Tackling Climate Change with World Economic Leader with Sonia Medina

Sonia Medina, named a World Economic Forum Leader in 2014, is one of the most influential voices in the UK climate change space. She is the Executive Director for Climate Change at the Children’s Investment Fund Foundation (CIFF), where she oversees an active portfolio of USD $18B+, and is on the Boards of ClientEarth, Iniciative Climatica Mexico and the Carbon Disclosure Project. In a conversation moderated by Naveen Kler, MBA2022 student and Social Impact Club Conference Chief of Staff, Medina discussed some of the core climate priorities for her organization, the necessity of garnering public buy-in and political support to effectively address the climate crisis and the critical importance of COP26 as a springboard for the ‘decade of delivery.’

“There is no silver bullet to addressing the climate crisis” – Sonia Medina

We are at a turning point in the climate crisis – last year, the EU generated more electricity from renewables than fossil fuels, China finally set target dates for carbon neutrality, joining a multitude of nations and companies in their pledges, and Americans voted to bring an ambitious climate plan into the White House by electing Biden as President. The need for change has become widely accepted and irrefutable – and the question is no longer if, but how. As Medina so aptly puts, there is no single solution applicable across countries or industries to ‘fix’ this crisis. Instead, this requires a complex assessment of which sectors are most agile and able to change, and who is in power to advance this agenda. Diverse markets and industries will require different strategies to achieve carbon neutrality – and although policies such as setting emissions targets, investing in renewables and nuclear energy, or implementing carbon taxes have been utilized successfully to support the climate movement, these may not be viable strategies globally. Medina spoke of how crucial public policy work in Denmark, Germany and Spain materially contributed to getting the cost curve down for renewables in the EU – removing the trade-off between sustainability and financial value creation.

“Change doesn’t happen when we focus on only one thing at a time” – Sonia Medina

Change requires the perfect storm of (a) having the right progressive voices in place, (b) ensuring those voices have the right advice channels to drive policy, and (c) arming those players and policies with the requisite resources to make it happen.  Change has to be carefully orchestrated – is there momentum for climate action policies? Is there a political window of opportunity? Is the policy designed to support the science? Do we have the right technology available and ready to use? Is there public support for this – and can we produce jobs or improve livelihoods in implementing climate action policy? Piecing all of this together is not mere coincidence; creating change is the result of investment into each part of this cycle.

Medina has a direct role in orchestrating this agenda. Last year, she dedicated $150M of her grant budget to climate-focused recipients. Although that is a small portion of the vast investment required globally to effectively address the climate crisis, her team can assist their grantees to make significant impact by sponsoring technology, research, lobbying, policy, advocacy, litigation and various other needs – in fact, one of CIFF’s past grantees led the investigation which broke the Volkswagen emissions scandal.

Medina noted the importance of capturing the complexity of the system when we think about measurement return on these investments. In selecting recipients, Medina’s team aims to invest where they can move the needle most. The scientific approach would ask each grantee to tie their work to the number of tonnes of CO2 removed from the atmosphere. This is unrealistic, and loses the nuanced approach to the climate crisis that is integral in guiding learning in this space. Instead, Medina assesses each opportunity within the sector it aims to alter, and if it really addresses the crux of the issues present. She notes that success can be achieved in a myriad of ways – such as reduction in inequality, or minimization of the risk of policy reversal – many of which are incalculable. In her words, “you lose if you believe this is just a numbers game.”

One sector explored in conversation was the decarbonisation of the power sector – an initial focus area for the climate community, including CIFF. Science tells us that to avoid a climate catastrophe, we need to halve our carbon emissions by 2030 – and a global phasing-out of coal is an essential and highly publicised component of this transition. This will occur at different rates globally depending on national capacity, financial incentives and technology available to support this. For the EU, coal will be phased-out by 2030, and the target for the rest of the world is 2050-2060. We must support developing nations to prosper economically in the transition phase, while also acknowledging that future human prosperity necessitates that this transition occur. India was another such example Medina gave where solar power technology has reached cost parity, or in some cases, become cheaper than coal power generation, driving green policy changes.

The decarbonisation of our cities and transport systems is the next wave of this effort. Electric vehicles achieving cost parity with internal combustion engines is driving this shift; the result of heavy investment into the development of this technology by private companies, such as Tesla, Ford and Toyota and numerous government subsidies supporting this. Eventually, change must be made across all of our systems to effectively address the climate crisis. It cannot happen in isolation.  

