The global financial system must be reformed because it facilitates “irresponsible emissions” that treat the global atmosphere “like an open sewer,” according to former US Vice President Al Gore.

In a broad interview with the Financial Times, the politician-turned-climate activist said the world could no longer afford the financial industry to continue to support carbon-intensive projects on a large scale.

Gore, who co-founded sustainable investment fund manager Generation Investment Management in 2004 with financier David Blood, said an overhaul of the banking, asset management and accounting sectors was crucial if the countries wanted to achieve the goal of net zero emissions by 2050.

Speaking ahead of the COP26 climate conference in Glasgow which begins next week, Gore said growing inequalities and the growing number of so-called climate refugees – mass movements of people fleeing weather disasters – are “responsible of the emergence of populist authoritarianism in so many countries, so we have a sense of urgency that is now spreading. ”

Gore called for increased regulation and disclosure to force banks, traditional asset managers, private equity firms and other asset owners to rethink the way they manage climate change risks.

Banks and asset managers must stop lending or providing capital to companies that engage in “destructive practices” and increase their support for companies that can drive the transition to a low carbon economy, a- he declared.

An investigation by campaign group Global Witness found that global banks and asset managers have provided a total of $ 119 billion in financing to 20 major agribusinesses linked to deforestation in the five years since entry into force of the Paris Agreement.

Gore believes that banks’ regulatory capital requirements should be changed to incorporate climate change and said global accounting standards need to be reformed to integrate sustainability accounting and financial accounting into a larger framework. This would bring nonfinancial factors into business balance sheets and calculate a monetary value for “externalities” – the costs of running a business that it does not bear on its own. It can be a company’s contribution to air pollution, its reduction in biodiversity or its impact on inequalities.

Gore criticized the carbon offsets market in the campaign for net zero emissions, where companies buy offsets from groups that plant and protect trees, install renewables, or carry out other activities aimed at cleaning up the atmosphere. – and bet them against their own emissions.

Compensation “cannot be a card without release from prison,” he said. They have “a role to play”, but as a last resort: “the focus must be on reducing emissions”.

“It is suicidal for the human race to continue on this path and pretend that it can be somehow negated by promising to plant trees here, there or elsewhere. It is just not realistic. ”

Regulators around the world are increasingly seeking to make climate-related financial reporting mandatory for certain companies. Gore said it was “essential” that these carbon disclosure requirements apply to asset owners and fund managers, as well as the companies they invest in – and that the rules apply. to private and public companies.

He said the dominant role played by the private equity industry, which is experiencing a period of unprecedented growth, has become a source of concern in reducing emissions. “When large asset managers offload assets [because of climate concerns], this highlights the need for mandatory disclosure in private equity so that these same assets do not continue to operate under new owners in the shadows.

Gore said it was “disappointing” that some world leaders, including Russian President Vladimir Putin and China’s Xi Jinping, were unlikely to visit Glasgow, but added he was optimistic about the forum’s success. “COP26 is likely to build on progress rather than reduce it,” he said.

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