First and foremost, ClimateSeed wants to wish you all a Happy New Year!
This past year, ClimateSeed strived to achieve positive climate action and place sustainability at the core of our activities. We are proud to have accompanied our clients in supporting emission reduction projects that have significant positive impacts on natural ecosystems and local communities all around the world.
As 2020 came to an end, we have decided to share with you a 2020 year-end review. Sustainability and the fight against climate change have certainly reached a significant milestone this year. It is therefore important to have a deeper understanding of the main trends and achievements of the year, to acknowledge what steps have been taken in the fight against climate change and which objectives should be set for 2021.
2020: The year of sustainability?
2020 has been a difficult and challenging year, for reasons we all know too well. The pandemic has raised awareness on the importance of the relationship between man and nature and how the post-pandemic economy should be rebuilt to preserve our planet. Maybe the pandemic has acted as a wake-up call, or maybe it was just about time, but the result is that this year, amid lockdowns and measures to stop the virus, an increasing number of actors have committed to fighting climate change. Governments worldwide have committed to carbon neutrality goals and business and financial services have made net-zero pledges, all with one objective: preserve our planet and avoid future crises.
What are the main environmental trends of the year? Here are our top 5:
The European Union has set the goal to achieve a 55% GHG emission reduction by 2030 and to reach carbon neutrality by mid-century as several European countries have already disclosed their strategy to achieve this. Japan, the world's third-largest economy, has also vowed to become carbon neutral with a "fundamental shift" in policy on coal use, and South Korea announced a 2050 net-zero emissions target. China, for its part, has pledged to be ‘carbon-neutral’ by 2060. This is a major challenge for the world’s biggest emitter, but it has spurred further momentum for climate action worldwide. And last but not least, newly elected US President Joe Biden has promised to rejoin the country into the Paris Agreement.
Although many sectors of the economy have suffered from the Covid-crisis, they have maintained their willingness to act for a sustainable future. The number of companies committing to achieving net-zero emissions has doubled during the pandemic. This year, business coalitions for climate action have been created. The Business for Nature call to action was signed by more than 600 companies with revenues of US$ 4.1 trillion.
Investor groups have made a net-zero carbon pledge to tackle the climate crisis. The financial world has taken an important step in the fight against climate change. Some of the world’s largest asset managers, worth more than $9tn, have committed to investing only in companies with net-zero carbon dioxide emissions by 2050. So far 30 investors, mainly from Europe, have pledged to this.
Two of the most polluting sectors, Fashion and Aviation, have taken action. The Fashion Pact, launched last year, has now gained more than 60 signatories from major fashion brands. Several initiatives, ranging from improving waste treatment, fighting plastic pollution, and creating clothes from recycled materials, have been launched by several fashion companies.
Although the Aviation sector has committed to carbon neutrality goals and has launched several carbon offsetting programs, 2020 represents the biggest retrenchment in the history of aviation. Because of this, in the long-term, the sector is likely to experience structural changes that could provide it the opportunity to rebuild itself for a low-carbon future focused on fuel-efficiency programs.
What about the Voluntary Carbon Market?
We've kept a close eye on the voluntary carbon market. While the impacts of Covid-19 on the market are still uncertain, in recent years, the market has experienced exponential growth.
What are some of the trends in the sector?
- A 2020 study has confirmed that the demand for voluntary carbon offsets holds strong and that the market has registered a 6% growth in 2019, lower than the growth registered for 2018, but still confirming the positive market trend. The survey focused on 2019 transactions and identified a near-record volume equivalent to 104 million metric tons of carbon dioxide equivalent either removed or prevented from entering the atmosphere. Average carbon offset prices remained unchanged, but prices for nature-based projects increased by 30%. - The new report by the Science-based Targets initiatives has included carbon offsetting as a tool for companies to reach their sustainability targets and a team from the University of Oxford has released ‘The Oxford Principles for Net Zero Aligned Carbon Offsetting’ — guidelines to ensure transparency in carbon offsetting. - U.N. Special Envoy for Climate Action and the former Bank of England governor, Mark Carney, launched a private-sector task force to scale up the voluntary carbon credit market. The task force, composed of approximately 40 market experts, has summarized all its findings in a report that analyzes market trends and sets principles to build a stronger market in the coming years. The report states that projections for credit retirements in 2020 will go up to 88 MtCO2. Moreover, it underlines that today the voluntary carbon market has a much stronger demand signal through companies setting net-zero goals between 2030 and 2050. - What can we expect in the future? Both the task force and Fitch Rating forecast a significant increase in demand going forward, due to the expansion of climate policies and carbon neutrality commitments from organizations. While demand is growing, supply is still consistently larger. Demand is still falling short to reach the 2050 net-zero objectives. This implies that efforts for businesses must increase in the years to come.
What is our wish for 2021?
Our wish is that recovery efforts from the pandemic will be built on green investments to address climate change and nature loss. According to the World Economic Forum, over half of the global GDP, corresponding to $44 trillion, will be potentially threatened by nature loss. This leads to the conclusion that business as usual practices have no future. We hope that 2020 was just the beginning of a clear and strong decarbonization trajectory. Reaching net-zero by 2050 to avoid the greatest risks of climate change, will require an enormous effort by public and private actors, individuals, and organizations.
ClimateSeed is convinced that everyone has the power to act for nature and can have a positive impact on the environment. We believe that only by accelerating our efforts in the fight against climate change, will the planet flourish, and with it humanity.
We look forward to what 2021 will bring in the fight against climate change!