ROME (Thomson Reuters Foundation) - Businesses should seize a $6 trillion opportunity to invest in tackling climate change over the next two decades, the head of an Indian multinational said at Davos on Thursday.
“Climate change is the next century’s biggest financial and business opportunity,” Anand Mahindra, chairman of the Mahindra Group, a $19 billion conglomerate, told the World Economic Forum (WEF), an annual meeting of global business and political leaders held in the Swiss Alps resort of Davos.
Mahindra likened the transformation to when cars were first introduced and the industry that developed around them. Climate change will also bring new appliances, technologies and retrofitting of old ones, he said.
“Why on earth are we talking about this as a compulsion or a burden?” he asked the audience.
The idea that companies face a trade-off between improving the climate and their growth or profits is a “myth”, he added.
“Everything our group of companies has done to try and improve energy (consumption) or to reduce greenhouse gas emissions has given us a return,” he said.
“We have to dispel the idea that there is a trade-off (for business),” said Mahindra, who is co-chair of a climate action summit taking place in California in September.
On Wednesday, Philipp Hildebrand, vice chairman of BlackRock, the world’s biggest asset manager, told the WEF a new generation is ramping up pressure on asset managers to put money into investments with a strong environmental agenda and to push companies to play a bigger role in addressing climate change.
“People are beginning to realize this problem is too big for governments alone to deal with.... Essentially corporations have to become part of this solution,” he said.
“We’re about to see the largest wealth transfer in the history of humanity. You have a new generation of clients... who simply care more about these issues,” he added.
More research is needed to prove there is no negative trade-off from incorporating environmental, societal or governance issues into investments, said Hildebrand, adding longer-term performance could actually be enhanced.
Insurance companies have a vested interest in switching their money away from fossil fuels, Thomas Buberl, CEO of insurance company AXA SA, told Thursday’s discussion on stepping up climate action.
If global temperatures continue to rise, bringing more hazards like hurricanes, droughts and wildfires, insurance companies may not be able to offer cover, he said.
“In my case it’s pretty simple - I have a good return potentially from investing in coal; I have lots of claims (as a result of) all these consequences,” Buberl said.
Investing less in coal “pays out significantly” in cutting the number of claims and in being able to continue providing insurance, he added.
The pace at which the world must switch from fossil fuels requires huge investment in new technologies, said Jay Inslee, governor of Washington state.
“We have to decarbonize the world’s economy at a pace that cannot wait for the great inventions that might otherwise occur over a century,” he said, adding they need to occur “over a decade or so”.
Although technology brings great hope and provides vital tools for cutting emissions, it alone cannot save the world, said former U.S. Vice President Al Gore.
“More important than changing the light bulbs is changing the policies, changing the laws,” he said.
Fossil fuel subsidies total some $5.3 trillion a year, and in many jurisdictions lobbyists for the industry have “gotten lawmakers to put up obstacles to the installation of solar and wind”, Gore said.
“We need to convince every country in the world” to increase their commitments to cut emissions and “to save humanity’s future”, he said.
Reporting by Alex Whiting, additional reporting by Sophie Hares; editing by Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women's rights, trafficking and property rights. Visit news.trust.org/climate