The recent COVID-19 pandemic had significant implications for both national economies and the global financial system, in addition to hindering the achievement of the sustainable development goals agenda. The UNDP estimates global human development—a combination of education, health, and living standards—could fall this year for the first time since 1990, which highlights how the effects of the pandemic present both an enormous challenge and tremendous opportunities for reaching the 2030 Agenda and the Sustainable Development Goals (SDGs).
With the additional challenges arising from climate change, governments have committed to several policy measures which promote a green recovery to rebuild their economies, while benefiting the people and the planet. The Organisation for Economic Co-operation and Development (OECD) estimates that the public resources committed by governments to support a green recovery amount to at least USD 312 billion. These measures present tremendous opportunities for green finance in general, and Islamic green finance in particular, in the context of Muslim-majority countries.
The State of Qatar, in light of its National Vision 2030 and in order to enhance the diversification of its economy away from hydrocarbon, has taken several measures to mitigate climate change. These include increasing the use of solar energy to more than 20% of its energy mix by 2030, the optimal use of water, improving air quality, waste recycling, increasing green spaces, in addition to the country’s commitment to organizing the first “carbon neutral” tournament featuring the use of solar-powered stadiums and water and energy-saving cooling and lighting technology. The State is also a signatory of the Paris Agreement on Climate Change and supports a number of global initiatives in relation to climate change mitigation.
All these initiatives could be funded via green finance. In this regard, there are four global trends in the financial industry that the State of Qatar can leverage to promote green finance for green recovery:
Growth of SRI and ESG awareness:
Socially responsible investing (SRI) and environmental, social, and governance (ESG) investing are two of the fastest growing investing areas globally. Both are driven by the increasing awareness of social and environmental responsibility. According to the Global Sustainable Investment Alliance, global sustainable investment reached $30.7 trillion in the five major markets at the start of 2018, a 34 percent increase in two years. These include Europe, United States, Japan, Canada, Australia, and New Zealand. Developing green finance instruments and products can attract a growing SRI investor base that seeks to align social and environmental values with its investment portfolios.
Upward trend of Islamic Finance:
According to the Islamic Financial Services Board (IFSB), the total worth of the Islamic Financial Services Industry across its three main segments (banking, capital markets, and takaful) is estimated at $2.44 trillion in 2019, marking a year-on-year 11.4% growth in assets in US dollar terms. According to Thomson Reuters, the industry is projected to reach $3.8 trillion by 2022. Qatar is one of the global Islamic finance hubs with Islamic finance assets representing more than 20% of the local financial system’s assets. With the recent development of Islamic green finance, Qatar has the opportunity to position itself as a sustainable finance leader in the region by promoting synergies between Islamic and green finance growing markets.
Financial innovation for sustainability:
The United Nations Conference on Trade and Development (UNCTAD) highlights that achieving the Sustainable Development Goals (SDGs) will take between $5 and $7 trillion, with an investment gap in developing countries of about $2.5 trillion and the additional net investment required to implement renewable energy solutions standing at $ 1.4 trillion, or about $100 billion per year on average between 2016 and 2030, according to the International Renewable Energy Agency (IRENA). Mitigating this funding gap requires an engaged private sector to make green investments. That is why several green instruments and products were developed across the various segments of the financial industry. These include green retail banking products, including green loans and green mortgages, green corporate and investment products, green project finance, and green venture capital and private equity, as well as green capital market instruments, like green investment funds, green bonds, and sukuk.
Integration of sustainability objectives into national strategies:
Several governments around the world have integrated sustainability objectives and green finance roadmaps into their national strategies, either through a top-down approach, whereby green finance frameworks and taxonomies are harmonized at the country level (as with China), or via market-led collaborative actions. In addition, to overcome private sector investment barriers, such as high up-front costs, long investment timelines, and higher perceived risks, several countries have put in place incentives in the form of subsidies and tax exemptions. The State of Qatar can leverage these experiences through collaborations and partnerships to develop a unique green finance model in the region
Green Sukuk: A Fast Growing Market
Green sukuk is an innovative instrument for financing green infrastructure. It has the potential to become a new asset class targeting both Islamic and socially responsible investors.
