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1. Distinguishing Among Climate Change-Related Risks

Author:
Lisa Sachs, Denise Hearn, Matt Goldklang, and Perrine Toledano
Publication Date:
02-2025
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
Understanding the diverse types of climate change-related risks is crucial for developing effective strategies to address the global climate crisis. A holistic yet disaggregated approach allows for a comprehensive view of the challenges while enabling targeted responses from various stakeholders. This document outlines three main categories of climate-related risks: planetary, economic, and financial, detailing their relevance to various stakeholders, timeframes, and potential response strategies. This short brief aims to disentangle the complex nature of risk discussions for productive discourse and appropriate risk management approaches for different stakeholders. In practice, discussions related to assessing and responding to climate change risk have conflated categories of risk, confusing discussions and undermining the effectiveness of related strategies. We hope this brief can bring clarity and rigor to analyses of risk and support constructive discussion among policymakers, financial institutions, social sector actors, and the public. We plan to follow this short briefing with a longer report including more detailed analysis, integrating feedback to these initial ideas.
Topic:
Climate Change, Finance, Economy, Investment, Risk, and Sustainability
Political Geography:
Global Focus

2. Scaling Investment in Renewable Energy Generation to Achieve Sustainable Development Goals 7 (Affordable and Clean Energy) and 13 (Climate Action) and the Paris Agreement: Roadblocks and Drivers

Author:
Mithatcan Aydos, Perrine Toledano, Martin Dietrich Brauch, Ladan Mehranvar, and Theodoros Iliopolous
Publication Date:
12-2023
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
The zero-carbon energy transition is the solution to the 2022 energy crisis and a fundamental part of the solution to the global climate crisis. Yet, there are relatively low levels of investment in renewable energy in developing countries, hindering their achievement of the Sustainable Development Goals (SDGs) and contribution to the Paris Agreement goals. In 2021, the Asia–Pacific region (excluding China) accounted for less than 8% of investments in energy transition technologies, Latin America and the Caribbean for less than 4%, and Africa and the Middle East for less than 2%. Annual investment in zero-carbon energy in developing economies other than China has stagnated since the Paris Agreement was signed in 2015. To put the world on track to reach net-zero emissions by 2050, annual capital spending on zero-carbon energy in developing countries must increase by more than seven times, to more than USD 1 trillion, by the end of the 2020s. There is therefore an urgent need to address the drivers of public and private finance for investment in renewable electricity generation, network infrastructure, and enduse sectors to meet the Paris Agreement and two complementary SDGs: ensuring access to affordable, reliable, sustainable, and modern energy for all (SDG 7); and taking urgent action to combat climate change and its impacts (SDG 13). This report sheds light on roadblocks to scaling up investments in renewables while distilling solutions from international experience and brings clarity to where international and national efforts should urgently be focused to address the deterrents of investment in renewables and enable zero-carbon energy security and prosperity.
Topic:
Climate Change, Investment, Renewable Energy, Carbon Emissions, Paris Agreement, Energy Transition, and Net Zero
Political Geography:
Global Focus

