Climate change is a clear threat to societies around the world, with short, medium and long-term impacts on their livelihoods. Climate change mitigation is paramount if we are to reduce greenhouse gas emissions to a safe level, preferably no more than 1.5o C above pre-industrial levels. While many development partners and donor organizations around the world support countries and communities to better adapt to climate impacts, the private sector must do more.
Many put the onus on governments to deliver on lofty climate goals. But government commitments can and should be bolstered by the engagement and tangible actions of the private sector.
The private sector is a critical player in the climate action space. Since 1988, 100 coal and oil producing companies are responsible for over 70 percent of global greenhouse gas emissions; accounting for 1 trillion tons of greenhouse gas emissions. Another 10-15 percent comes from the supply-demand of key forest risk commodities, such as timber, cattle, soy, mineral ores, coffee, palm oil, and rubber, which are the biggest known global drivers of deforestation. Nevertheless, in 2018, private funding accounted for only 18.5 percent of climate finance, with an outsized focus on cutting emissions of the energy sector of middle-income countries.
However, governments can contribute to long-term shifts in how the private sector operates through foreign aid; particularly in developing countries that are the most vulnerable to climate change. For example, the USAID Green Invest Asia project helps agriculture and forestry businesses in Southeast Asia improve their sustainable commodity production and manage environmental risk. The effort to date has contributed to the mobilization of $42 million in private finance into the ‘Agriculture, Forestry and Other Land Uses’ sector, translating to improved business efficiency and agricultural productivity on over 116,000 hectares of land, and the projected reduction of 8.7 million tons of CO2 over 15 years.
Similarly, the USAID Strengthening Environmental Governance Across Regions (SEGAR) project will bring Indonesia closer to achieving its environmental and social sustainability goals — Indonesia’s New Low Carbon Growth Path aims to reduce GHG emissions by 43% by 2030, and prevent the loss of nearly 16 million hectares of forestland by 2045 — within private sector natural resource-based commodity production supply chains. By 2026, USAID SEGAR plans to bring 7 million hectares of land under improved management, reduce 55 million metric tons of CO2 (the equivalent of 12 million cars off the road for a year), and mobilize $45 million in additional "green investment,” further mitigating climate change beyond the life of the project.
Sustainability is smart business, but implementing strategies to reduce and measure carbon emissions, meet global environmental and social standards and ecosystem restoration targets, and access financing can be challenging. That is why USAID—through projects like USAID Green Invest Asia and USAID SEGAR—serves as a catalyst to reduce risk and create an enabling environment for private sector-led environmental sustainability.
The United States is committed to renewing its strong alliance in the effort to confront the climate crisis. Cooperating with global partners, particularly the other major economies, will mobilize public and private sector finance to drive the net-zero transition and help vulnerable countries cope with climate impacts. Collectively, we have a narrow moment to pursue action in order to avoid the most catastrophic impacts of this crisis and to seize the opportunity that tackling climate change presents.
This blog is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this blog are the sole responsibility of Pact and do not necessarily reflect the views of USAID or the United States Government.
David Bonnardeaux is a seasoned environment and natural resource management practitioner with over 15 years of experience. He has worked and lived across the globe, from Malawi, Ghana, Ethiopia and Zimbabwe, to Vietnam, Myanmar, Thailand, Mexico and Peru. He has worked and consulted for the World Bank, World Wildlife Fund, Conservation International, Winrock International, USAID/Ghana, SGS Environment, Development Alternatives Inc. and McKinsey Social Initiative. At an earlier stage in his life, he consulted for the BBC Natural History Unit on a number of wildlife documentaries including The Life of Mammals and Andes to Amazon working alongside Sir David Attenborough in Costa Rica, Venezuela and Ecuador. He is an avid photographer with a focus on landscapes, portraits, nature and photojournalism, with his photos published in World Bank, USAID, Conservation International, Survival Quarterly and Roll Call publications, and featured in the Wildlife Heroes book.