Category: GLOBAL QUESTIONS

(by Stefania Del Monte)

Marta Simonetti is an experienced green finance director based in London. She worked in the City of London, initially in marketing and then in development and transition banking for the European Bank for Reconstruction and Development. In 2017 she set up her consultancy, Globalfields Ltd, which specializes in green finance and sustainable leadership.

From August 2017 to date she has carried out several assignments at senior level for the Green Climate Fund, WWF-US, GIZ, IPC GmbH, Absolute Energy Capital, as well as for private equity companies and governments. She is now focusing on the green transformation of financial markets, working with governments, financial institutions and the consultancy sector in Europe, Africa, Central Asia and south-east Asia.

In her work thus far she has been leading bilateral and multilateral structuring and negotiations in climate and conservation finance, including with the Green Climate Fund, the Global Environment Facility, the NAMA Facility, the German bilateral cooperation agency (GIZ) and multilateral banks, as well as for private companies. Her main skills are in fund management (legal and institutional structuring), blended finance structuring (mixed participation equity and loans; revolving funds; guarantee funds), resource mobilization, programme structuring in climate and environmental finance. She also offers pro-bono work for the delivery of presentations and leadership training programmes specific in the areas of green finance, climate change and environmental degradation, in particular for schools and in careers events at universities in London.

We have met her to try and get a better understanding of this very complex matter.

Marta, your academic and professional experience in the climate and environment field is impressive but we would like to start with a very basic question. We often hear the expressions global warming and climate change. What exactly are they and what’s causing them to happen?

Many thanks for this question, which is not that simple at all! Climate science is an important aspect of our work in green finance as it gives us the evidence of the anthropogenic factors (i.e. the man-made role) in temperature warming vis-à-vis normal patterns of change. It reinforces the fact that we can make a concrete impact in our work with clients.

Specifically, global warming refers to the long-term rising of the average temperatures of Earth’s climate system observed since the pre-industrial period (i.e. the period between 1850 and 1900) due to human activities, primarily fossil fuel burning, rapid urbanization and loss of ecosystems. With time, those have increased heat-trapping greenhouse gas levels in the Earth’s atmosphere.

When we look at historical temperature changes, we see a succession of warm patterns followed by ice ages over the earth’s geological history. Thanks to the analysis of Antarctic ice-cores carbon dioxide (CO₂) concentration alongside the study of temperature changes, we know that warm periods, with some exceptions, are periods of high atmospheric CO₂, and cold periods, geologically, have been periods of low atmospheric CO₂.

After the industrial revolution we see a 40 per cent rise in CO₂ atmospheric concentrations during the 20th and 21st centuries. When we look at temperatures between 1880 and now, the ten warmest years ever recorded are within the last 17 years. The hottest temperatures ever recorded were in 2016, 2019, and 2015. There is a lot of convergence on these data among major research organization, including NASA, the Hadley Centre for Climate Science, British Antarctic Survey and the Oceanic National Oceanic and Atmospheric Administration.

(data from ossfoundation.org)

Because of this pattern change in temperatures and CO₂ concentrations, we are also experiencing new weather patterns that have remained in place for an extended period of time and cannot any longer be considered as isolated occurrences. This change in the Earth’s climate system is climate change. For example, we are now experiencing an increasing number of extreme weather events, such as violent storms, heavy or irregular precipitation patterns, unprecedented floodings, more frequent and longer-lasting heatwaves, droughts.

In 2020, and with all the research available on the subject, we are still faced with a large number of deniers. How is that possible? Do we have to believe Greta Thunberg or Donald Trump?

I find Greta’s message very powerful because it is really seeking to achieve what we (the older generation) haven’t done fast enough: i.e. bringing about systemic change across all sectors. A crisis such as that we are witnessing now is indeed unprecedented. Think about the bush fires in Australia, the snow-free Christmas day in Moscow, or the current above-average temperatures in England followed by three weekends of storms and torrential rains. Those occurrences used to be abnormal, rare events. Now it is the new normal. Greta would say: Your house is on fire. And rightly so, because we cannot any longer think that those are remote problems that will not affect us. Yet…every crisis brings fundamental questioning, and the way we answer those questions, the motivations we bring behind our answers are the real catalysts for change. I think we are now at the right juncture to substantially speed up climate and environmental action. Our awareness and knowledge of the issue have increased, because the problem is so in our face that we cannot turn away from it.

