Jim Yong Kim: Make 2014 the turning point on climate

A year ago, I said at this meeting that we needed a plan for tackling climate change, a plan fit for the challenge that we face. A year later, we’ve seen great leadership on climate from countries and companies, but emissions are still rising and the poor are still suffering.

We don’t have a plan yet and the bits we do have are not equal to the size and challenge.

The UN Secretary-General has called for a leadership summit and we all should be very grateful to him for having done so. This gives us the opportunity to organize our collective leadership.

This is the year to take action on climate change. There are no more excuses. If we fail, our children and grandchildren will ask us why we didn’t act when it was still possible to do so.

We need leaders who are not thinking about short-term returns or election cycles.  We need leaders who are thinking foremost about taking care of the most vulnerable in this generation and the generations ahead.

The good news is that there is action we all can take to turn economies around so they’re investing in what is clean and healthy and there are innovations that will bring future growth, jobs, and competitiveness.

Through policy reforms, we can divest and tax that which we don’t want, the carbon that threatens development gains over the last 20 years.

First things first: Many have called for a price on carbon.  Now, we must act.  Governments must put a price on pollution. Putting a price on carbon through either taxes or market-based instruments are key. Can we be ready by September to set target dates for implementation? We should set performance standards for buildings, cars, appliances, transport systems, and drive efficiency to encourage investment away from high-carbon growth and towards innovation and cleaner, greener growth.

We called for a phase-out of harmful fossil fuel subsidies. Act now. The $1.9 trillion in subsidies can be redirected to support investment in clean growth. This challenges the notion that responding to climate change is not affordable.

Financial regulators need to lead, as well. Sooner rather than later, they must address the systemic risk associated with carbon-intensive activities in their economies, made clear, of course, by price signals. Start now by enforcing disclosure of climate risk and requiring companies and financial institutions to access their exposure to climate-related impacts.

The so-called “long-term investors” must recognize their fiduciary responsibility to future pension holders who will be affected by decisions made today. Corporate leaders should not wait to act until market signals are right and national investment policies are in place.

Be the first mover. Use smart due diligence. Rethink what fiduciary responsibility means in this changing world. It’s simple self-interest. Every company, investor, and bank that screens new and existing investments for climate risk is simply being pragmatic.

So, as a first step, we should aim to double the green bond market and reach $20 billion by the September summit, and at least $50 billion by the time of the Paris meeting.

The leaders here in Davos, both from the private sector and from government, have it in their power to act in substantial ways.  Now is the time to act for future generations before it’s too late.

Author: Jim Yong Kim, President of the World Bank, is participating in the World Economic Forum’s Annual Meeting 2014 in Davos-Klosters, Switzerland.

Image: The sun is seen behind smoke billowing from a chimney of a heating plant in Taiyuan, Shanxi province. REUTERS/Stringer