Monday 20 September 2021 5:55 am

A net zero future depends on open trade of green goods and services

William Russell is Lord Mayor of the City of London.

In the future when historians look back at 2021 they could well see it as a turning point. A time when after witnessing unprecedented wildfires, flash flooding and extreme winds, the world finally took notice and came together to tackle climate change.

Or they could see it as a time when the world squandered this moment, subsequently condemning the planet for future generations. International cooperation is vital to ensure that it’s the former rather than the latter. As we fast approach the Cop26 climate change summit, we must enact concrete steps to tackle this global threat as well as remove the barriers preventing cooperation, especially for the trade of environmental goods and services (EGS).  

One of the most fundamental challenges for developing a cohesive framework for trading environmental goods and services is one of semantics: we can’t yet agree on a definition. Previously, EGS had a very narrow definition: municipal activities, such as sewage and water treatment, and the reduction of certain industrial emissions. In 2001, negotiations took place in Doha with the stated aim of reducing trade barriers for environmental goods and services, but the talks stalled on that familiar stumbling block of what we mean when we say environmental goods and services.  

Broadly, environmental services include activities such as engineering, design and financial consulting. They have a critical role to play in facilitating the trade of environmental goods such as wind turbines and water filters. Services help to keep the international trading system functioning. Without appropriate services – from the lawyer who advises on the contracts, to the bank which provides the financing – international trade would not be possible.

If we set aside the question of a definition, there are a host of issues inhibiting trade: visa issues, tax rules and subsidies, recognition of professional qualifications, legal rights of establishment and requirements to have a local presence in order to supply cross-border services.

Reducing these barriers would make it easier for the world to access the goods and services needed to tackle climate change, yet to date there has been no international agreement when it comes to trade in environmental services. This must change and as the host of Cop26 the UK is well-placed to lead the charge.

The UK is a world leader in environmental services, with its output of EGS totalling £87bn, 4 per cent of GDP, placing it in a unique position to lead on the liberalisation of trade in environmental services.

At the City of London Corporation, we are playing our part to actively try to reduce these barriers by engaging in discussions with jurisdictions across the world on harmonising relevant regulations and standards. Our Climate Action Strategy commits the City Corporation to achieving net zero for our own operations by 2027 and across its investments and supply chain by 2040. Central to our mission is to support the Square Mile hitting net zero emissions by 2040.

These discussions must take place at a multilateral level. International cooperation is key. Just last week I hosted the Commonwealth Investment Summit. The Commonwealth, representing 54 nations and 2.4 billion people. It has a long history of cooperation and harnessing this tradition will be crucial. The Commonwealth is rich with shared values and this provides an ideal platform to take the spirit of international cooperation to the rest of the world.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.