Climate deniers thrive on instilling doubt and misinformation. We need to remain very aware that the most prominent deniers out there receive significant financial backing from (predominantly) the oil and coal industries, and then also from farming and heavy industries. What I find dangerous in this rhetoric is their effort to disenfranchise and disengage people from the actual conversation. If we are not responsible for climate change, then it follows that we shouldn’t worry so much about what we do because nothing we do actually matters. This is an abdication of responsibility! This is an abdication of our true human nature and our ability to bring change and meaning, in our own lives, as well as for the environments and communities we live in.

The real conversation has another focus. We have the technology to move away from fossil fuels. This is happening faster in some countries and not so fast in others. In a way we can say that it is important to remain mindful of the complex socio-economic transitions that are needed to decrease reliance on coal, oil and gas, as those have a price, expressed in the affordability of clean energy. Yet this transition needs to happen, globally. At the moment, while technology costs are coming down, we still have entry barriers, for example in mismatches between policies on the one hand, and regulation on the other; or political uncertainties which then translate in higher insurance costs or may act as deterrent to investment.

We have two major paradoxes here. Short-termism is now pervasive, in politics and in business. For many politicians it is impossible to think past the next election. This jeopardizes the ability to accept short-term costs for longer-term gains. In business, we want to see quick returns on investments and short pay-back times. When we work in climate action or in sustainability, the work is fundamentally long-term. We seek long-lasting impacts.

The second paradox is that while we seek to reduce emissions through clean energy generation and resource efficiency practices, we have rapidly become a more electrified, digitalized society. Think about how many tasks we now do digitally that were previously done without electricity: paying bills, writing letters, studying, billboards. Who goes now to the post office to pay, say, the water bills? Or when was the last time we sent a friend an actual letter written by hand, using pen and paper? While we may still have books, online content is now so efficient that it can really save us time and energy. And what about money? Here in London, where I live, there are shops that do not accept cash any longer. Now we have smart houses, big data, machine learning, predictive technologies. This is all very useful. It all needs electricity. So, as the population grows, any efficiency gain in carbon mitigation, water efficiency, or resource efficiency that we may achieve through new technology is eroded by the growing rate of consumption of that resource. This is the Jevons paradox, very much used in environmental economics. Before we start thinking though that any efficiency improvements in climate action is futile, let’s add another perspective here: i.e. the growing role of environmental conservation and stewardship of the planet. This is why now more than ever we need to find and implement applicable solutions.

So, when I look at Greta I really see progressive politics fighting against regressive government. In Greta I see the spark for systemic change rather than clinging to the status quo. For our future, the future of our children and humankind, for the health and preservation of the earth systems, we need to choose climate action!

It is too late to prevent climate change?

Climate change is already happening. What we can do now is to make sure that we decrease emissions, and fast. GHG emissions in fact increased in 2017 and 2018, and stabilized in 2019, according to the International Energy Agency. An important concept here is the planetary boundaries of the earth systems. In some instances, we have made useful progress, for example in the reduction of chlorofluorocarbons to slow down stratospheric ozone depletion thanks to the Montreal protocol and more recently the Kigali Amendment.

But in other areas – namely climate change and biosphere integrity – we may have already gone beyond the boundary. What does this mean? That we are fast approaching a tipping point, beyond which certain changes may become irreversible, such as loss of ice cover in polar regions, with subsequent sea level rises; or loss of ecosystems. Some people may find the extinction of some species irrelevant, or may be unmoved by an emergency thousands of miles away from home. Those events, though, are neither unrelated nor irrelevant, because ecosystems are interconnected, planetary boundaries are interconnected and ultimately, we are also connected (to ourselves, to others, to the contexts we live in). Do you remember John Donne’s poem ‘No man is an island entire of itself…’? The balance is in humankind’s approach to become aware that we are all part of a whole system, and that this interconnection is not a new concept or new-age mumbo-jumbo. It is real.

