Open Letter to G20 Rome: A Matter of Trust – Climate Finance

Did you follow the G7 in Cornwall like me, hoping to hear commitments on Climate Finance? Patricia Espinosa, UN Climate Chief said afterwards, “I cannot say that there was really any breakthrough” and the promised $100bn was “absolutely crucial” for the success of the talks. Alok Sharma, UK COP President said reaching the annual climate funds target was “a matter of trust”, wrote Leslie Hook (Financial Times, 19 June 2021).

As momentum builds towards the crucial October Biodiversity COP15 in Kunming, the G20 in Rome and COP26 in Glasgow, what if the recent G7 gathering had followed the example of the 95- year- old Queen Elizabeth II, apparently so full of energy, who went down to the Eden Project in Cornwall, and ‘trundled back on the train in the middle of the night’, according to Valentine Low,  (The Times, 16 June 2021).  

Innovations & Bitcoin Distractions

Quite apart from the alarm at miners’ increasing country-sized footprints, adverts for cryptocurrencies like bitcoin can be found on the sides of buses and are now hot news again. Second thoughts from Elon Musk, People Bank of China and ECB saying they are not real currencies after the BoE warned that ‘cryptos’ have no intrinsic value (unlike gold?) so “buy them only if you’re prepared to lose all your money”. Meanwhile, the IRS and some tax authorities are clamping down with new reporting. The US Fed and other central banks are working on digital versions of their own currencies, including the HM Treasury with BoE recently launched a Central Bank Digital Currency Taskforce.

Perhaps price volatility, after a good long run, won’t dent the enthusiasm from crypto-coiners, particularly amongst those burned by the Financial Crash 2008, who learned not to trust the system or who were doomster-fans of William Rees-Mogg’s ‘The Sovereign Individual – Mastering the Transition to the Information Age” (1997), a manifesto for a future, where increasingly autonomous individuals and bankrupt, desperate governments will confront one another, across a new divide. Apparently, this inspired the founder of PayPal to lead the ‘prepping for the apocalypse’ rush to NZ – ‘the Future’ – reported by Mark O’Connell in the Guardian (15 February 2018). The book’s author, Lord William R-M was a distinguished previous editor of The Times, and father of Jacob, currently Conservative Leader of UK House of Commons. What all this means for crypto-communities, and NFTs, from Beeple high-end art to Zed Run ‘digital horseracing’, will take time to work through, with unpredictable winners and losers, while the carbon meter ticks up and up.

More relevant for us at BCI is Gillian Tett – who predicted the 2008 financial crash, thanks to her training in Social Anthropology – writing in the Financial Times (April 8, 2021) that ‘Blockchain may change equity trading for good’. In a small pilot, Credit Suisse and Nomura cut out America’s DTCC that normally settles stock trades, with cheaper and faster settlements using blockchain, in hours rather than days. Gillian Tett says, “I’d bet hefty sums in any currency, that non-bitcoin innovations will eventually matter far more”. Piper Sandler, an investment bank, guesstimates that there are already around 4000 financial assets and processes operating on blockchain technology, and DTCC is now conducting internal experiments with blockchain itself.

So, instead of just coins, let’s hear much more about the potential of ‘blockchainsforgood’ and ‘good-bets’ for climate actions, including using ‘Green-Fintech’ innovations but first, the big problem of too little climate finance for adaptation and resilience.

Too Little Climate Finance for Resilience & Adaptation

Christiana Figueres, a founding partner of Global Optimism and the former COP21 President, has said recently that the pledge from financial institutions to ensure their investments were in line with long-term climate goals was ‘exceedingly good news’ but that rich countries must still make good on an unkept promise made in 2009, to provide $100bn a year in public and private finance to developing countries – the G77 – by 2020.

Speaking at the G77 on 18 January 2021, the UN Secretary General spelt out the scale and complexity of the challenges, from the pandemic and vaccines, soaring debt and costs, biodiversity loss and he warned that ‘adaptation must not be the forgotten component of climate action, until now, only 20% of climate finance’.

