A changing climate means changing investors

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Climate change is becoming a significant risk for development banks, with several changing how they do business, according to a panel of experts hosted yesterday at COP20 by the Inter-American Development Bank and the Ministry for the Environment.

Attending the discussion were Environment Minister Manuel Pulgar–Vidal UNFCCC Executive Director, Cristiana Figueres, and IDB President, Luis Alberto Moreno.

Moreno explained that the bank had identified climate change as major strategic challenge.

“The truth is that all economic activities are climate sensitive. The climate in this generation is uncertain and therefore the bank’s profits are too,” he said.

On the panel was eminent American conservation scientist and former advisor to the World Bank, Dr. Thomas Lovejoy. Dr. Lovejoy warned that with signs of the climate changing now there was no longer a choice between mitigation and adaptation.

“It’s too late not to worry about adaptation. But the sooner we get to work the easier it will be,” Dr. Lovejoy said.

La Gorda
_Environment Minister Manuel Pulgar-Vidal stands next to Dr. Lovejoy at COP20 (Photo: Corey Watts/Peru this Week)_

Dr. Lovejoy said he “took his hat off” to Peru for trying to halt deforestation by 2020, though he acknowledged the task would not be achieved easily.

Climate scientists have long recognized tropical forests like the Amazon as globally important storehouses of carbon in need of protection. In Peru, mining, logging, and infrastructure development—legal and illegal—continue to put pressure on the rainforest. Even so, deforestation appeared to be in decline for several years when, for reasons not yet clear, it spiked recently.

Panellist Dr. Amal–Lee Amin, leader of the International Climate Finance programme at independent non-profit group E3G, said that sustainable development requires a transformation.

“Transformation isn’t simple. It requires changing economies, and changing relationships within governments and key sectors. It’s not something that happens overnight,” Dr. Amal–Lee Amin

Dr. Amin said that loans contingent on countries’ progress on climate policy had seen the IDB drive institutional change and cultivate environmental expertise in Peru and several other countries in the region.

Given the rate of warming, however, Dr. Amin said it was important to find ways of fast-tracking change. She cited the example of wind power in Mexico which four years ago had delivered about 250 megawatts, and quickly scaled up to the current measurement of 9 gigawatts.

“Other banks are trying to catch up,” she said, explaining that the IDB had pioneered finance for small-to-medium-sized enterprises offering solutions to climate change. Dr. Lovejoy said that the World Bank was the first to integrate environmental goals into all areas of its work.

In 2009, governments agreed to try to hold global warming below 2 ˚C above the pre-industrial average. Since the 19th century the world’s average temperature has risen by about 0.8 ˚C.

Dr. Lovejoy said that life on Earth was “very sensitive” to warming and that even a 2 ˚C rise would spell disaster for many species and environments.

“Two degrees is too much. A world two degrees warmer would be a world without tropical reefs. Climate change needs to be dealt with great dispatch,” he said.

Earlier this week, the World Meteorological Organization released a provisional report saying the year was shaping up to become the hottest on record.

The WMO also released a video on YouTube that included a “weather report” for Peru in the year 2050. The video is part of series aimed at raising awareness and features Minister Pulgar–Vidal explaining what climate change means for Peru.

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