How can the private sector play a greater role in climate action? – Sky News Arabia Sky News Arabia

In this context, the role of the private sector emerges very clearly. It can have a wide impact on improving the environmental situation and contributing to achieving sustainability goals, at a time when environmental challenges are accelerating and the need to adopt sustainable behaviors and strategies that achieve a balance between economic development and environmental protection is growing.

The role of the private sector is a vital driver of the transition towards a more sustainable and environmentally responsible economy. Whether it is through clean technology, sustainable production practices and companies’ commitment to providing products and services that contribute to improving the environment, the private sector can play a prominent role in helping the international community adapt to growing challenges.

In a report last October, the International Monetary Fund called for increasing climate-related private sector investments, especially in emerging countries, in order to reach the desired goal of “net zero emissions by 2050.” The Fund’s data in this context indicate that:

• $2 trillion must be invested annually by 2030 (according to data reported by the International Energy Agency).
• The currently scheduled amount – out of the total 2 trillion requested – amounts to only 400 billion dollars for the next seven years.
• It is crucial to increase the private sector contribution from 40 percent to 80 percent, to meet the significant needs for climate investments in emerging market and developing economies.

Private sector tools

Among the most prominent roles in which the private sector can be relied upon to lead an effective and influential role in regard to climate action, and in light of concerted efforts to confront the major crises that threaten humanity, are the following:

• Investing in clean technology: Companies can support research and development in environmental technology to develop clean and efficient solutions.
• Improving energy efficiency and sustainability: Improving energy efficiency and adopting sustainable practices that reduce the environmental impacts of industrial operations.
• Commitment to zero emissions goals: setting clear goals to reduce carbon emissions and adopting initiatives to achieve them.
• Investing in renewable sources: supporting renewable energy projects and investing in green infrastructure.
• Developing sustainable supply chains: enhancing cooperation with suppliers and motivating them to adopt sustainable practices.
• Arming consumers with information: Providing transparent information to consumers about environmental products and encouraging them to make sustainable consumption decisions.

The role of the private sector

Climate change and sustainable development consultant in Cairo, Dr. Sayed Sabry, in exclusive statements to the “Eqtisad Sky News Arabia” website, said that an important and major role for the private sector can be played on a broader scale in the next phase to support efforts at the levels of adaptation and mitigation regarding the consequences of the climate crisis, which is represented by a group of projects – including projects The aforementioned – which helps in the various paths to confront the climate crisis in cooperation with the official (governmental) agencies in the countries.

He points out that it is necessary to integrate the roles between governments and the private sector, provided that governments work to prepare infrastructure and pioneering projects – especially in emerging countries in particular – in a way that opens the way for more investments by the private sector in projects related to confronting climate change, noting The importance of governments assuming their responsibilities in preparing the infrastructure for high-risk projects that require high technologies, to encourage the private sector.

He added: “Projects such as solar energy projects and others are of high cost and require a strong and prepared infrastructure. In order to encourage the private sector in emerging countries in particular to engage in them more broadly, countries must support these trends and create the appropriate infrastructure in complementary roles.”

Moreover, Sabri stresses the importance of developing legislation with the aim of facilitating support for the private sector in entering more effectively into climate-related projects, and by providing various facilities and incentives to enter into projects, enabling investors to achieve a profit margin, especially since any investor primarily considers The first is the return he will earn.

Government facilities

In order to support the private sector to play a broader role in the context of confronting climate change, there are many other facilities required from governments to support the sector, as follows:

• Providing legislation and incentives: Adopting legislation that encourages sustainable practices and providing financial incentives to companies that adopt these initiatives.
• Encouraging innovation, research and development: Providing financial support and encouraging innovation by investing in clean technology research and development.
• Encouraging sustainable reporting: Imposing requirements on companies to submit periodic reports on their environmental impact and implement sustainability strategies.
• Facilitating access to sustainable financing: Providing facilities for companies to obtain financing that supports environmental projects.
• Promoting public-private cooperation: Encouraging cooperation between the government and the private sector through partnerships to achieve specific environmental goals.
• Educating and raising awareness: Promoting educational campaigns about the importance of environmental responsibility and the benefits of sustainability.

According to Sabri, by supporting the private sector and providing the necessary facilities, governments can play a vital role in stimulating effective participation in climate action, thus achieving sustainable development and preserving the environment.

Financing and investment challenges

However, the climate change and sustainable development consultant in Cairo points out, at the same time, a group of obstacles and impediments that stand in the way of expanding the private sector’s participation in these projects, the most important of which is the current economic conditions that the world is suffering from, and the high severity of risks (..).

Economic crises can significantly affect the role of the private sector in climate change projects in several ways, as follows:

• Reduced financing: During economic crises, the private sector may reduce its investments and available financing for environmental and green technology projects. This may be a result of a lack of financial liquidity and a decline in investments due to economic uncertainty.
• Project delays: Underinvestment may cause delays in planned projects, which could impact sustainable and clean technology efforts that can play a role in combating climate change.
• Reduced innovation: Economic crises may have a negative impact on innovative thinking and environmental technology development. The main focus of companies in such periods can be on survival or continuity rather than investing in long-term projects.
• Change in priorities: Companies’ priorities may change during economic crises to focus on continuity and achieving quick profits instead of investing in projects that take a long time to achieve financial returns.
• Impact on government support: Economic crises may affect the ability of some governments to provide economic incentives to promote sustainable projects, reducing the possibility of the private sector supporting these projects.
• Job losses: If the economic crisis leads to significant job losses, this may cause less interest in environmental issues and climate change, as individuals’ first concern may be to survive and secure their basic requirements.

Deputy Director of the Financial Affairs Department at the International Monetary Fund, Ruud de Mooij, said in an online press conference last month that about 40 percent of emerging markets were classified as below investment grade, which means that they are not currently “part of the… Investable area. This reflects the specificity of the landscape for emerging countries that face multiple and escalating challenges.

During his speech at the ADIPEC 2023 exhibition and conference, Dr. Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, and President-designate of the Conference of the Parties (COP28), renewed the call for the need to triple renewable energy production by 2030, stressing that the world needs to reduce emissions. By at least 43 percent by 2030 to avoid global warming exceeding 1.5 degrees Celsius, and investments in clean energy technology reached a record level of $1.7 trillion last year.

The international community

At the same time, in his interview with the “Eqtisad Sky News Arabia” website, the climate change consultant speaks about the importance of the role that the international community can play in general in the context of carrying out its responsibilities regarding the climate crisis, and the major countries fulfilling their pledges, considering that some of those pledges “ “Doubtful” in light of the economic crisis affecting some of these countries, and efforts aimed at achieving climate goals are subject to backlash due to the broader impact of these economic conditions, including some countries resorting to returning to using coal to generate electricity, in light of the energy crisis.

On the other hand, the energy crisis and other similar crises must push to expand investments in alternative energy sources and move forward in terms of the energy mix, which is supposed to accelerate the investments and efforts of the private sector in this context, to benefit from favorable opportunities.