Since the issuance of the first green sukuk in 2017 in Malaysia, the market has grown significantly, with twelve issuers in Indonesia, Malaysia, and the United Arab Emirates tapping the market, in addition to the Islamic Development Bank. About $7.6 billion in four currencies (EUR, IDR, MYR, and USD) was raised up to September 2020, with tenors ranging from two to 21 years. The amounts raised were allocated to green construction, energy efficiency, and clean transportation projects.
Promoting Green Finance in Qatar
Although the green finance market is still in an early stage of development in the country, the market has witnessed several initiatives by local institutions that might pave the way to the development of a more dynamic market. In September 2020, Qatar National Bank (QNB) issued the first ever green bond in Qatar, a $600 million tranche, under its MTN Program, with a maturity of five years under its established Green, Social, and Sustainability Bond Framework.
In addition, Qatar Stock Exchange (QSE) introduced an ESG Guidance in 2017 to assist listed companies wishing to incorporate ESG reporting into their existing reporting processes.
While Bond and sukuk issuance in Qatar reached $28 billion in 2019, the market is largely driven by government issuance and commercial banks for corporate issuances, with the exception of Ezdan Sukuk in 2016 and 2017. The development of green sukuk in the country with the enabling ecosystem could facilitate corporate sukuk issuance, thus enhancing market liquidity.
In conclusion, promoting a green recovery in line with the country’s economic diversification objectives and climate mitigation strategies will require the development of an enabling ecosystem for the development of green finance in Qatar. Developing a pipeline of bankable green projects at the country level, market awareness, and promoting synergies between Islamic and green finance will provide the basis for further innovation and policy action, such as green labels, frameworks, and incentives.
Increasing Frequency of Cyclones and Flooding Portends Worse Problems
Sixteen years ago on August 29th, hurricane Katrina struck the Louisiana coast causing widespread damage that was estimated at $125 billion. This year, by a remarkable coincidence, hurricane Ida hit on the same date, again August 29th. The weather service holds the end of August though the beginning of September as the period with the highest likelihood of tropical cyclones hitting the Louisiana coast. In light of this, perhaps the coincidence is not quite as uncanny.
While not as large as Katrina, hurricane Ida was more powerful with winds in excess of 150 miles per hour. That is in line with climate scientists who now believe extreme weather events will tend to increase in both severity and frequency unless something is done about global warming.
Another example has been the heat wave last June in the Pacific Northwest in which hundreds of people died. Canada set an all-time-high temperature record of 49.6 degrees Celsius in the village of Lytton. The chance of all this happening without human-induced global warming is about 1 in a 1000. However, the warming makes the event 150 times more likely.
Following Ida was hurricane Larry. Also powerful, it formed in the Atlantic but luckily for the Atlantic coast chose a path straight north. These recurring extreme weather events have caught the attention of scientists. Thus Myhre from the Center for Climate Research in Norway and his coauthors find a strong increase in frequency and confirm previously established intensity. They collected data for Europe over a three-decade period (1951-1980) and repeated the process for 1984-2013. This historical data also allowed them to develop climate models for the future, and, as one might imagine, the future is not rosy.
Expanding their horizon, the authors note that historical and future changes in Europe follow a similar pattern. This does not hold when including the US, Japan and Australia which are likely to experience bigger changes. Given intensity and frequency going hand in hand and also that the study considered natural variability alone, we can only dread the inclusion of human forcing through climate drivers like greenhouse gases.
For coastal residents, sea level rise adds to the hazard. Worse, it is now a problem for people several miles inland. In South Florida, drainage canals are used to return water to the ocean after storm and flooding events; the difficulty now lies in rising sea levels that hinder the efficiency of the drainage canals.
Residents as far away as 20 miles inland have noticed water coming up their driveway, a new and frightening portend of the future. The South Florida Water Management District oversees the canals. It raises and lowers the gates controlling flow to the ocean or vice versa. Thus they can open the gates to release flood water from storms to the ocean.
