset managers to file more than 100 resolutions over the next two AGM seasons in the United States, Europe, Canada, Japan and Australia.
“Of course, not all companies will support the Say on Climate,” Hohn told pension funds and insurance companies in November. “There will be fights, but we can win the votes.”
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