Improving air quality – an investment case study in building public narrative

Generating public and political support is a crucial component of creating the necessary systems change to be impactful in the climate crisis – one of CIFF’s mandates as a climate funder. In assessing funding opportunities, air quality initiatives stood out for a myriad of reasons: first, the root causes of air pollution are the same as climate change, and public demand for cleaner air would directly benefit the climate agenda; and secondly, air pollution also affected major, wealthy cities – helping to employ public interest in the climate crisis in advanced economies.

Engaging the public in developed countries had been a major hurdle in advancing the climate agenda – this group of people may not feel the direct impact of the climate crisis as harshly. They can afford air conditioners when temperatures rise, or can afford to pay more for groceries in the event of food shortages. Driving awareness of air pollution was a strategic method of connecting with the public on something that they felt was more visceral and posed an immediate threat to them. In addition, an analysis of the implicit carbon price of fuel efficiency targets adopted by the EU, undertaken by one of CIFF’s advocacy grantees, found these to be in the range of €1,500 – sending a powerful market signal that pricing derived from regulation is dramatically higher than that set by the market. By using air quality as a proxy for carbonization, the grantee established a pricing signal and generated strong public pressure to reduce air pollution, and increase political focus on transport systems.

Looking ahead – COP26 and the decade of delivery

COP26, scheduled for 1-2 November 2021 in Glasgow, is the annual conference of the decision-making body of the UN’s Convention on Climate Change. Medina had planned for her message at COP26 to be one of ambition – to encourage non-state actors, the private sector and key leading countries in the climate space to push for greater ambition in achieving carbon reduction targets.

However, COP26 faces even more challenges in light of the COVID-19 pandemic. There is less public money to shape climate policy, and many economies are still in a dive of austerity. Medina states the objectives of COP26 are now twofold: first, we must demonstrate that the Paris Agreement is a robust international framework that will take us all the way to 2030. This objective centres on the ratchet mechanism included in the Paris Agreement, which asks countries to re-commit and stretch their NDC targets every 5 years in the hope that increased ambition on aggregate will bend increasing temperature curve assumptions back towards ~1.5 degrees Celsius, instead of the ~2.7-3.0 degrees Celsius increase projected by the UN. The aim for Glasgow will be to signal that this transition is indeed happening, and nations no longer have a choice but to get on board.  

The second objective is ensuring that money spent on COVID-19 recovery also seeks to advance a green agenda. The pandemic has worked to exacerbate many differences already evident between developed and developing economies, and we are at real risk of a world economy operating in two speeds. Emerging economies have been forced to borrow heavily to support recovery, and fiscal space is being squeezed more than ever – for example, South Africa is using more than 35% of each taxed Rand simply to repay debt, leaving almost nothing for subsidies to support climate policies. COP26 offers a unique forum to establish debt restructuring in a manner that ensures a green recovery, such as debt swaps for climate mitigation. If we fail to support developing economies in investing in climate-focused technology as part of their COVID-19 recovery, we will both slow their recovery and fail to hit climate targets by 2030. 

Both of these objectives are critical. This is amplified by the fact that the COVID-19 recovery is the largest fiscal injection we have ever seen, 3-4x times the magnitude of the boost following the 2008 GFC. As Medina states, “[climate advocates] might be missing the biggest opportunity that we will have in the next three decades to ensure this huge influx of funding is going to the right type of infrastructure.” It is crucial to ensure that our decision-makers understand the impact that this fiscal injection can have on achieving a carbon-neutral world.

Addressing the climate crisis means we need to completely shift our systems at a scale and speed unseen. It will mean working to recover economically, while also finding ways to shift the cost curve in favour of green technologies and not allowing climate progress to falter in the wake of the pandemic. Medina encouraged listeners to find where they can be a force for change, where they can be an activist. In her words, “there is no option, but forward and upward” – and we, as a global community, must push for this change together.  

Victoria Henderson (MBA 2021) has three years’ experience in management consulting at Bain & Company, and a background in Law and Politics. She is an intern for the Wheeler Institute, contributing to the creation of content that amplifies the role of business in improving lives.

Leave Comment

Your email address will not be published. Required fields are marked *