COP26 President Alok Sharma on the future of climate action in a fractured world

The climate summit COP26 was seen as a qualified success. Progress was made, but even more is needed.

As the COP27, due to be held in Egypt by the end of the year, draws closer, and in the light of the Russian invasion of Ukraine, COP26 President Alok Sharma spoke with the head of the World Economic Forum's Centre for Nature and Climate, Gim Huay Neo to discuss the significance of public-private collaboration in delivering more radical climate action.

You can hear the whole session on the Ageda Dialogues podcast, watch the session below, and follow the transcript.

Amanda Russo, Head of Media Content, World Economic Forum: Welcome to this special edition of the Agenda Dialogues. I'm Amanda Russo. I'm going be your moderator for the next 30 minutes. We have a lot to cover and a lot of very important topics so we're going to jump right in.

Today, we're speaking about how businesses and governments can deliver on the promise of climate action. COP26 was just five months ago, and we saw a slew of climate commitments and millions funneled into important financing. But then, just one month ago, Russia invaded Ukraine. The war is already a humanitarian disaster. And in addition to the human costs, leaders around the world are warning that the stakes are high when it comes to the next stages of the energy transition.

We're midway to COP27 in Egypt and there's a lot of questions on what to do next, and where to go. The two people I have joining me today are going to help us answer some of these questions. We have Alok Sharma joining us from London, the COP26 president, thank you for joining us, and we have our Managing Director Gim Huay Neo from the Centre for Nature and Climate here at the World Economic Forum.

Alok, I'm going to come to you first. Will the crisis and its impact on energy flows speed up or slow down the energy transition?

Alok Sharma, COP26 President, The Government of the United Kingdom: Amanda firstly just to say thank you to the WEF for having me on. Look, I mean, you know, you're right. The world has changed, for the worse since, the evil and frankly brutal invasion of Ukraine by Putin's regime, and I don't think anyone can be failed to be moved by the the terrible images that we're seeing coming out of that war, every day. And of course the international community stands shoulder to shoulder with the courageous people of Ukraine. You talked about the humanitarian crisis. Absolutely. We have to address that and provide support but, of course, there is also an issue in terms of global energy markets. And that is, again, something that every country is having to grapple with right now.

I've just come this afternoon from Paris. I was at the International Energy Agency ministerial meeting. And of course this was sort of front and central of that discussion. And what I did say at the meeting to colleagues is that clearly, every country is going to have to look to see how they meet that acute need now. Clearly, you know, governments are going to have to make sure that lights stay on, that people's homes are heated, that businesses are able to operate. But I also made the point that, you know, ahead of COP26 we managed to get 90% of the global economy committed to net zero, and in fact, some of those commitments came at COP as well. So as countries make those decisions in terms of energy going forward, they also need to keep the medium- and long-term view in sight and make sure that they are staying committed to the net zero commitments that they have made.

And you know, clearly we are seeing the benefits of having homegrown renewables, homegrown clean energy right now. So in the UK, for instance, we've gone from 40% of electricity coming from coal back in 2012 to a few percentage points now. And certainly I can see that we will see an acceleration in renewables, we will see an acceleration in clean energy as well. And I think it's worth pointing out that when this takes place, it is, of course, good for the environment, but it also has a big economic benefit in terms of creating jobs as well. So yes, we will see I'm quite sure an accelerated push on renewables. And at the end of the day, we will end up I hope, with not just an environmental but an economic dividend as well.

Amanda Russo: Thank you Alok, and Gim Huay way, over to you. Alok talked about an acceleration. What are your thoughts on some of the next steps to the energy transition?

Gim Huay Neo, Managing Director, Centre for Nature and Climate, World Economic Forum: So first, my heart goes out to all those who have been impacted by the situation, the current crisis, that we're confronted with. It is a humanitarian crisis and we have to support all multilateral efforts to help the people on the ground. At the same time we also want to reduce collateral damage from from the crisis on energy. Agree with Alok, we need to see how we can step up on the transition towards renewable sources of energy and continue to push on to address climate challenge.

Amanda Russo: And 'stepping up' was a big part of what we saw back in November at COP26. Alok: obviously this is a big part of your existence, probably for the past many years and I'm sure, you know, with the conclusion of the Glasgow Climate Pact being signed on and the 1.5 C warming target within reach. We know there is a lot of involvement from the public and private sector. But what I'd like to ask you is, for you, what was the role of businesses and in how did businesses contribute to that Glasgow Climate Pact?