3. Finance For Zero: Redefining Financial-Sector Action to Achieve Global Climate Goals

Author:
Lisa Sachs, Nora Mardirossian, and Perrine Toledano
Publication Date:
06-2023
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
As of 2023, the financial system is woefully misaligned with the world’s climate goals. Six times the current annual level of investment in non-fossil fuel investments is needed between 2023 and 2030 to stay on a 1.5ºC warming pathway.1 The ratio of clean-energy lending and equity underwriting by banks relative to fossil fuels needs to reach 4 to 1 by 2030, whereas for 1,142 assessed banks, the ratio was between 0.8 and 1 at the end of 2021.2 As providers, underwriters, and fiduciaries of trillions of dollars of capital flows annually, financial institutions (FIs) play a critical role in decarbonizing the economy and scaling access to clean, affordable energy. Optimally, the roles and opportunities for the financial sector should be guided by an official pathway and associated policy tools, such as carbon pricing, public finance and guarantees, strategic subsidies, sectoral regulations, and so on. Unfortunately, that policy framework to shape and guide the financial sector does not yet exist. In the absence of strong government leadership, there has been a proliferation of bottomup models, tools, metrics, methodologies, and initiatives designed to measure and evaluate the climate performance of financial institutions. While the rapid growth of these initiatives demonstrates the financial sector’s engagement, meaningful progress in realigning global finance to support climate goals has been limited. These frameworks and tools often overstate or misrepresent the extent to which they support meaningful action toward achieving climate goals, and at times rely on misaligned targets or metrics that undermine their effectiveness as tools for setting or assessing corporate commitments. Overall, existing commitments and strategies are not sufficiently aligned with the actions needed from financial sector actors to achieve climate goals. There are deep and inherent limitations to bottom-up approaches to achieving decarbonization, some that are within the capability of financial institutions to address but many that are beyond their remit. This report focuses on the things the financial sector can and should do even in the absence of a robust long-term policy framework. Part 1 of this report urges FIs and their alliances to be clear in their commitments, pledges, and communications about their climate-related objectives and corresponding strategies, their limitations, if any, and how they measure success. Current climate-related pledges, alliances, frameworks, and tools at times confuse or conflate risk mitigation with climate action, relying on targets and metrics that may not be fit for purpose. Whether intentionally or unintentionally, FIs and their alliances can misrepresent or overstate the effectiveness of their approaches in contributing to climate action. This misrepresentation can be exacerbated by the use of misleading metrics or strategies, such as selling or legally spinning off high-emitting assets or using offsets in net-zero pathways. FIs should communicate clearly and accurately about their climate-related pledges and commitments, including whether their goal is to contribute to climate action or to mitigate their own financial risk and how their business strategies will be aligned to achieve those goals. FIs should ensure that targets, metrics, and methodologies are aligned with their goals and business strategies and do not misrepresent the effectiveness of their strategies. FIs’ commitments and strategies are shaped by their financial interests and their interpretation of their fiduciary and other legal duties and obligations; because of perceived tensions between legal obligations and certain climate-oriented strategies, FIs and their alliances should provide clear, public explanations of how their interpreted fiduciary and other legal duties shape their climate-related strategies. Part 2 of this report proposes how financial institutions can and should contribute to, and not undermine, climate goals, under current policy conditions. While many of these actions are relevant for a risk-mitigating approach for FIs and their alliances, these recommendations go beyond risk mitigation in order to guide those FIs and their beneficiaries that seek to have real climate impact.
Topic:
Climate Change, Investment, Sustainability, Financial Institutions, and Financial Systems
Political Geography:
Global Focus

4. How Much Have the Oil Supermajors Contributed to Climate Change?

Author:
Jiarui Chen, Perrine Toledano, and Martin Dietrich Brauch
Publication Date:
03-2022
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
In the 40-year period 1980–2019, annual carbon dioxide (CO2) emissions from fossil fuel combustion, including flaring, increased by more than 80%, and total emissions from those sources represented approximately 83% of anthropogenic CO2 emissions (also including cement production and land-use change) without accounting for sinks. Understanding the carbon footprint of countries and companies along the oil value chain is fundamental to outlining paths to reduced reliance on fossil fuels. However, academic analyses of carbon footprints are limited by the lack of a reliable dataset and carbon accounting method that would allow comparisons across countries and companies.
Topic:
Climate Change, Environment, Carbon Emissions, and Carbon Footprint
Political Geography:
Global Focus

5. Allocation of Climate-Related Risks in Investor–State Mining Contracts

Author:
Martin Dietrich Brauch, Perrine Toledano, and Cody Aceveda
Publication Date:
06-2022
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
As the effects of climate change continue to worsen, mining projects, the communities surrounding them, and their host states are increasingly at risk of being affected by environmental disasters, with devastating social and economic consequences. Risk allocation provisions included in investor–state mining contracts, often considered boilerplate and replicated in agreements without careful consideration or negotiation, could potentially help the parties assign responsibilities between themselves and limit their losses in those cases. However, traditional risk allocation clauses within existing mining contracts, formulated before the world acknowledged the severity of climate change, do not adequately allocate climate-related risks and impacts between states and companies.
Topic:
Climate Change, Environment, International Cooperation, United Nations, and Risk
Political Geography:
Global Focus

6. Roadmap to Zero-Carbon Electrification of Africa by 2050: The Green Energy Transition and the Role of the Natural Resource Sector (Minerals, Fossil Fuels, and Land)