What do you think are the most important priorities, in order to tackle the climate crisis?

There are four key areas of priority where I believe we can bring substantial changes and impacts.

• Financial support. For many countries, there is still a need to bridge the gap between the technical and impact potential of a project, and its commercial viability. This is where I see still a steady role for public interventions given as blended finance in the form of concessional lending, guarantee instruments and subordinated positions in financial instruments (e.g. first loss and tiered funds). We definitely need a little bit more risk-taking in order to bring new technologies on the market, which can be achieved through concessional equity in incubators and accelerators funds, as well as for venture capital. Supporting the supply of viable projects can strengthen the arguments for the business case of investing in green and SDG-linked products, which is paramount to speed up divestment away from fossil fuels.
• Technology solutions. There are two ways to look at this: a solution as a new product, design or process (e.g. gravitational technologies for energy storage); and as a system change, i.e. green connectivity, circular economy and cradle-to-grave solutions, ‘green-digital’ urban designs and urban adaptation practices. To name a few…
• Nature-based solutions. This would include conservation efforts, resource preservation and management, re-building of ecosystem. In this area we have solutions at hand, for example in carbon sequestration through reforestation and afforestation practices. Those solutions need to be implemented at a faster pace that the on-going destructions of those same ecosystem, which is very challenging.
• Applicable awareness. I hear too often people feeling disempowered: how can one person make a difference? Well, let’s bring awareness to this issue and see what we can do, as individual, as part of a community, and in the bigger political arena, then we are not anymore acting as one but as humankind. As we prepare for next Conference of the Parties (COP26), co-organized by the UK and Italy and taking place in Glasgow in November 2020, we can take the opportunity to learn more about what’s happening and empower ourselves to bring change.

For example, what are some key changes we can bring into our lives?

I would like to give some suggestions… Switch energy supplier to full renewable energy; reduce meat consumption; join a vegan / vegetarian group for inspiration and recipes; reduce food waste; seek bulk or unpacked shops where you can use and reuse your own containers; increase energy efficiency by, for instance, switching all lights off, as well as through efficient lighting, windows and walls; join a clothes swapping group or sales apps; use sharing services rather than owning a product (e.g. car sharing); vote with your wallet by deliberately choosing which product and company you want to support and which you don’t; participate in tree-planting exercises and other sustainability activities organized by your council; use public transport to move around; vote for those candidates who have a clear pro-climate and sustainability agenda.

How can your expertise make a difference?

At Globalfields we look at climate change and sustainability practices in businesses from a variety of angles. We are interested in the interconnectedness of the issues and therefore we are able to offer holistic approaches. As I was mentioning earlier on, clean energy generation and efficiency gains cannot be taken in isolation from conservation efforts and stewardship of the planet. We need to think about energy and resource efficiency solutions alongside their wider impacts. We need to align corporate efforts with the sustainable development goals and with international agreements such as the Paris Agreement.

Globalfields was incorporated almost two years ago, and in this relatively brief time we have worked very closely with a number of governments, public and private-sector institutions to create processes or policies to implement green finance practices.

In particular, our work includes supporting organizations in drafting green finance strategies and roadmaps for their implementation; in designing framework for a company’s alignment with the SDGs; supporting the work around frameworks for green loans and SDG loan certifications; advising on financial instruments in green finance, with specific use of concessional and blended products for developing countries; fund-raising and structuring of funds.

More recently we have also worked on green finance training and made our first investment in small-scale hydropower. Two additional investments are under consideration as we speak.

Most of our work is targeted at corporate level, but we have also designed frameworks for coaching for transformational ‘green’ leadership, delivered individually or in small groups. This is where we aim to empower people to not only understanding the subject matter but also to design the most appropriate pathways for them to become transformational leaders in their organization. Working at corporate and individual levels is in my opinion a necessary undertaking in order to bridge the gap between science, policy and action.

Cover image: Marta Simonetti