Call for climate action

Deutsche Welle: Mr. Kell, the United Nations has won some unexpected allies in the fight against global warming.

Georg Kell: For the first time, the private sector has argued in favor of pricing externalities. This is a breakthrough because usually business blocks climate action on a national level. Investors are actually making the case for putting a significant price on carbon. Polluters are making the case to be charged. That has never happened before. This is a very promising major development that will encourage policy makers.

The COP climate conferences showed very limited results in the past two decades because big companies lobbied against new climate laws and most heads of state didn’t show up. Can you comment?

Now 73 countries, including Russia and China, have signed a declaration that fights global warming. 120 heads of state, even US President Barack Obama and French President Francois Hollande, attended the recent UN Climate Summit in September. Ban Ki-moon also mobilized the streets: More than 400,000 people participated in the Climate March in New York. Most importantly, however, 1000 companies made the case for pricing carbon. Unthinkable only two years ago.

What caused this change?

Extreme weather and sea water level rises are not just a horror scenario any more. Storms, floods, droughts and water scarcity can disrupt almost any planned economic activity. There is big nervousness going on for good reason. The exposure to such risks has increased enormously. Climate change is bad for business.

Hurricane Sandy recently flooded huge parts of New York. Do real estate owners such as the Rockefeller family support the UN because they are now getting "wet feet”?

Yes, it’s a mixture of many things. Obviously the fear of property losses is a major factor. Much of the world's wealth, about 60 percent, is invested in property and infrastructure. For the first time the investor community is actually realizing that their future asset performance is seriously under threat.

Financial powerhouses such as BlackRock, BT Pension Scheme and the Rothschild & Cie Gestion Group, have just signed a call on governments to implement a major global carbon pricing. Some of the asset owners who represent about 24 trillion dollars did more than this.

The Rockefeller Brothers Fund, built with profits from their great-grandfather's Standard Oil Company, is now selling investments in the fossil fuel industry and is putting pressure on companies that are adding to climate change. Rockefeller Brothers will abandon companies reliant on coal and tar sands because carbon is now recognized as the evil in the game. Scientific evidence strongly shows that carbon is the cause of global warming. You cannot deny this any more.

The IPCC has just released a report that we need to cut carbon emissions by 40 - 70 percent before 2050 if we aim to limit global warming below two degrees. What’s your take on this?

This is why pricing carbon high enough is essential. It provides incentives to move towards an energy efficient low carbon consumption and production. Many companies still have a double-faced identity: One the one hand showing a bit of green credentials, on the other hand lobbying against carbon action. They focus on short term profits. Therefore, we need to give strong signals and strong incentives. A quick transition is possible. Philips Lighting already switched 40 percent of its turnover to energy efficient LED. Unilever and Nestle have invested large sums in a sustainable supply chain.

Can subsidies be shifted to renewable energy?

Yes, 500 billion dollars are spend are annually to subsidize fossil fuels. We have to get rid of perverse subsidies, stop using dirty diesel and coal, and invest in green technologies.

For decades the oil industry was one the biggest opponents of renewable energies. Now UN Global Compact members such as Royal Dutch Shell, BP and Norway's Statoil have signed a call for a global carbon pricing. How come?

Getting oil on board is a very important step. For almost 10 years, the UN Global Compact and others have been working on winning the business community, to get them to realize that sustainably and a natural system that can support all of us is good for business. Many companies have discovered that energy efficiency and a low carbon footprint gives them a competitive advantage. Greenhouse gas emission will be priced highly in the future.

How high?

The Norwegian government charges its oil and gas industry with a CO2 tax of up to 75 dollar per ton. This has made Norway a leader in carbon-efficient oil and gas production. Helge Lund, the CEO of Statoil, said an international price on carbon should be at least 100 dollar per ton. This is a start.

This will increase energy cost significantly. What about the losers, such as the coal industry?

There are always winners and losers. The world has to adapt to changes. A low carbon world opens up a whole universe of new business opportunities: new products, new services, and new solutions. It will push green growth and create many new jobs. A major shift to renewable energy has made Denmark an export leader of green technology. The Danish think tank Sustainia just nominated Newlight Tech for an award. The US-based company developed a process to take CO2 out of the air and transform it into carbon negative plastics.

Greenhouse emissions don't care about national boarders. What about major polluters such as China?

Working on climate issues is a huge opportunity to also revive collaboration among states. China is putting in place a national pricing system for carbon next year. This will be the biggest carbon market. China is now also the biggest investor in renewable energies.

Eighty-two percent of the world's energy is still produced by fossil fuels. Do you think the UN will have a chance to close a global deal on carbon pricing at the COP21 climate summit in Paris next year?

It's in the cards. Not pricing pollution and carbon emissions is the biggest market distortion in human history. The voices of those who make the case for pricing carbon are getting louder and stronger. Our job is now to win more companies to lobby for carbon pricing and to encourage policy makers to be courageous. The world is longing for solutions.

Georg Kell is the founder and executive director of UN Global Compact. Global Compact members are signing a declaration in which they express their commitment for an ethical way of conducting business. With more than 8000 members the UN Global Compact is the biggest corporate sustainability organization.