Author:
Jeffrey D. Sachs, Perrine Toledano, and Martin Dietrich Brauch
Publication Date:
01-2022
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
All Africans—whether living in urban or rural areas—need access to affordable, clean, efficient, reliable, climate- proof, and renewable energy for both residential and productive uses to achieve sustainable development objectives. This report sets out a comprehensive and actionable roadmap for Africa’s zero-carbon energy transformation by 2050, with most advances achieved by 2030. Natural resource management in minerals, fossil fuels, and land sits at the core of the strategy. The world is moving to decarbonization by 2050. This is the dominant geopolitical message of 2021, appearing, for example, in U.S. President Joe Biden’s online summit with world leaders in April 2021 and in the new IEA Report on Net Zero by 2050: A Roadmap for the Global Energy Sector. Africa will be part of this global trend. Prospective oil and gas projects in Africa will no longer be pursued as overseas markets and financing will shrink. At the same time, Africa’s vast renewable energy potential, in the solar and hydropower sectors especially, will engage increasingly bankable and highly attractive investments. In net terms, Africa has a huge amount to gain from a decisive build-up of renewable energy and the capacity to produce the minerals, hardware, and software of the new zero-carbon energy economy. Starting from a simple and transparent model of the annual investment volumes needed to provide continent-wide access to electricity based on renewable sources (Section 2), the report addresses various imperatives and challenges regarding Africa’s energy planning (Section 3) and financing (Section 4) and outlines recommendations for immediate implementation of the strategy from 2022 (Section 5).
Topic:
Climate Change, Development, Energy Policy, Environment, Sustainable Development Goals, Sustainability, Decarbonization, and Energy Crisis
Political Geography:
Africa

7. The Case for a Climate-Smart Update of the Africa Mining Vision

Author:
Perrine Toledano, Martin Dietrich Brauch, Karan Bhuwalka, and Kojo Busia
Publication Date:
04-2021
Content Type:
Research Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
Mining sector investments in Africa can be structured so that the continent may benefit from climate policy in de- veloped countries that puts a global price on carbon. Cur- rent supply chains rely on complex, specialized networks where different parts of the production process are locat- ed in different regions of the world. This system of global value chains5 leads to greenhouse gas emissions through cross-border transportation and excess waste (especially in electronics and plastics). There is some evidence that border tariffs harm vertical specialization, where different regions are specialized in a very specific task.6 Therefore, carbon pricing, including carbon border tax, could lead to the localization of value chains. Multinational companies may move intermediate stages of production closer to the source of mineral extraction, providing a boost to foreign investment across Africa. The incentive for companies to shrink these value chains is even higher in the aftermath of the COVID-19 pandemic, which exposed some of the risks of relying on extensive global supply networks.7 These global trends sit within a broader and relatively recent context of soaring environment, social, and governance (ESG) investment affecting companies, shareholders, and governments alike.
Topic:
Climate Change, Environment, Mining, and Carbon Emissions
Political Geography:
Africa

8. Five Years After the Adoption of the Paris Agreement, Are Climate Change Considerations Reflected in Mining Contracts?

Author:
Tehtena Mebratu-Tsegaye, Perrine Toledano, Martin Dietrich Brauch, and Mara Greenberg
Publication Date:
07-2021
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
At the 2015 Paris Climate Change Conference, the world’s governments set an ambitious goal of limiting global temperature rise to 1.5 °C over pre-industrial levels. To meet this goal, global anthropogenic CO2 emissions must decline steadily and reach net zero by about 2050.2 The pathway to a low-carbon future requires a fundamental shift away from fossil fuels and toward clean energy technologies. This transition will be mineral-intensive: the World Bank estimates that the production of minerals could increase by more than 450% by 2050 to meet the growing demand for clean energy technologies.3 How these minerals are produced will have a lasting effect on the clean energy transition. The mining and metal sector contributes 4–7% of greenhouse gas (GHG) emissions globally.4 Without adequate regulation to incentivize climate- friendly sustainable operations, increases in mineral extraction risk increasing the sector’s carbon footprint.5 In addition, climate change acts as a risk multiplier by increasing the risk of flooding, drought, and landslides and, as such, exacerbates the negative externalities caused by poor mining practices. First and foremost, climate change considerations should be incorporated into the climate, environmental, water, forestry, energy, or mining laws of mineral-rich countries. For example, in 2016, Kenya passed a climate law that requires climate mainstreaming in all sectors.6 Guinea’s 2019 Environmental Code encourages the use of renewable energy wherever possible and mandates the environment minister to implement the National Strategy for Climate Change Adaptation.7 But the pace of legislative processes is often slow—and in countries where the legislation does not include climate change mitigation and adaptation requirements,8 countries may turn to contractual provi- sions to compel the mining sector to shift to climate- sensitive practices. This paper assesses the extent to which this is being done through an analysis of all publicly available mining contracts signed by fragile states in Africa9 after the adoption of the Paris Agreement in December 2015 that appear on ResourceContracts.org (21 contracts).10 Though the magnitude of African fragile states’ contri- bution to global GHG emissions is minimal, these states have a comparatively high degree of vulnerability to the impacts of climate change.11 In this context, governments can and should mobilize the mining sector to play a meaningful role in meeting their climate mitigation and adaptation needs and those of project-affected communities. In addition, the increased demand for critical minerals to produce renewable energy and battery solutions tends to increase investment flows into the mining sector of several of those fragile states,12 making it all the more crucial for their governments to ensure that new mining investments support each country’s sustainable development goals. Doing so, with respect to climate action, furthers both a country’s competitiveness in international markets13 and minimize the mining sector’s footprint on the country’s environment and communities. Though our analysis focuses on contracts concluded by fragile states in Africa, the policy recommendations that we draw from their analysis apply to all host governments that do not already have robust laws that operationalize mitigation and adaptation goals and are eager to leverage and strengthen the role of their mining sectors in achieving sustainable development. Our recommendations envision generating long-term savings over the life of the mines, even if some of those recommendations may in practice represent higher upfront costs for mining companies. For example, adopting renewable energy sources, though possibly more expensive at the outset, is more cost-effective than fossil fuels considering the life of a mine.14 Avoiding deforestation early on also generates savings for mining companies when the time comes to fulfill their mine closure and rehabilitation obligations. Furthermore, by supporting community efforts to build resilience to climate change, mining companies have the opportunity to meaningfully contribute to project-affected communities. Attention to climate change considerations that entail higher expenditures by mining investors at the initial stages of the operation of a mine also tend to reduce the tax revenues from mining for host governments in the short term. However, for governments, too, the long-term benefits outweigh the initial revenue reductions. As long as governments put strong progressive fiscal regimes in place,15 they will be able to reap the upside from a climate- aware, low-carbon mining sector that will be more profitable than a business-as-usual, carbon-intensive mining sector in the medium to long term.
Topic:
Climate Change, Environment, International Cooperation, and Carbon Emissions
Political Geography:
Global Focus

