The global economy is showing positive signs that our future is a green one. But even as companies worldwide shift to eco-friendly operations and new technology paves the way for a cleaner environment, current emission levels have rebounded from the dip in 2020, proving we still have work to do.
The goal: Limit global warming to well below 2 degrees Celsius, preferably to 1.5C, compared to pre-industrial levels, as outlined in the Paris Agreement. Canada’s greenhouse gas reduction target is to reduce emissions by at least 40% by 2030 and to net zero by 2050.
HSBC recently held a roundtable with industry leaders to discuss how to reach this global objective. HSBC’s Christian Deseglise, Head of Sustainable Finance and Investments, Global Banking and Markets, underscored that it won’t be easy and will require a fundamental transformation of the global economy.
“2050 seems pretty far away, but 2030 really is tomorrow,” he said. “If we want to meet that target, I think we have a monumental task ahead of us to move the economy onto a net zero emissions trajectory.”
By going green, businesses can work towards the goal of cutting emissions by over 7% each year between 2020 and 2030, equivalent to last year’s pandemic-fueled drop. With more than 125 countries dedicated to net zero by 2050, there’s now a clear commitment to move forward, along with encouraging developments in green technology, sustainable infrastructure and banks like HSBC leading the way.
The pandemic has prompted us to contemplate how to build back better. Currently, about 70% of global emissions come from buildings and infrastructure assets. That means building sustainable and resilient infrastructure is a crucial step in reducing emissions and meeting the United Nations’ sustainable development goals (SDGs).
“Infrastructure plays a really critical role in so many aspects, not only for economic growth and people’s lives, but also SDG and climate change agendas,” said Jason Lu, Head of the Global Infrastructure Facility in Washington, D.C. “It’s the growth engine of many developed and national economies, helps create jobs, and is directly linked to the quality of life for all of us, and critical for building back better and greener.”
Sustainable infrastructure is key, but it does come with a hefty price tag. According to the Organisation for Economic Co-operation and Development (OECD), an annual investment of US$6.9 trillion in infrastructure is needed to meet global development needs through 2030. In order to help fund green infrastructure in developing countries, HSBC has developed a public-private partnership called FAST-Infra alongside the International Finance Corporation (IFC), the OECD, the Global Infrastructure Facility and the Climate Policy Initiative. Recognizing that multilateral development banks can’t go it alone, FAST-Infra aims to raise the flow of private finance to developing world sustainable infrastructure by creating a sustainable infrastructure label and undertaking targeted financial interventions.
The 5G network is a new player in the game, and the backbone for a lot of smart technology. According to the UN, the information and communications technology (ICT) sector could help slash emissions by 20% by 2030i — the equivalent of taking more than 291 million cars off the road in the United Statesii. Many companies are starting to see what 5G has to offer. And 5G stations don’t require nearly as much energy as 4G towers, where half of the electricity consumed goes toward cooling transmission equipmentiii.
The 5G network also enables the use of affordable sensors to examine water safety and levels. This could revolutionize the agriculture sector since farmers currently use outdated irrigation systems that waste water and contribute to climate change. In cities, 5G could also manage traffic so cars spend less time idling on the road. In the workplace, 5G can be a catalyst for greater digitalization, which means less reliance on materials like paper products that can create substantial waste in production, and too often ends up in landfills instead of recycling facilities.
Technology, in fact, could be key to achieving net zero emissions, according to Tyler Hamilton, Director of Cleantech for MaRS Discovery District in Toronto, Ont.
“Technology, in my view, is a big part of the answer. There are three things we need to do — optimize, electrify and decarbonize,” said Hamilton.
Optimization could involve using software and Artificial Intelligence to crunch data and come up with ways to operate businesses and industry more efficiently. Electrification means using electricity instead of fossil fuels for transportation, heating and industrial processes, and decarbonizing is achieved by ensuring that all of that electricity is renewable and clean.
A significant barrier, Hamilton says, is the red tape faced by companies that already have something to offer, including clean commercial products outside of wind and solar, but are being ignored.
“They’re written off as ‘futuristic innovations’ when in fact they’ve already gone through that path to commercialization and have existed for more than a decade,” said Hamilton. “What they need is access to capital, progressive policies, and enabling regulations.”
Natural capital is also one of the best-kept secrets and is right in our own backyards.
Soil, water and trees fight climate change on their own as long as they’re protected. Dr. Yasmina Elshafei, Executive Director of Pollination in London, England, argues there’s a failure to recognize the intrinsic value of preserving and restoring natural infrastructure to fight climate change. Coastal wetlands, forests and oceans are immediately deployable tools that can achieve carbon removal at a much lower cost than technological solutions.
Aside from protecting the environment, natural capital investment is becoming an important asset thematic in its own right, Dr. Elshafei said. Beyond addressing the climate challenge, such investment delivers multiple co-benefits — including improving biodiversity and contributing to humanity at large — by directing capital flows to creating more sustainable livelihoods. Empowering communities in forest-rich countries, protecting fisheries and generating eco-tourism revenue in local communities can help achieve these aims.
“We’re seeing a number of Fortune 500 companies making significant commitments and active pledges towards nature-based investment. I think there is a general acceptance among the global community that this asset class is going to be critical in the path to reaching net zero,” she said.
Major companies worldwide, including Google and Facebook, are throwing their weight behind green infrastructure like solar and wind. As sustainability gains steam, customers have come to expect eco-friendly commitments from business leaders.
HSBC is looking at working with more corporations to take on new eco-friendly projects. The bank is working alongside the IFC and the OECD to create a common definition of green infrastructure that would serve emerging countries and stimulate private investment capital. Alongside green financing options, HSBC’s Fast Track program helps clients assess emerging market risks and confidence to expand business internationally — something that’s essential as the world recovers from the pandemic and we work toward a more sustainable future.
Contact HSBC to find out more about how your business can support a net zero future.