The problem now is that the ocean level in the Atlantic during some storms is higher than the water level inland so they cannot open the gates — that would simply bring in more water.
All of these happenings are clearly not a happy future prospect … unless we take global warming seriously and act soon.
Human activity the common link between disasters around the world
Disasters such as cyclones, floods, and droughts are more connected than we might think, and human activity is the common thread, a UN report released on Wednesday reveals.
The study from the UN University, the academic and research arm of the UN, looks at 10 different disasters that occurred in 2020 and 2021, and finds that, even though they occurred in very different locations and do not initially appear to have much in common, they are, in fact, interconnected.
A consequence of human influence
The study builds on the ground-breaking Intergovernmental Panel on Climate Change (IPCC) assessment released on 9 August, and based on improved data on historic heating, which showed that human influence has warmed the climate at a rate that is unprecedented in at least the last 2,000 years. António Guterres, the UN Secretary-General described the IPCC assessment as a “code red for humanity”.
Over the 2020-2021 period covered by the UN University, several record-breaking disasters took place, including the COVID-19 pandemic, a cold wave which crippled the US state of Texas, wildfires which destroyed almost 5 million acres of Amazon rainforest, and 9 heavy storms in Viet Nam – in the span of only 7 weeks.
Whilst these disasters occurred thousands of miles apart, the study shows how they are related to one another, and can have consequences for people living in distant places.
An example of this is the recent heatwave in the Arctic and cold wave in Texas. In 2020, the Arctic experienced unusually high air temperatures, and the second-lowest amount of sea ice cover on record.
This warm air destabilized the polar vortex, a spinning mass of cold air above the North Pole, allowing colder air to move southward into North America, contributing to the sub-zero temperatures in Texas, during which the power grid froze up, and 210 people died.
COVID and the Cyclone
Another example of the connections between disasters included in the study and the pandemic, is Cyclone Amphan, which struck the border region of India and Bangladesh.
In an area where almost 50 per cent of the population is living under the poverty line, the COVID-19 pandemic and subsequent lockdowns left many people without any way to make a living, including migrant workers who were forced to return to their home areas and were housed in cyclone shelters while under quarantine.
When the region was hit by Cyclone Amphan, many people, concerned over social distancing, hygiene and privacy, avoided the shelters and decided to weather the storm in unsecure locations. In the aftermath, there was a spike in COVID-19 cases, compounding the 100 fatalities directly caused by Amphan, which also caused damage in excess of 13 billion USD and displaced 4.9 million people.
The new report identifies three root causes that affected most of the events in the analysis: human-induced greenhouse gas emissions, insufficient disaster risk management, and undervaluing environmental costs and benefits in decision-making.
The first of these, human induced greenhouse gas emissions, is identified as one of the reasons why Texas experienced freezing temperatures, but these emissions also contribute to the formation of super cyclones such as Cyclone Amphan, on the other side of the world.
Insufficient disaster risk management, notes the study, was one of the reasons why Texas experienced such high losses of life and excessive infrastructure damage during the cold snap, and also contributed to the high losses caused by the Central Viet Nam floods.
The report also shows how the record rate of deforestation in the Amazon is linked to the high global demand for meat: this demand has led to an increase in the need for soy, which is used as animal feed for poultry. As a result, tracts of forest are being cut down.
“What we can learn from this report is that disasters we see happening around the world are much more interconnected than we may realize, and they are also connected to individual behaviour”, says one of the report’s authors, UNU scientist Jack O’Connor. “Our actions have consequences, for all of us,”
Solutions also linked
However, Mr. O’Connor is adamant that, just as the problems are interlinked, so are the solutions.
The report shows that cutting harmful greenhouse gas emissions can positively affect the outcome of many different types of disasters, prevent a further increase in the frequency and severity of hazards, and protect biodiversity and ecosystems.
