Friday 20/09/2019

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What is the value of sustainability in emerging economies? (III)

Responsible Investment Strategist

The sustainable approach remains focused on facts and real progress rather than on commitments made by politicians. Hence, the model contains very few indicators related to treaties and protocols. But how exactly does the COP21 conference affect our approach? Check out this last article to find the answer.

 

 

 

The UN Summit held in Paris in December of last year is key to the acknowledgement of carbon risk as an economic risk. It fosters the universal commitment to the transition to a low-carbon economy. However, although countries are committed to the issue they still need to live up to their promises. On 22 April, 175 parties (namely 174 countries and the European Union) gathered in New York for the official opening of the agreement’s ratification. Although the parties have signed the Agreement, and have thus demonstrated their intention to ratify it, there are just 15 countries which have officially ratified it so far, every one of which is most exposed to climate change and has the most problems with the issue. The reputation risk is high for the countries which have committed to ratifying the agreement, which reduces the risk they will opt out. However, the agreement will not enter into force until at least 55 parties representing at least 55% of global greenhouse gas emissions have ratified it.

In the coming years, actions will speak louder than words, showing the true commitment of a country to the carbon challenge. Nowadays, other indicators, such as the evolution of carbon emissions as a function of economic activity, the vulnerability to climate change and the extent to which countries are prepared for it, make it possible to better understand the policies which have been adopted than the mere ratification of an agreement, although the latter still remains important.

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