United Nations Environment Programme (UNEP)

Address by Achim Steiner, UN Under-Secretary-General and UNEP Executive Director At the First Official Meeting of Ministers of Environment of the BRICS Countries

Developing Green Economies for Sustainability and Competitiveness

Moscow -- Your Excellency Sergey Donskoy, Minister of Natural Resources and Environment of the Russian Federation.

Your Excellencies:

Izabella Teixeira, Minister of Environment, Brazil;

Shri Prakash Javadekar, Minister of State for the Environment, Forest & Climate Change, India;

Chen Jining. Minister of Environmental Protection, the People's Republic of China

Edna Molewa, Minister of Water and Environmental Affairs, the Republic of South Africa

Esteemed guests, colleagues, ladies and gentlemen,

To begin, I would like to offer your Excellencies my warmest congratulations for the convening of the first BRICS Ministerial meeting on the Environment. I wish this inspiring initiative, whose seeds were sown at the inaugural UNEA last June, enduring success.

It is indeed a privilege to address this distinguished gathering and I extend my appreciation to you and the Russian Federation, our generous hosts, for this kind invitation.

UNEP has worked closely with BRICS nations though the past years, witnessing first-hand the leadership, vision and determination by BRICS governments to embrace a bold transition towards low carbon resource efficiency, inclusive green economic growth and overall sustainable development.

From Russia's energy-saving policies and India's ambitious renewable energy targets and forest-based budgeting to South Africa's Green Fund, Brazil's Sao Paulo sub-national green economy initiative and China's implementation of the Ecological Civilization, BRICS nations have been pioneering the green economy transition.

The establishment of environmental public-private partnership mechanisms in the context of the BRICS, taking the Saint Petersburg Initiative into account, will undoubtedly expedite and further strengthen the transition and will serve as a platform for knowledge sharing, technology transfer and investment.

Innovative financial mechanisms under the BRICS, such as the soon-to-be launched New Development Bank and the Contingent Reserves Arrangement, have the potential to not only ease short-term liquidity pressure and contribute to international financial stability, but also has the potential to construct an enduring green infrastructure, longer term competitiveness for the BRICS economies and strengthen South-South cooperation.

Excellencies, ladies and gentlemen,

2015 is a momentous year for sustainable development.

The coming months will determine how the development priorities of developing and emerging economies are articulated and reflected in the context of global negotiations.

In July, the world will hopefully agree on new means to align global financing with sustainable development priorities (at the 3rd International Conference on Financing for Development in Addis Ababa), just months ahead of the crucial SDGs Summit in New York, which will define a path for the next generation of development. At the year's end, a new legally-binding and universal agreement on climate change will be negotiated and hopefully agreed at the UN Climate Change Conference, COP21, in Paris.

The work undertaken through the BRICS platform will undoubtedly influence these processes, unlocking myriad opportunities for future welfare, prosperity and development.

I recall in this context the Fortaleza Declaration and Action Plan, adopted at the Sixth BRICS Summit last July, where leaders reaffirmed their commitments to cooperate on environmental issues, including a successful agreement on climate change at COP 21; a commitment to support the SDG process and Post-2015 Development Agenda - in line with the Rio principles on sustainable development; and to promote the deployment of clean energy and energy efficient technologies - taking into account national policies, priorities and resources.

Unlocking Climate Finance

As world governments intensify efforts to achieve a global agreement on climate change in time for the Paris Conference, it is no exaggeration that success in Paris will largely depend on progress and agreement on the issue of climate finance; and the prospect of mobilizing it at the required pace and scale.

Tackling climate change requires economic transformation and a re-channeling of private finance.

There is no silver bullet for the mobilisation of private climate finance, which ranges from micro-scale roof-top solar voltaic installations to large-scale offshore wind parks; from the restoration of ecosystems such as mangrove systems to the climate-proofing of large man-made infrastructure.

Equally varied is the private financial landscape spanning everything from micro-finance institutions, from domestic banks to large infrastructure financiers and institutional investors.

Pathways to Scale

Following the financial crisis, increasing focus is being placed on how the financial system can fulfill its underlying purpose to serve the long-term health of the global economy.

If brought to scale, the US $300+ trillion global financial system could help close the widening gap in sustainable development investment.

Yet, financial markets do not tend to effectively price environmental resources, with the result that the value of natural capital stocks such as clean air, productive soils and abundant water continues to fall in 116 out of 140 countries across the world.

This comes clear in the work of UNEP's Inquiry into the Design of a Sustainable Financial System, which draws on work undertaken in 12 countries and across a range of critical sectors such as banking, insurance, investment and securities.

The Inquiry, launched in early 2014, explores what will potentially be one of the most important contemporary changes in our international economic and development landscape: in other words, the reshaping of our global financial system to fit the needs of sustainable development financing.

Our aim is clear: to speed the transition to an inclusive sustainable economy.

To do so, we need to channel trillions of dollars annually into green investment and many more trillions away from pollutant and natural resource-intensive investment.

The fact remains that today's financial systems - the banks and the pension funds among others - are financing increasing amounts of environmentally damaging investments, and inadequate green investments.

Meeting this challenge, in a nutshell, requires the mobilization of large amounts of private capital.

Even China, with one of the world's strongest fiscal positions, estimates that less than 20 per cent of its annual US S$350 billion incremental green-financing needs can be met through the use of public revenues.