Alok Sharma: The Glasgow Climate Pact, I do think it was a historic achievement. I mean, even in a pretty fractured world last year, it's obviously got worse this year, but even in a pretty fractured world last year we managed to get consensus with almost 200 countries signing up to a really strong set of commitments. The issue now, of course, is to push forward and make sure those commitments turn into delivery and action.

But I do think COP26 in Glasgow was one of the first COPs where there was a big focus on business. We had a lot of the business community coming together. And I think the reason for this is because we have got to that inflection point where governments, businesses, civil society effectively are singing from the same hymn sheet. They understand why it's important that you need to take care of the climate and the environment at the same time as you're championing growth and that's why green growth is a big, big trend. Net Zero is a big, big trend right now. And if you look at some of the commitments that the businesses made, we had, we were running campaigns on clean energy, we were running campaigns on stopping deforestation. We were running campaigns on zero emission vehicles. And in all those areas we had significant signups from from from business.

So we had 54 businesses and investors, big businesses and investors, car manufacturers, signing up to the Glasgow Declaration on Zero Emission Cars and Vans. And basically what they were signing up to was ending the sale of ICE vehicles in 2035 in the big leading markets, and 2040 in other markets.

We had commitments made by companies in terms of addressing the issue of deforestation. And we also had a significant number of big financial institutions signing up to the Powering Past Coal Alliance. But I think one of the biggest announcements from business was the Glasgow Financial Alliance for Net Zero - so $130 trillion of assets signing up to go to net zero by 2050. I mean, that is absolutely huge. I think that will grow. And I think that is the the kind of the direction of travel.

And so I do think business played a big, big role in terms of the momentum at COP. And you know, last year I visited almost 40 countries. I spent a lot of time talking to governments, but also to businesses. And I can tell you that there are countries across the world where business is leading government on this clean growth agenda. And that's something that we need to see happening more and more because ultimately, it is going to require the real economy to help deliver on the commitments that were made in Glasgow.

Amanda Russo: And I think delivering on these commitments and in making them is obviously something that continues to make headline news and it's very encouraging to see this happening. But I think when we talk to friends and family who may not be in these industries, may not be in government, they think, Wow, 2050: That's really far. That seems like a long time in the future. So Gim Huay, coming to you, what do you think needs to be done to deliver a meaningful decarbonisation this decade, because you have to lay the foundation now for 2050. And I think there's a lot of activities that maybe people just don't know is are currently happening.

Gim Huay Neo: And I would agree that the first steps have been made. And it's an important one, right, the long-term commitment, right? And really now it's translating ambition to action. But before I get into the detail, I do want to congratulate Alok and his team because I think Glasgow did very successfully mobilise the corporate and business, finance industries, to engage governments, to push for bolder commitments. They themselves are also organising efforts bottom-up to drive towards net zero. From an optimist's point of view, I would say that right now the glass is 20% full - lots more to do. And really is to map out action plans. Reduce: how do we continue to cut emissions? Replace: how do we continue to invest into new sources of energy, use new technologies innovations, to support energy transition, but also to restore, conserve carbon sinks in nature, both on land and water? Every company, every industry group, governments, will need to map out their own action, deliverables. And the more clarity they can have on the immediate actions to be taken, I think, the faster they can get to where they need to be 10, 15, 30 years from now.

Amanda Russo: And I know one of the things that the forum did was the First Movers Coalition and that was all about creating the market demands now to create the investment now so that the technologies can be developed so that way you can use test them and then use them. It's not an overnight thing. So it's it's definitely a very impressive thing that was mobilised for COP26.

You touched a little bit about the finance and you've come to the Forum from a previous career in finance. So staying with you, tell us what do you think are some of the key actions within the finance world that need to happen this year? How do we protect the climate and the communities that are most vulnerable to some of the changes that are happening because of climate change?

Gim Huay Neo: ESG is quite well understood among financial players - and ESG stands for environmental, social and governance issues - is quite well integrated into operations of financial players, but it's still more regarded as a compliance area. The question is whether or not we can get the financial industries to also start looking at investing into ESG opportunities. So they need to find that sweet spot and ideally grow it where people planet and profit can jointly prosper. These opportunities exist, but we need to put some spotlight on it and continue to push for more for growth in this area.

