 Wednesday was finance day at COP26, bringing together finance ministers and central bankers to discuss how to fund a green transition. UK Chancellor Rishi Sunak, speaking to the conference, declared that the rich world would belatedly meet their decade-old pledge to provide $100 billion per year to developing countries. He also spent time emphasising the importance of private finance. But public investment alone isn't enough. Our second action is to mobilise private finance. Let me pay an enormous tribute to Mark Carney for his leadership, leadership that is delivering results. The Glasgow Financial Alliance for NetZero has now brought together financial organisations with assets worth over $130 trillion of capital to be deployed. This is a historic wall of capital for the NetZero transition around the world. On the screen behind Sunak does sound impressive, but is it all just hot air? To find out, I'm joined by Adrian Buller, who is an environmental economist at the Commonwealth think tank. Adrian, welcome back to Navarra. My first question to you is about that $130 trillion, which is apparently being made available to achieve NetZero. That's a lot of money. If that were the case, that would be transformational. Is there really $130 trillion, which is now committed to achieving NetZero? What's going on here? What are they talking about? Yeah, I mean, not at all. If it sounds like an outrageously large number, that's because it is, to put it in context, the combined capitalisation of every listed company in the entire world is $120 trillion, so less than this. It's because this number has nothing to do with money that's actually committed to any kind of activities related to climate finance. It's just the aggregate pool of assets that is controlled in some shape or form by the 450 or so financial institutions that have signed up to that. Insurers, asset managers, banks, basically anything they've got on their balance sheets, counts towards that $130 trillion figure. That means things like my credit card debt, or if you have a mortgage, that's an asset that's technically counted in that figure, but obviously that's not being mobilised in any way towards combating the climate crisis. It's a clever sleight of hand, although it's so ridiculous that I think they almost overstepped it. The depressing bit is that even at that size, it's actually still less than half of global financial assets. It's about 40% that's even made this kind of ambiguous commitment to maybe one day sort of align themselves with Nazira. What is the commitment that they've made? They've joined this alliance, which Mark Carney seems to be leading. What have they committed to? What have they suggested that they will do? My Canadian breathman, Mark Carney, has basically committed everyone to sign up to this pledging voluntarily that they will align their portfolios with net zero by 2050. The trouble is that there's no sort of agreed standard on how that actually looks for the financial system. It's a complicated question. You're funding things that might have lifetimes that extend decades into the future, so it's tricky to actually do. Those kinds of things can take years to establish, which are obviously years that we don't have. They've said that they're going to create an international standards board to do that, but who knows how long that will really take. Even then, these are voluntary commitments, and there's nothing in this agreement that says you can't continue funding new fossil fuel projects into the future, even though the International Energy Agency has already, it's a pretty conservative organization, and it has already said there's no space for new fossil fuel projects. Basically, it's just like a toothless exercise in PR, in my opinion. It's great that finance has decided it cares about its green image, but unfortunately, it's at the moment just all voluntary wishy-washy fluff, basically. Let's go back to our friend Rishi, because he did make some separate pledges, which sounded to me at least like they would have some legislative force or wouldn't be entirely voluntary. Here he is in that same speech, saying he would help rewire the financial system to funnel that cash towards a green transition. Let's take a look. What matters now is action, to invest that capital in our low carbon future. To do that, investors need to have as much clarity and confidence in the climate impact of their investments as they do in the traditional financial metrics of profit and loss. So our third action is to rewire the entire global financial system for net zero, better and more consistent climate data, sovereign green bonds, mandatory sustainability disclosures, proper climate risk surveillance, stronger global reporting standards, all things we need to deliver, and I'm proud that the UK is playing its part. We've already made it mandatory for businesses to disclose climate-related financial information, with 35 other countries signing up to do the same. Today, I'm announcing that the UK will go further and become the first ever net zero-aligned financial centre. This means we are going to move towards making it mandatory for firms to publish a clear, deliverable plan, setting out how they will decarbonise and transition to net zero with an independent task force to define what's required. So we're seeing that they're talking about new transparency commitments on firms to disclose their environmental impacts and environmental risks, and also a responsibility for UK firms to demonstrate they are on track towards net zero. He's suggesting there'll be some sort of independent body to make sure