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How international trade can help tackle climate change

Author: ICAEW Insights

Published: 30 Nov 2021

International trade has a crucial role to play in reducing the impact of climate change, with the accountancy profession key partners in putting economies on a more sustainable footing, says Chris Barton, HM Trade Commissioner to Europe.

Chris Barton leads a team from the UK’s Department for International Trade based in 34 countries to encourage trade and investment between the UK and Europe. 

In the first of two interviews with ICAEW Insights, Barton outlines how international trade can help reduce the impact of climate change, keep markets open in the face of growing vulnerability, and how the accountancy profession can play its part in improving resilience.

What is the role of international trade in reducing the impact of climate change?

International trade has a key role to play in tackling climate change. Moving to a zero-carbon economy will require unprecedented levels of investment to transform our energy, transport, housing and wider infrastructure. We need international capital for this. It will also require the development and distribution of clean technologies and products across the globe. International trade enables and encourages this, including through efficient and effective supply chains, healthy competition and international collaboration. 

As HM Trade Commissioner (HMTC) for Europe, I am therefore putting sustainability at the heart of our work – both as a principle that all we do should align with our sustainability goals and as an opportunity for us to exploit in our trade and investment work. I and my teams in 34 countries work closely with our extensive business and stakeholder network across the continent to enable this, and with colleagues across departments in London. We analyse market opportunities, advocate the role of UK exports and inward investment to address these and assist businesses in doing so.

To give you an example, DIT Europe is running a Clean Growth campaign that involves intensive collaboration with our large business networks across Europe to connect leaders in clean growth and strengthen relationships with European customers, investors and innovators. Through this campaign, we aim to drive investment into the many opportunities across the UK and increase exports of the UK's world-leading solutions for the net-zero transition. A recent highlight was a series of 14 sector-focused events around the pre-COP meetings in Milan.

Can you give some examples of how international trade policy can improve resilience and adaptation in the face of climate change?

The most important role that international trade policy can play in improving resilience and adaptation in the face of climate change is to keep international markets open – specifically in the products and infrastructure needed to adapt to climate change, and more generally to drive economic growth particularly for the least advantaged countries and regions who are most vulnerable to climate change’s impacts.

Trade also fosters international collaboration, through which countries can develop zero-emission solutions faster, increase economies of scale, and bring down costs of green technologies more quickly. The UK is committed to working with governments across the globe, civil society and businesses to support resilience and adaptation. In parallel we are of course working internationally on mitigation too, both directly through COP26 and indirectly at the World Trade Organization to promote ‘green trade’, liberalising trade in environmental goods and services, setting standards and supporting a circular economy.

What business disruption risks caused by climate change are on your radar and what is your role in relation to mitigating those risks?

The Green Trade report referred to above describes how natural disasters have already caused $3 trillion of damage this century. $44 trillion of economic value is highly or moderately dependent on nature and exposed to nature loss. Global GDP could be 10% smaller by 2050 if temperatures rise to 2.6°C above pre-industrial levels versus a Paris Climate targets aligned world. And underpinning these headline figures are the terrible impacts climate change can have on individuals, families and societies – especially the poorest and most vulnerable.

These global economic impacts bring generalised costs and loss of revenue for business as a whole. Climate change can also bring direct risks at all stages of the supply chain, including primary production, manufacturing, distribution and sales. In an increasingly connected world, no business will be entirely immune from this.

My team and I have an important role to play in addressing these risks by encouraging sustainable trade and investment between the UK and other European nations. For example, in encouraging international investment in our nearly £650bn pipeline of infrastructure projects including in offshore wind, nuclear, hydrogen, electric vehicles, green shipping, jet zero and energy-efficient housing.

Climate risk in numbers: what is the role of the accountancy profession in your view? Are measuring and reporting all the profession can offer or is there so much more?

The accountancy profession has and continues to play a critical role in raising awareness of the economic risks related to climate change, advising and supporting businesses of all sizes to mitigate these risks, and of course, the profession plays a tremendously important role in measuring and reporting on environmental impacts. The relevance of the ‘environmental balance sheet’ of companies – and countries - will only increase. 

Many members of the ICAEW are of course in senior positions – all over the globe. Their strategic and operational decisions directly impact the future trajectory of all kinds of organisations; they are key partners in putting economies across the planet on a more sustainable footing. 

Professional organisations like the ICAEW also provide a key role in training, ensuring current and future generations have the right skills in and for a greener future. This is also really important for attracting global investment. As HMTC for Europe, I frequently hear from European investors that access to talent is top of their minds when making investment decisions in the UK. Professional bodies like the ICAEW - and the many world-class Universities across the UK - thereby play a critical role in supporting our efforts to get sustainable investment projects over the line.

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