Blue sky thinking: 5 things to know about air pollution
Around 90 per cent of people go through their daily lives breathing harmful polluted air, which has been described by the United Nations as the most important health issue of our time. To mark the first International Day of Clean Air for blue skies, on 7 September, UN News explains how bad it is and what is being done to tackle it.
1) Air pollution kills millions and harms the environment
It may have dropped from the top of news headlines in recent months, but air pollution remains a lethal danger to many: it precipitates conditions including heart disease, lung disease, lung cancer and strokes, and is estimated to cause one in nine of all premature deaths, around seven million every year.
Air pollution is also harming also harms our natural environment. It decreases the oxygen supply in our oceans, makes it harder for plants to grow, and contributes to climate change.
Yet, despite the damage it causes, there are worrying signs that air pollution is not seen as a priority in many countries: in the first ever assessment of air quality laws, released on 2 September by the UN Environment Programme (UNEP), it was revealed that around 43 per cent of countries lack a legal definition for air pollution, and almost a third of them have yet to adopt legally mandated outdoor air quality standards.
2) The main causes
Five types of human activity are responsible for most air pollution: agriculture, transport, industry, waste and households.
Agricultural processes and livestock produce methane, an extremely powerful greenhouse gas, and a cause of asthma and other respiratory illnesses. Methane is also a by-product of waste burning, which emits other polluting toxins, which end up entering the food chain. Meanwhile industries release large amounts of carbon monoxide, hydrocarbons, particulate matter and chemicals.
Transport continues to be responsible for the premature deaths of hundreds of thousands of people, despite the global phase out of dangerous leaded fuel at the end of August. This milestone was lauded by senior UN officials, including the Secretary-General, who said that it would prevent around one million premature deaths each year. However, vehicles continue to spew fine particulate matter, ozone, black carbon and nitrogen dioxide into the atmosphere; it’s estimated that treating health conditions caused by air pollution costs approximately $1 trillion per year globally.
Whilst it may not come as a great shock to learn that these activities are harmful to health and the environment, some people may be surprised to hear that households are responsible for around 4.3 million deaths each year. This is because many households burn open fires and use inefficient stoves inside homes, belching out toxic particulate matter, carbon monoxide, lead and mercury.
3) This is an urgent issue
The reason that the UN is ringing alarm bells about this issue now, is that the evidence of the effects of air pollution on humans is mounting. In recent years exposure to air pollution has been found to contribute to an increased risk of diabetes, dementia, impaired cognitive development and lower intelligence levels.
On top of this, we have known for years that it is linked to cardiovascular and respiratory disease.
Concern about this type of pollution dovetails with increased global action to tackle the climate crisis: this is an environmental issue as well as a health issue, and actions to clean up the skies would go a long way to reducing global warming. Other harmful environmental effects include depleted soil and waterways, endangered freshwater sources and lower crop yields.
4) Improving air quality is a responsibility of government and private sector
On International Day of Clean Air for blue skies, the UN is calling on governments to do more to cut air pollution and improve air quality.
Specific actions they could take include implementing integrated air quality and climate change policies; phasing out petrol and diesel cars; and committing to reduce emissions from the waste sector.
Businesses can also make a difference, by pledging to reduce and eventually eliminate waste; switching to low-emission or electric vehicles for their transport fleets; and find ways to cut emissions of air pollutants from their facilities and supply chains.
5)…and it is our responsibility, as well
At an individual level, as the harmful cost of household activities shows, a lot can be achieved if we change our behaviour.
Simple actions can include using public transportation, cycling or walking; reducing household waste and composting; eating less meat by switching to a plant-based diet; and conserving energy.
The Website for the International Day contains more ideas of actions that we can take, and how we can encourage our communities and cities to make changes that would contribute to cleaner skies: these include organizing tree-planting activities, raising awareness with events and exhibitions, and committing to expanding green open spaces.
How clean is your air?
You may well be wondering exactly how clean or dirty the air around you is right now. If so, take a look at a UNEP website which shows how exposed we are to air pollution, wherever we live.
The site indicates that more than five billion people, or around 70 per cent of the global population, are breathing air that is above the pollution limits recommended by the World Health Organization.
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