they are doing that. Adrian, worry of those two announcements or suggestions from Rishi Sunak? Were they significant? I mean, there's a couple of good things sprinkled in there, you know, give us some crumbs which are, you know, green sovereign bonds or an international reporting standard. But ultimately, I mean, he doesn't even accurately represent his own, you know, new strategy in that speech. So the commitments around mandating that companies disclose how they'll get to net zero is actually a lot weaker than that. So you can just go on the government's own fact check website and it says, you know, will reporting how your company will reach net zero be mandatory. And the answer is no. What they are mandating is that you, you know, disclose some information that you've thought about transition risks, you've thought about the climate crisis and, you know, how you'll adapt to the transition in some way, but there's no actual requirement for you to commit to reaching that zero by 2050 and set up plans to do that. There's also no requirement around, you know, eliminating carbon intensive activities. So again, it all comes down to, you know, this idea that somehow with more information, with enough perfect information, the rational actors of the market will finally, you know, allocate capital appropriately. When obviously, you know, that's not the case, the financial crisis was any indication. But, you know, we've got lots of information. We know that coal plants are driving the climate crisis and yet we continue to finance them. The problem is that it's, you know, profitable in the near term and, you know, the chancellor doesn't want to do anything to kind of get in the way of that. So it's all kind of about, you know, disclosure, what this will mean for companies as opposed to, you know, actually kind of having any impact on what they'll really do in the real economy. That's a really good point. Transparency will only get us so far, given that we know which industries are polluting and, you know, they're still doing it. There was some potential good news from COP26, at least the headline that really got my attention, which was that potentially the commitments made at COP26 will help limit global warming or are predicted to limit global warming to below two degrees. That's according to a report by scientists at the University of Melbourne. They modeled that, yes, if the latest commitments are all reached, then warming would only be 1.9 degrees. And I'll say only 1.9 degrees. Obviously, we need it to be 1.5 degrees to avoid tipping points, etc., and for the most vulnerable countries to be okay. But, you know, that's a big advantage on what came before. And we can go to a quote from the scientists involved. This is according to The Guardian, the reports author, Malt Meinhausen, an associate professor in climate scientists at Melbourne, climate science at Melbourne, and a lead author for the Intergovernmental Panel on Climate Change said the momentous shift in the projected global warming was largely triggered by recent improvements in India and China's emission targets for 2030, as well as India's commitment to net zero by 2070. He said it was the first time the combined pledges and probable emissions path of more than 190 countries had given a better than 50% chance of limiting warming to below two degrees. Now, Adrian, as I said, you know, we're aiming for 1.5 degrees. So 1.9 is still, you know, still not what we need. But it's a hell of a lot of, you know, it's a downside improvement from what we've been used, what we've been used to hearing. Yeah, I mean, you know, I'm not a climate modeler, so I'm going to assume that the science is sound. However, I think, you know, yeah, it's great to have this kind of news prior to this, the same models were showing that, you know, based on the nationally determined contributions that had already been made before this cut, we were closer to, you know, three degrees. So that's a market improvement. A lot of it comes down to, as you pointed out there, the pledges from China, India, other major emitters like Nigeria. At the end of the day, it is still 50% chance of reaching a temperature that commits, you know, unfathomable numbers of more people to suffering every year, you know, drought, extreme weather flooding. And a lot of it comes down to two things. One, you know, what happens in the next 10 years, so up until 2030, you know, it's not that we can just kind of faff around until 2040 and then be like, oh, okay, now we're going to do net zero. Every single ton of carbon that we emit makes it harder and harder to reach net zero and makes that curve steeper and steeper. So all of it will hinge on, you know, what countries actually do in the near term. And the other fact is that a lot of these commitments that have been incorporated into that analysis are from lower income and emerging economies that have made them, and very rightfully so, contingent on rich countries meeting basic commitments about, you know, the climate finance pledge of $100 billion a year that we've been failing to meet, scaling that up and, you know, all sorts of kind of transfers, ideally of wealth in the form of cash grants, although that's perhaps which we're thinking, you know, from the global north to the global south. So there's a lot of contingencies in there, but you know, those contingencies have always been there. So it is, you know, a sliver of potential, soft, minute, good news amidst an otherwise kind of been fire of a conference. But yeah, there's still a lot of contingency and, you know, 1.9, as you pointed out, is still not good enough.