The second thing that I want to highlight is really the notion of a 'green premium'. CEOs have told us that today that you don't really command a significant price premium for green goods and services. And the analogy that I would draw is for tech companies, they do command a premium when they're tech enabled. Can we actually do the same for companies that are actually going green or contributing significantly to the climate transition. You think about carbon pricing, the World Bank and IPCC have spoken about how you need at least carbon price to be $80 and above for us to get to a 2 degree, 1.5 degree pathway. So to a large extent we are still not fully pricing in the cost of carbon emissions. And I think one of the things we need to do collectively is think about how we can price in and provide a premium for green. The Forum is quite well known for its Global Risks Report. Every year we published a report, and every year the same three risks are flagged: climate change, biodiversity loss/ecosystem collapse and extreme weather events. These have been flagged as top risks among business, government leaders. The question is, are we actually pricing in well the risks in each of these areas? Because if we are, then really companies who are best able to mitigate the risk should become the winners of tomorrow - business winners of tomorrow

Amanda Russo: Alok, you greatly increased the amount of climate finance going to developed countries. However, you know, there's still been reports that there is this gap in the financing required for developing and low income countries, that they need to be able to balance economic growth with the transition to net zero. So what's the role of the private sector in helping to close this gap?

Alok Sharma: If I may just go back very briefly to an earlier really important point you made which is that we talk about net zero by the middle of the century, by 2050. That is some way off. But of course, what we have also got is commitments from countries in terms of how they will cut their emissions by 2030. And in the UK, we have a very ambitious plan to cut emissions by by 68% by 2030 - our national determined contribution.

And one of the things that all countries agreed to do was to look again at their 2030 emission reduction targets and come back by the end of this year, if necessary, to see that those are aligned with the Paris temperature goals. You're talking about 2050, but actually what matters is what you do by 2030 and 2035 and moving forward so that is something that we of course this year are pushing forward countries to come forward with more ambition.

On the point about finance, you're obviously right, there are lots of commitments that are made by governments, but I think we have to understand that, ultimately, a lot of that is going to require finance to deliver it. And yes, we got commitments in Glasgow - ahead of Glasgow we set out a climate finance delivery plan, which is basically showing how developed countries collectively will get to that $100 billion a year goal that was set a long time ago, was due to be delivered by 2020. I think we accept that it's unlikely to be delivered in 2020. I mean, that report will be produced by the OECD so we will see where we come out. But what we did manage to do was to get commitments which show that - and I think with some some credibility, actually - that over the years 2021-2025 around half a trillion will be mobilised from developed countries to support developing nations.

And the other thing that we agreed at COP is that developed countries will double the amount of money they put into adaptation by 2025. And that is a particularly acute issue for many countries which are on the frontline of climate change but actually are not responsible for creating any meaningful emissions at all.

But this is where the private sector is going to be so important. So you know, one of the things that we also announced at COP26 was a just energy transition partnership for South Africa. $8.5 billion initially to support South Africa, support Eskom with the move away from coal towards clean energy. And last week I co-chaired a meeting with our German ministerial colleague on bringing together the G7, bringing together the multilateral development banks, bringing together the private sector, to see how we might be able to support collectively other countries as well, developing nations, to make a clean energy transition.

So, you know, the reality is that none of this is going to be possible until and unless we're able to deploy private money and that's what we are looking to do. And actually, the Glasgow Financial Alliance for Net Zero has a strand of work where they're doing precisely that, looking to see how all these trillions that have been committed to net zero by 2050, how do you mobilise that money into developing countries. And I do think, actually, the MDBs, the multinational development banks, have a key role to play here as well, looking, for instance, to establish first loss capabilities behind which the private sector can then come in and invest as well. So there's a lot of work going on. I hope by the time we get to Sharm el Sheikh we can show some more country deals in the same way that we had for South Africa. But there's a lot of hard work ahead and ultimately to deliver on all of this it does require finance.

Amanda Russo: And let's let's turn to some of that hard work ahead. You know, COP27 - we're about halfway there. I think a lot of questions that have come up around leadership, the bold leadership that's needed from public and private sector to really move things forward. And we're seeing a lot of this. People are calling and urging their leaders to say, hey, we're behind you, we're ready to go. Tell us what to do.

So Alok, you're the president of the COP - what's your advice to CEOs, to heads of state, heads of NGOs? Are there specific qualities for climate leaders that we need in today's world?

Alok Sharma: You mentioned Egypt and of course they have the presidency for COP27 in Sharm el Sheikh is, as you said, a number of months away now. We're working closely with our Egyptian partners on this agenda because obviously a lot of what we got over the line in Glasgow then has to be delivered at COP27 but then also beyond that, there's a whole range of work programmes that are taking place. And you know, that work is vital. Clearly every COP is a stepping stone for the next COP. So we very much hope that we will see progress in Sharm el Sheikh.