Only the US has come up with fresh commitments on climate finance. The UK is reported to have pledged £11.6bn climate finance over the next five years. Fiona Harvey also quotes Akinwumi Adesina, president of the African Development Bank, “Africa was losing between $7-15bn a year because of climate breakdown and would rise to $$50bn a year by 2040”. Sonam Wangdi, chair of the Least Developed Countries group, said the LDC are counting on “support to help implement our ambitious climate plans” (The Guardian, 24 April 2021).

Deborah Lehr, of the Paulson Institute, the Chicago based think-tank specializing in US-China, writes (Fintech Spotlight, 15 April 2021) that the sums needed to save the planet are daunting, $2.4trn every year to 2035 and “Governments cannot meet these demands alone. The private sector must play a role, and innovation is the key to unlocking the capital required”. Where might Blockchain and Green-Fintech fit in?

Green-Fintech, Blockchain & Emerging Technologies

The UK Chancellor has warmly welcomed the recent Kalifa Fintech Review and its recommendations, including the proposed Centre for Finance, Innovation and Technology. What if the CFIT supported developing a London ‘Green-Fintech’ hub for climate finance, to help enable the UN Secretary General’s call for $100bn, focused on capacity-building both in the UK and in the G77, including Africa and the Commonwealth Countries?

What if the G7 and the G20 saw opportunities using blockchains and other core technology, making it easier to raise some of the $100bn annually from a mix of government and private sector, including philanthropy? And what if it was easier to trust impact reports with immutable data? Would that make it easier to raise climate finance for similar projects, with confidence, at scale?

So if the G7 did not achieve new commitments for Climate Finance, here is our open letter to the next G20, due to meet in Rome 30-31 October 2021:

Dear Chair G20 2021,

With President Biden’s goal for increasing US climate finance to $5.7bn a year by 2024 together with the reported UK pledge of £11.6bn on climate finance over the next 5 years, we all must hope that the G20, before COP26 – will commit to meeting the UN Secretary General’s repeated call for $100bn pa climate finance for the G77, in particular for adaptation, partly through technology transfer.

One of the biggest hurdles is unlocking public and private funds for carbon reduction and adaptation projects in vulnerable communities. Thanks to the global leadership of donor countries like the US, Japan, the UK and the EU, the challenge is not ‘affordability’ but rather ‘verifiability’. Donors and investors seek good projects with credible MRV (measurement, reporting and verification) for the greatest environmental benefit. To help meet the climate emergency, every Yen or Euro must be well spent. The same kind of blockchain technology that underpins cryptocurrencies, offers a way to create trust through the system for the ambitious climate actions we all need to take.

Gillian Tett in “Blockchain may change equities trading for good” (Financial Times, 8 April 2021) wrote, “I’d bet hefty sums in any currency, that non-bitcoin innovations will eventually matter far more”. She is right. While bitcoin grabs some headlines, distributed ledger technology (DLT) is being applied in basic but transformative ways in dozens of sectors.

At Blockchain & Climate Institute (BCI), a UN-recognised think-tank, our international teams of volunteer engineers, lawyers, financiers, data and climate scientists, are supporting many governments in providing an enabling policy and regulatory environment in which to nurture Blockchain-based climate innovations across Sustainable Finance, Resilience, Emissions Trading and Biodiversity, as well as Renewable Energy, Circular Economy, Smart Cities, Blue Economy and Oceans.

Secretary John Kerry spoke powerfully on World Ocean Day of the global challenges, including ‘lawlessness on the high seas’. Blockchain could bring stronger traceability and help turn the tide for sustainable fishing, with seafood having one of the longest and convoluted supply chains – typically 7 points from sea to consumer.

While the Kalifa Fintech Review will drive forward innovations, taking a more ambitious ‘Green-Fintech’ approach in the G7 and G20 could help deliver on the UN Secretary-General’s repeated call for $100billion per annum climate finance, for the poorer G77 countries for adaptation, including technology transfer through the Green Climate Fund and the UN Climate Technology Centre and Network (CTCN).