Privatising climate change action a bad policy

The climate change debate kick-started with a solid commitment to historical responsibility and the principle of equity. It was envisioned the global community will forge partnerships to fight back against climate change. They assured the world the commitment will be fulfilled.

Unfortunately, Global North started to deviate from its commitment to historical responsibility and the principle of equity. The developed world is slowly and steadily excusing itself from the required actions to combat climate change.

The story starts with the Kyoto Protocol. The Global North committed to reducing greenhouse gas (GHG) emissions, but it never happened. They did not fulfil their commitment. The US Senate led the anti-action drive by hindering the implementation of Kyoto Protocol commitments.

Bali Action Plan was next on the list. Countries decided to devise plans to check climate change and adapt to it till the COP-15. However, they preferred to talk over actions and failed to deliver on their promises. There comes the Copenhagen COP-15. The world geared towards Copenhagen with the hope of a positive outcome and a concrete agenda for the implementation. However, COP-15 ended with verbal commitments with no concrete action plan.

It was decided the developed world would provide $30 billion as new and additional financial resources in 2010-2012. Moreover, it was promised by them they would be providing $100 billion from public and private sectors annually. Once again, the commitments never materialised.

Paris Climate Change Agreement was dubbed as a step in the right direction. It was hoped the world would act and countries would deliver on their promises. Again, debate is dominating over the actions.

The same is true for the Glasgow COP-26. It started with exceptional enthusiasm, but landed nowhere. Despite all the hue and cry, the outcome is poor and disturbing. Many experts believe it is a betrayal by the developed world, including the US and the European Union. They uphold the legacy, talk a lot, but take no action. Although West is a self-declared champion of human rights, it failed to recognise the climate change threat to humans, let alone human rights.

The UN Secretary-General shared the same sentiments, but with different words. He is concerned about the commitments of $100 billion and the needs of vulnerable countries. He considered world must act in emergency mode, but the world is not listening to him.

Despite the need for urgent actions, the developed world preferred to postpone it. Rather, they are hell-bent on shifting the burden on developing and poor countries and creating business opportunities for their companies.

They have been doing it systematically since long.

The developed countries did not provide the required assistance to the developing world. The worst part of the story is that they do not seem in the mood to fulfil their commitments and lead the fight against climate change.

They think it is charity, they can decide what they want. But in reality, it is not so. It is an obligation for them in the context of historical responsibility. Moreover, a report by Oxfam indicated developed countries are promoting loans in the disguise of climate financing. In 2020, Oxfam’s calculations showed the finance was mainly provided through loans, not grants. Further, it highlighted the $59.5 billion provided between 2017 and 2018, – $47 billion (80pc) were loans and half at higher interest rates, further impacting the poor countries.

Oxfam produced another report in 2022, which came up with some shocking details. It claimed developed countries are misleading the world by overstating their financial contribution. The report highlighted the actual financing by developed countries was around $21-24.5 billion in 2020. These countries inflated the contribution by 225 percent and claimed they provided $68.3 billion. The amount is extremely low as compared to the need.

For example, developing countries need $70 billion for adaptation which can inflate to $300 billion in 2030. On the other hand, the cost of loss and damage is also rising. It has been estimated the need can be around $290-580 billion for loss and damage.

Instead of fulfilling their commitments, the developed countries promoted private sector to take a lead in financing the climate action. Now, United Kingdom, the US and its partners are smartly trying to shift the debate from their commitments of $100 billion to private financing. Glasgow Financial Alliance for Net Zero was presented as a new window of opportunity. It is a consortium of private companies and investment houses to pool resources.

Mark Carney, UN Special Envoy for Climate Action and Finance and UK Prime Minister Johnson’s Finance Adviser for COP26, had claimed the total assets of the companies committed for net are around $130 trillion. But, it is private money available for investment and lending that cannot be compared with the commitment of $100 billion.

It’s considered an attempt to create an alternative to World Bank and IMF-like institutions which will be in direct control of private sector. It will be unfortunate, as the poor and developing countries are already struggling to break the shackles of debt trap woven by the World Bank, IMF and other Western financial institutions.

Private sector always works to maximise profit, and for that purpose, they can fail the global financial sector. We have already seen a glimpse of mismanagement and greed of private sector during the financial crisis of 2008. Many experts believe private sector is again pooling resources to further exploit the world (poor countries) in the name of climate change.

It is pertinent to mention here private sector has no obligations to society, nor is legally bound to serve society. They will not be interested in providing grants or assistance for adaption or loss damage programmes or for combating disasters.

The developing and vulnerable countries have two options: either look towards international institutions or private sector to get loans, or try to create financing from their own resources. Global North is telling poor and the vulnerable countries developed nations will not assist them.

The Global North is successfully shifting the focus from historical responsibility and the principle of equity to private sector financing and public and multilateral development bank loans.

In this way, they are slowly and steadily shedding off their responsibility. They are also creating space for their companies and investment houses.

Against this backdrop, there is a need to build a movement to reverse the process. First of all, developing countries need to join hands to bring back the debate of historical responsibility and the principle of equity at the global level. There should be no compromise on it.

Second, the private sector should not be accepted as an alternative to commitments made by the states. All efforts should be made to ensure the states fulfil the $100 commitments.

Third, if the private sector wants to play role of the states, it will also have to fulfil the states’ obligations. The private sector should also not treat countries as a market.

The argument built in this article is not against the role of private sector in the fight against climate.

Inclusion of private sector is direly needed to combat climate change. The argument is that climate actions should not be privatised. The world cannot afford to leave the fight to private sector, as climate change has many dimensions that are out of its business sphere like security, food security, poverty, migration, etc.

For example, it is a brutal truth that food insecurity can be a business opportunity for the private sector, not an obligation to tackle the issue from a human perspective. The global community will have to maintain the difference between the role of private sector and privatisation of climate change actions.