Interesting things are afoot in the world of climate finance in the run up to this year’s United Nations climate change conference or COP29. For one thing, details have been aired of the first draft of a UN position paper laying the groundwork for the conference set to take place in Azerbaijan in November.
For another, the US Securities and Exchange Commission (SEC) has completed receipt of amicus briefs for and against its rule on climate-related financial disclosure, with plaintiffs having until September 17 to respond.
According to French news agency AFP, the UN draft outlines the approaches to reach a “new collective quantified goal” for climate change finance, intended to supersede current arrangements for up to US$100 billion per year of funding from developed nations to support sustainable transitions in developing countries. It is said to contain seven different structures articulating competing positions in the debate.
The US and European Union both apparently target around $1 trillion per year in climate change funding by 2035, with African countries pushing for some $1.3 trillion a year. Western developing countries are also pushing for China and major Arab oil states to become donors rather than recipients, which they have resisted thus far.
At least the US is engaged internationally at this level. Domestically, however, it faces problems imposing regulations on its own states. Institutional investors representing some $2 trillion in assets under management, including California Public Employees’ Retirement System and California State Teachers’ Retirement System have submitted a joint amicus brief in favour of the climate rule. Republican state attorneys and some business groups, however, have submitted briefs against it.
Failure of the SEC climate rule would mean that the US becomes a rules-taker rather than a rules-maker in the realm of climate disclosure. US companies operating abroad would still have to make mandatory climate disclosures under other regulatory regimes, while the US would not be in a position to impose its own standards and preferences. The map of the 46 US states that declared for or against the climate rule divided fairly predictably along party lines, almost exactly mirroring the Democratic/Republican split.
However divisive the issues likely to be aired at COP29, the continuing scale and momentum of global action on climate finance ought to be enough of a warning to the foot-draggers in the US. Decisions will be made one way or another, and those who do not engage with the process will have to live with the consequences without being in a position to affect them.
Rules-making in finance and technology has proven to be a very effective way to extend the rules-maker’s values and promote its businesses. US lawmakers would do well to remember that.
