Public-private partnerships and clearly defined policies are essential to achieve the net zero goals


Public-private partnerships and clearly defined government policies for the transition to a greener economy are essential to mitigate the effects of climate change and achieve net zero emissions targets, according to senior executives at the annual Saudi investment forum Arabia.

“Let me give you a glimpse into something amazing that has happened over the past two years,” Khaldoon Al Mubarak, Managing Director and Managing Director of Mubadala Investment Company, told the Fifth Future Investment Initiative on Tuesday. .

“We had a pandemic that started in January 2020 and within 12 months, through public-private partnerships and through small businesses – BioNTech, Moderna, Novovax – [came] a global solution from science to actual vaccine production and delivery. “

“It is remarkable and it is a model,” which shows that greater goals can be achieved through global collaboration, said Mr. Al Mubarak.

The private sector has taken the lead in climate action, but it bears a “disproportionate burden” in driving the change that could bring the world closer to its climate goals, the panelists said.

Participants in the discussion included Larry Fink, CEO of the world’s largest asset manager BlackRock, Blackstone Group Chairman Stephen Schwarzman, Goldman Sachs CEO David Solomon, Banco Santander Group Executive Chairman Ana Botin, Bridgewater Associates founder Ray Dalio and South African mining. tycoon Patrice Motsepe, founder and president of African Rainbow Minerals.

“The climate challenge will require that everyone contribute to their [own] manner. No one is going to solve it on their own, ”Al Mubarak said. “We have to solve it by working together globally as institutions, as governments, as civil society and this is a responsibility we all have to shoulder.”

Environmental, social and corporate governance standards have become a priority as the world emerges from the Covid-19 pandemic that plunged the global economy last year into its worst recession since the 1930s.

Businesses, especially those in the public sector, energy companies, governments and regulators face increased pressure to help rebuild a greener economy with the goal of meeting net zero carbon emissions targets by here 2050.

Multilateral banks such as the International Monetary Fund are calling for more investment to finance the transition. About $ 20 trillion in funding is needed over the next two decades for businesses and countries to become carbon neutral by mid-century, the IMF said this month.

Global companies in the public and private sectors are moving in the right direction. However, the corporate sector alone will not be able to tell the difference, as society as a whole does not move quickly enough towards the goal of carbon neutrality in the absence of “effective government policies”, he said. Mr Fink said.

“The problem is not the SOEs; the problem is how we move society forward. If we only ask SOEs to move forward and not the rest of society… we are not going to achieve climate change, ”he said.

The inability of society to keep pace with the corporate sector and the increasing pressure on business will only create more “polarization”.

“We are currently living with rising energy prices [and] as we sit here, right now, [there is] a high probability of $ 100 [per barrel] oil due to ineffective short-term policies. We are not focusing on long term issues, ”he said.

Policymakers must ask themselves how to help emerging countries – excluding China – which are responsible for 34% of global emissions.

The role of the World Bank and the IMF should also be rethought in how they can help emerging countries progress on climate risk targets, Fink said.

BlackRock is one of the most vocal advocates of considering climate as an investment risk. The company joined fellow asset manager Vanguard Group and 43 others in pledging to reduce net greenhouse gas emissions from their portfolios to zero.

Mr Solomon said it is easier for companies to be held accountable for the decision they make in terms of climate actions. However, politicians are harder to hold accountable.

“In most democracies, politics is a short-term game. And one way or another, we have to find a way for our governments to work with the private sector and find incentives for these partnerships to be longer and more thoughtful, ”he said.

However, it is “complicated”, he said.

World leaders are meeting in Glasgow at the end of this month for the UN Cop26 climate summit to discuss and agree on deeper emission cuts to fight global warming.

Saudi Arabia, the world’s largest oil exporter, is aiming for carbon neutrality by 2060, Crown Prince Mohammed bin Salman of the Saudi Green Initiative (SGI) in Riyadh said on Saturday.

The kingdom became the second Gulf country, after the United Arab Emirates, to unveil a net zero emissions target. Bahrain, one of the Gulf’s smaller producers, also pledged on Sunday to achieve emissions neutrality by 2060.

The climate challenge will require that everyone contribute in their [own] manner. No one is going to solve it on their own. We have to solve it by working together globally as institutions, as governments as civil society and this is a responsibility we all have to shoulder.

Khaldoon Al Mubarak, Managing Director, Mubadala Investment Company

Mr. Al Mubarak said that as an investor, Mubadala, the sovereign investment arm of Abu Dhabi, recognized the climate challenge about 15 years ago and had prioritized it as an investment theme for over of a decade.

“This is an investment theme based on a reality that we had anticipated … our renewable energy platform started in 2006 and we have invested nearly $ 20 billion over the past 20 years in renewable energies. in over 30 countries, ”he said.

“This has turned out to be a healthy investment theme and we have achieved [a] positive rate of return. More importantly, it is a contribution on our part to this solution.

Investors and state-owned companies do not have to choose between profits and climate priorities, Al Mubarak said.

A good rate of return on investment can be achieved through a long-term investment approach, he said.

“I have two words: meaning and sensitivity. I am fortunate to represent an investment institution that has a shareholder capable of enabling… Mubadala to have a long-term vision, to have a patient vision of investments, without compromising returns, ”said Mr. Al Mubarak.

Pressure-driven investment, capital use and divestment decision-making “is not necessarily in the long-term interests of shareholders.”

Updated: October 26, 2021, 13:20

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