9. A Review of Sierra Leone’s Mines and Minerals Act

Author:
Tehtena Mebratu-Tsegaye, Perrine Toledano, and Sophie Thomashusen
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
With the support of Oxfam, the Columbia Center on Sustainable Investment reviewed select provisions in the Mines and Minerals Act 2009 and corresponding policy statements from the Minerals Policy 2018 to provide recommendations for how to best align the anticipated new mining law with international best practice. The 2009 law was reviewed with a focus on the following topics: • Fiscal regime; • Climate change; • Access to and use of land; • Community consultations and participation; • Human rights; and • Community development agreements.
Topic:
Climate Change, Human Rights, Natural Resources, Mining, Land, Sustainability, and Community
Political Geography:
Africa, West Africa, and Sierra Leone

10. Resourcing Green Technologies through Smart Mineral Enterprise Development

Author:
Salem Ali, Perrine Toledano, Nicolas Maennling, Nathaniel Hoffman, and Lola Aganga
Publication Date:
02-2018
Content Type:
Working Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
Much has been written in recent years about the urgency to develop new technologies that meet ambitious targets for more efficient energy infrastructure with reduced reliance on fossil fuels. There has also been growing recognition that mineral scarcity can hamper the speed of key technologies being developed. The dominance of China as a global supplier of many technology minerals and the Chinese government’s ability to constrain supply has led to a focus on the international trade dimensions of the challenge. The United States, Japan, the European Union and South Korea have all been keenly focused on securing mineral supply for their domestic industries through a range of initiatives. These efforts have included the World Trade Organization dispute resolution mechanism; research investment in alternative and more widely available materials where possible; and considering strategic stockpiles of minerals from internal sources that harken back to Cold War era strategies for material security. In this report, we argue that a neglected area in addressing the mineral scarcity challenge is the private sector’s current trajectory for geological mineral exploration of key minerals and innovative initiatives on material efficiency and recycling where possible. We term this approach Smart Mineral Enterprise Development (SMED) which entails a partnership between public and private entities to consider pathways whereby public sector data sharing on geology can be coupled with research innovations in the private sector both upstream and downstream of mineral supply. Just as smart energy grids harness efficiencies in electricity supply and demand through a dynamic process of communication, SMED processes can do the same for key technological bottlenecks in mineral supply. We focus on cobalt to highlight the bottlenecks; identify alternative supply sources based on current exploration and recycling technologies; propose ways in which the international legal framework could be adapted to promote investments in critical minerals; and consider ways by which the public sector can assist the private sector in developing a SMED process that would bring forth more efficient and effective entrepreneurial activity to meet our green technology needs.
Topic:
Climate Change, Energy Policy, Science and Technology, Natural Resources, European Union, Green Technology, and Electricity
Political Geography:
United States, China, Europe, Asia, and South Korea