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Global CEOs urge G7 leaders to step up climate action

Major international companies are urging world leaders to take more action to tackle climate change at the G7 summit in Germany this weekend, calling for large-scale carbon pricing and measures to boost demand for clean technology.

In an open letter ahead of the three-day meeting starting Sunday in the Bavarian resort of Schloss Elmau, more than a dozen heads of major corporations, including Bank of America and Shell, called for ambitious government climate policies “that provide clarity to the private sector.” and stability”.

“Once companies can be assured of a stable and predictable policy environment with well-defined goals, we will do everything we can to help society get there,” they wrote.

The companies came together under the Sustainable Markets Initiative, which was announced by the Prince of Wales in Davos in 2020 and now counts more than 400 global chief executives among its members.

During the summit, the G7 will deal with the consequences of the war in Ukraine, including the turmoil it has caused in global energy markets. European countries, including Germany, are increasing their use of coal energy to conserve gas reserves after Russia curtailed supplies.

But SMI members said the crisis in Ukraine should not undermine efforts to phase out the use of thermal coal, the most polluting fossil fuel.

“Of course we face a challenge in the short term, but over time that is a meaningful and achievable goal,” they said.

German Chancellor and G7 President Olaf Scholz promised last week’s summit was said to demonstrate that leading democracies uniting against Russia’s aggression are “no less committed to fighting hunger and poverty, and fighting health crises and climate change.”

Governments are coming under increasing public pressure on climate policies from companies nervous about continued uncertainty about future regulations, and are hugely critical of their progress toward ambitious net-zero emissions targets.

Bank of America and other leading US financial institutions have recently faced failed campaigns by shareholders seeking to block their financing of fossil fuel projects.

Energy companies also face skepticism about the pace of their green transition. Last month, 20 percent of Shell shareholders voted in favor of a resolution saying the climate plan is not in line with the 2015 Paris agreement, which aims to keep global warming well below 2°C.

The SMI letter placed a strong emphasis on carbon pricing and called on governments to pursue a price on emissions that would increase over time. It said a $30-70 carbon price would destroy the economic logic for coal investment, while a level above $120 would boost investment in technologies such as direct air capture, which removes carbon dioxide from the atmosphere.

The intervention comes amid political efforts around carbon pricing on both sides of the Atlantic. This Month Democratic Senator Sheldon Whitehouse submitted a bill that would lead to a carbon tax on imports, initially set at $55 per tonne of associated carbon dioxide emissions.

This week, Members of the European Parliament agreed to a plan to impose a similar carbon tax on imports, and to extend the EU’s emissions trading system – which currently includes energy, heavy industry and aviation – to a wider range of domestic sectors.

The SMI letter also asked governments for “demand-side policies,” such as a firm end date for sales of petroleum-powered cars and requirements for sustainable fuel use by airlines.

If the G7 and other governments “can partner with the private sector to help accelerate our progress, we can do it,” according to the letter, whose signatories included leaders from BP, EY, PwC, State Street and the Mahindra Group.

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