The war massively shifted the political agenda. Safety issues come first, the fight against climate change has to take a back seat when in doubt. However, this does not mean that the energy transition is lost. It’s just more in the hands of companies and investors than ever before.
When Germany’s Chancellor Olaf Scholz spoke of the turning point in the Bundestag, the whole world listened. Two days earlier, Russia had attacked Ukraine, bringing a long period of peace in Europe to an abrupt end. Since the end of the Cold War, Germany had also benefited from the so-called peace dividend, saving many billions of euros for national defense and channeling them into environmental protection and social projects, for example. Now the whole of Europe is being upgraded – Germany alone promises a special fund of 100 billion euros for the Bundeswehr.
For the Intergovernmental Panel on Climate Change, the change in security policy is bad news. In their latest report, the experts assume that planned emission reductions will be significantly delayed due to the Ukraine crisis. The issue of climate change could lose political urgency against the background of an acute military threat.
Carsten Roemheld is Capital Markets Strategist at Fidelity International.
But is this concern really justified? At least with regard to Germany, a differentiated view is appropriate: After all, the sanctions imposed by the West have long since demonstrated the far-reaching consequences of energy dependence on Russia. In order to reduce this dependency, the rapid expansion of renewable energies is now also a top priority in the country. Economics Minister Robert Habeck has announced that coal-fired power plants will run longer if necessary in order to be able to do without Russian gas in the short term – but the government still wants to stick to the medium-term climate goals of the coalition agreement.
But the current situation shows even more: Namely, that political measures alone are not enough to stop climate change anyway. In order to advance the energy transition and to achieve the goal of net zero by 2050, politics needs the economy. And in the corporate world, the energy transition is increasingly turning from a mandatory program into an investment-promoting and profitable business. In the long term, it can be assumed that economic actors in the West will advocate more sustainability across the board. First, to meet climate policy requirements. And secondly, to do good business with it.
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Investors play a key role in this. After all, these companies can support the transformation with capital – and punish those who don’t participate by withdrawing capital. The assessment of climate risks now forms the basis of many investment decisions. Investors want to know in advance how the consequences of climate change will affect the development of a company in the long term. Investor pressure is also increasing. And so environmental sinners are forced to disclose misconduct and make it credible that they will also achieve their net zero goals – regardless of the energy policy of the states.
The war in Ukraine fundamentally changed the political agenda in the West. The focus of the turning point is no longer the major sustainability issues such as energy, mobility and agriculture, but security and defense. In the fight against climate change, companies are now more important than ever. You can secure the climate-neutral future – and will do so solely in your own interest. Because if you don’t keep up with the times, you’ll keep up with the times.
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