Speaking at the Marrakech COP almost one year to the day his gavel sounded the conclusion of negotiations that brought us the Paris Agreement, French President Francois Hollande didn’t mince his words when addressing US President-elect Donald Trump.

“The United States, the second-largest emitter of greenhouse gases, must respect the commitments that were made in Paris. France will lead this dialogue with the US and its new president, in openness, in respect, but with demands and determination on behalf of the 100 states who have already ratified Paris.”

Indeed, the US election has cast an eerie shadow across this COP, with delegates entering the venue full of trepidation in light of the election of a man who had previously declared climate change to be a hoax “created by and for the Chinese in order to make US manufacturing non-competitive”. Reports that Myron Ebell, notorious climate sceptic and head of the Cooler Heads Coalition (whose mission is to “dispel the myth of global warming”) will lead the US Environmental Protection Agency, jeopardising the signature climate policies of the Obama administration, have only added to the sense that the progress made only a year ago is on the verge of collapse.

But does a Trump presidency have the capacity to undermine the Paris Agreement?

The answer, we hope, is no.

We are in the midst of a global clean energy surge, with renewables reaching cost parity with fossil fuels. Global markets are headed towards clean energy and responsible investment accounting for climate risks, and that trend will only become more pronounced.

Speaking at his last COP as Secretary of State and alleviating fears that changes to American policy would undermine the Agreement, John Kerry outlined his confidence that the transition to a clean energy economy will continue, because the marketplace will dictate it, not any government.

“It is not going to be government alone, or even principally; the private sector is the most important player. Because of the market decisions that are being made, I do not believe that the pathway the United States is on, to reach our Paris commitments, can, or will, be reversed.”

There is no turning back from Paris. Not for the US, nor for any of the other 196 parties to the agreement.

Global mechanisms have been triggered, both nationally and internationally, within the public and private sectors that will ensure a low carbon future for us and our children.

And as the gloom around this Marrakech lifted, investors were keen to boast of the actions which will ensure the Paris Agreement continues regardless of US – or indeed any other Party State’s – domestic policies.

While wary of “this new political climate we are operating in”, Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change (IIGCC), is certain that a Trump presidency “doesn’t change the fact that over €13 trillion (AU$18.81 trillion) globally is invested under mandates such as the IIGCC, the UN Principles of Responsible Investment and the UN Environment Programme’s Finance Initiative”.

Institutional investors are going beyond merely divesting from fossil fuels and are now actively seeking out low carbon investment options. Dutch pension administrator and asset manager MN, representing €92 billion (AU$133b) of the previously quoted amount, is forcing existing asset managers to provide details on their carbon footprints when considering retention of their investments. CIO Gerald Cartigny said: “Every asset manager has signed the UNPRI and has an impost in place to reduce their carbon footprint.”

CIO of AXA Mediterranean Erick Decker was more explicit, warning that “… the cost of financing will increase for those companies who are not taking climate action … when our bonds are maturing, we’re just not going to invest in them anymore, and they will have to choose to play in the game, or not”.

This irreversible trend is recognisable across American asset classes as well.

Pete Grannis, first deputy comptroller of the New York State Comptroller’s Office, spoke to the action taken by announcing a low carbon index, seeded with US$2 billion, awarding companies using less carbon. Stressing that attracting investor capital is no longer an issue, but rather; “… the challenge is finding a way to invest more of our assets in a green economy”. US investment vehicles cannot invest quickly enough in low carbon asset classes.

While noting that a Trump presidency might lead to a loss of regulatory oversight, with American institutions unable to move such environmental disclosure requirements from the voluntary column to the regulated column, this mightn’t be an issue if investor demands continue to ensure such actions don’t need to be legislated. The New York Comptroller’s Office is one of many American institutional investors using their clout and leverage to ensure companies they are invested in act in accordance with a 2°C future and perhaps even a 1.5°C degree future – a more ambitious and legitimate long-term temperature goal, as enshrined by the Paris Agreement.

These are all long-term views of asset strategy, based in responsible investment frameworks that aim to correctly invest on behalf of shareholders and policy holders who are growing increasingly aware of climate risks.

What’s more impressive is that this is all part of a truly global movement.

Phase 2 of the Financial Stability Board’s Report of the Task Force on Climate Related Financial Disclosures (Phase 1 available here) is due for release in the coming weeks, with the results to be taken to the G20 Finance meeting in March 2017. The world’s largest international body monitoring and making recommendations about the global financial system, with board representatives from every major G20 economy, is investigating what it means to be a company existing in a 2°C world? What are the risks? What are the opportunities? What are boards doing to plan for climate risks and how have they acted accordingly?

So when considering the legacy of Paris in these uncertain political times, it seems only apt to return to the words of the French president.

“A promise of hope can’t be betrayed; it must be fulfilled.”

One reply on “Trump’s presidency doesn’t spell the end for global climate action”

  1. Thanks Ian for this briefing. Just going back to basics, I’m no expert and could probably be wrong, but the US (even under Obama) has not yet ratified Kyoto Agreement which basically aimed to reduce Global CO2 emissions to below the level of the year 2000. Kyoto’s first commitment period was 2008 to 2012 (with Australia managing to negotiate an increase rather than reduction!), and the second from 2012 to 2020.The Paris agreement was to look at what happens after 2020. So my first observation would be that the US hasn’t appeared to have joined the international effort in any case. My second observation is that Global CO2 emissions have carried on increasing regardless … what is this telling us?

    I believe in a low carbon future but I’m increasing unconvinced that the current solutions are solutions at all. When one looks at so called sustainable development initiatives, especially those based on trading emissions and financial savings or incentives, one may or may not discern the problem … not enough time to go into this in depth now, but suffice to say we need to be seeing “ecological” solutions rather than financial solutions. Cheers, Peter

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