In a marked break with the past, developing nations are playing a leading role in this all-important reshaping, notably those with major economies and rapidly developing financial and capital markets.

Brazil's central bank has established environmental risk management requirements for banks, and is working with market actors in establishing how environmental lender liability might improve both environmental outcomes to Brazil and financial returns to the banks.

The People's Bank of China has established a Green Finance Task Force, co-convened with the UNEP Inquiry, and is working with dozens of public agencies and market actors on developing 14 sets of proposals for enhancing green financing through policy, regulatory and market innovations.

South Africa's stock exchange has led globally in requiring listed companies to report on their sustainability performance, The country's pension fund legislation has led the way in requiring pension fund trustees to take sustainability factors into account in making investment decisions on behalf of intended beneficiaries.

Beyond the BRICS nations, Indonesia's integrated financial regulator, OJK, has delivered a world-first in establishing a ten year Roadmap for Sustainable Finance.

Perhaps it is not surprising that developing countries are leading the way. After all, it is these countries that experience the worst effects of environmental degradation and climate change; impacting health, livelihoods and costing life.

Beyond this, however, are two further reasons for such leadership that I would like to highlight:

Firstly, development banks in emerging economies are built on the principle that financial systems exist to promote development. This is distinct from the OECD model that sees the financial system mainly as an economic sector rather than a development enabler.

Secondly, financial systems in developing countries are evolving rapidly, and so the challenge is to design forward routes, not to retro fit highly developed systems that are present across much of the OECD.

Green bonds, for example, can become part of the development of China's bond markets, just as environmental and social considerations can be designed from the outset, and so more effectively, into the BRICS New Development Bank and the Asian Infrastructure and Investment Bank.

In a year such as 2015 when securing financing for sustainability - both broadly and for climate related actions - is such a critical theme and ambition, the opportunity exists to go beyond identifying 'additional resources for sustainable development' to shaping the contours of a new international financial system; one that is fit for the needs of an inclusive, sustainable, 21st century economy.

Opportunities Ahead

Financial Initiatives

The innovative financial initiatives set by the BRICS present significant opportunities for building sustainable development and resilience across the BRICS nations, as well as in the context of broader South-South cooperation.

Environmental Goods and Services

At the same time, it is estimated that the global market demand for environmental goods and services is projected to rise from US $584 billion in 2004 to close to US $2 trillion by 2020, in particular the global market in low-carbon and energy-efficient technologies.

This presents yet another economic opportunity, especially for emerging economies.

Embracing such potential can help shift labour and resource intensive economies towards a greener model that is more sustainable, competitive and knowledge-based.

Renewable Energy

Some experts still predict that fossil fuels will supply the majority of our energy 'for decades to come', but the evidence strongly points in another direction.

According to UNEP's Global Trends in Renewable Energy Investment 2015, once again in 2014 renewables made up nearly half of the net power capacity added worldwide. Major expansion of solar installations in China and Japan and record investments in offshore wind projects in Europe helped propel global investments to US $270 billion, a 17 per cent surge from 2013 figures.

These climate-friendly energy technologies are now an indispensable component of the global energy mix and their importance will only increase as markets mature, technology prices continue to fall and the need to rein in carbon emissions becomes ever more urgent.

In developing countries, where renewables are best positioned to address the chronic lack of energy access, clean energy investment rose 36 per cent to US $131 billion. It's well on track to surpass investment in developed countries, which amounted to US $139 billion, last year.

Much of the surge by developing economies over recent years has been thanks to investment in China.

This raced up from just $3 billion in 2004 to $83.3 billion in 2014, helped by supportive government policies aimed at boosting power generation in the country, at providing demand for domestic wind and solar manufacturing industries, and - especially recently - at offering an alternative to pollution-inducing fossil fuel generation.

However, the advance of the developing nations in renewable energy has not been only about China. In 2014, Brazil ($7.6 billion), India ($7.4 billion) and South Africa ($5.5 billion) were all in the top 10 of investing countries, while Mexico, Chile, Indonesia, Kenya and Turkey were all in the $1 billion plus club and several others were challenging to join them.

The proportion of world electricity generated from this cumulative installed renewable power capacity rose from 8.5% in 2013 to 9.1% in 2014. The 9.1% of global generation achieved by renewables excluding large hydro in 2014 resulted in an estimated 1.3 gigatonnes fewer CO2 emissions by the world's power system.

Yet, the growth of renewable generation faces a mixture of old and new barriers, sometimes because of the very success of renewables. Coping with 25 per cent or more variable generation is more difficult for grids and utilities than managing a 5 per cent proportion.

If the positive investment trends in renewables are to continue, it is important that major market reforms in the electricity sector are implemented - of the sort that Germany is now attempting with its Energiwende energy transition.

Excellencies, ladies and gentlemen,

A clean energy, resource efficient future is not just possible and desirable; it is imperative.

On a vital, basic level, our decisions and actions today will determine whether the 'Anthropocene' will be an age in which human ingenuity and responsibility will allow 10 billion people to have access to a sustainable future tomorrow, without compromising the vital life support systems of our planet.

As custodians of the future, it is our responsibility to make the right choices and seize every opportunity for a greener and more sustainable future.

Thank you.

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