Look, I mean, I always hesitate from telling people how they ought to lead. Let me give you my own own experience from COP26, which is that this was the first COP that I had ever been to. I'm not, at least historically, a sort of climate warrior. My own background is banking. I was our business and energy minister when I took on this role full time.

The one thing that I felt was incredibly important as part of this process was to build consensus. And that's why you know, my team engage with countries all around the world. That's why, for me, it was so important to visit as many countries as possible last year. As I said, you know, I visited almost 40 countries over a nine month period. And it was about listening because I think there are countries which are in different positions here. There are those developed nations, there are those that are developing nations which want to grow. And one of the recognitions I think, that we have to have is that you cannot say to a developing country that, I'm sorry, you must curb your roof, because that is somehow going to keep emissions down. I think the answer is to support countries with green growth.

I mean, if I give you a statistic from the UK, over the last 30 years, we've managed to grow our economy, our GDP, by around 80% and yet we've also cut emissions by 40%. So I think supporting countries is going to be really vitally important.

And, you know, as I said, from from a leadership point of view, it is about listening and building consensus that as a COP presidency, that's something that we sought to do. And I think you know, those who watched COP26 will have seen that the final few hours were actually pretty tense. And the reason that we were able to get this historic deal over the line is because we had collectively with other countries built the trust over the last two years.

And just in terms of businesses, what I would say is that, you know, please walk the walk - you're making commitments, make sure you deliver on them. Work with your suppliers, and actually give the message to governments around the world that business is willing to lead. And frankly, if business is saying that to governments you're going to get much more progress with governments also then deciding that business is behind them in this green growth agenda.

Amanda Russo: I think, you know, businesses saying 'well, it is what it is,' it's not going to fly anymore. I think people are actually going to start saying, Okay, well let's go we know going green is good for business. And we know that zebras can change their spots. People who said one thing one day have decided, we're all in. We realised this is good for business, we can move forward. And it's good for our partners and members and everything. So, Gim Huay, I know you've addressed climate and sustainability in a number of angles throughout your career. What's your advice to some leaders out there? Maybe there are people in the tech sphere or in crypto or in traditional business or in NGOs? What would be some of your advice to them for the next stages?

Gim Huay Neo: I think first we have to be optimistic. We have to dare to dream of a better future for ourselves. You know, I was speaking to some scientists from the poles, working in the North and South Pole is difficult for them, and they speak about eco- anxiousness.

And I think this is also quite pervasive among corporate executives, public sector leaders, right, especially those dealing with climate sustainability issues. The challenge is immense, is highly complex, but I think in situations such as this, we also need to maintain a very healthy state of mind. Dare to dream so that we are in a good position to deal with the issues - and to take it a step at a time, in a good direction. We want to take care of the environment. But this transition path is a journey. Right? We also need to take care of lives, livelihoods, jobs at the same time, right? So there are many things that we're trying to solve, but we just need to be directionally moving and ideally accelerating as we move.

The second thing that I would highlight is that I think this is also a moment to harness innovation. I mean, the human being has a huge capacity to innovate, especially in times of critical challenges. Within the Forum, we've actually launched an open source platform called UpLink that actually allows innovators - we crowdsource ideas of innovators. From solving problems of plastic waste to reforestation efforts. In fact, just yesterday, we announced the winners of in India where we launched a 'trillion tree challenge'.

And the innovations came in all form, from simple ideas, to recycling agricultural waste into packaging material, to scientific ones, where you can actually use fungi to bind the roots of plants to enhance plant nutrient intake, which is also a good form of carbon storage.

So what we really want to do is launch a bit of an eco-preneur revolution. Use that energy to want to make things happen into something very positive for ourselves.

The last thing is that I think moments like this we also need to continue to build partnerships. It is a global challenge. None of us can do it alone, and we are much stronger together. We have convened various communities highly committed to climate action, the Young Global Leaders, CEO climate leader champions, friends of nature, Friends of Ocean Action, so and so forth. And right now we are also starting to look at how we can engage the region's - regional stakeholders and partners who would actually be closer to the ground and they can help drive execution and success stories.

And the other area is also how we can actually continue to convene closed-door conversations where we can talk about difficult issues and address them on a sectoral basis. One of the most recent dialogues we have launched is around the ocean, Ocean 100 Dialogues, to create spaces for companies engaged in the maritime shipping industries to discuss and work together to build a future together.

Amanda Russo: I'd like to thank both of my guests. It's been a pleasure, and we hope that you've enjoyed this special edition of our Agenda Dialogue series.

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