#79 The G|O Briefing, December 9, 2021


Today in The Geneva Observer, we return to the issue of vaccine access and equity and take stock of the year just passed: as Jamil Chade reports, the scoreboard is, to be honest, rather horrific. The scientific feast that saw the development of several COVID-19 vaccines in record time has not, unfortunately, been matched by the same spirit of innovation and creation in ensuring global access to the drugs. Concern must now be added to disappointment: Should the Omicron variant require a new vaccine, the same challenges—from vaccine nationalism to IP rights and a breakdown of solidarity—could put us in the same situation.


As Peter Drucker wrote once, “what gets measured gets managed.” On that very subject, we have a recent op-ed by British banker Howard Davies. He argues that the COP26 conference (its limited success notwithstanding) might have been a “watershed event” in creating recognized and accepted accounting and measurement standards for the finance sector as it is ‘greens’ itself. Agreed-upon standards would ensure the flow of more capital into the green economy.

There might, in fact, be too many competing standards, writes Davies, but the momentum and the initiatives are nevertheless very welcome.
Such a proliferation of standards, however, might have negative consequences: "Multiplying the numbers of actors is a good thing. Multiplying the number of norms, however, is not," Sandrine Salerno recently told us.

“Too many regulations is a dangerous road that can lead to greenwashing,” Those questions were at the heart of the recent Building Bridges Summit and weeklong event (“where finance meets the SDGs”), widely lauded as a success.

2021 proved that immunization is not only an issue of vaccines. Politics interfered.

By Jamil Chade

Almost one year ago, Margaret Keenan, 90, became the first person in the world to receive a vaccine against COVID-19. The image that was published around the world gave hope that 2021 would be a different year and that the pandemic was reaching a turning point. But what began in the UK in December 2020 proved that immunization is much more than a question of vaccines. And in many ways, Geneva was transformed into the epicenter of this “lesson.”  

What followed Keenan’s jab was a stampede for vaccines, with the worst scenario being fulfilled. Over 8 billion doses were administered in almost 12 months. Enough to assure more than one dose per human being. But the inequality that is so present in different dimensions of politics and society once again proved itself a resistant factor. Over 40 countries still do not reach 10% of their population with the vaccines. In the LDC, only 25% of medical staff are protected.  

In Geneva, the multilateral efforts to grapple with the pandemic fell well short of their aim. Covax, an innovative instrument that promised to avoid the mistakes made by governments and institutions during the first decades of the HIV pandemic, became a mirror of the failure of authorities to acknowledge the nature of the crisis.

It was meant to deliver 2 billion doses by the end of 2021. With less than one month to go, it has distributed only 600 million. And the problem has not been a lack of money, but a lack of available vaccines, thanks to some affluent countries stockpiling doses in warehouses and negotiating exclusive contracts with suppliers.  

The year also ends with no agreement on the proposal of a TRIPS Waiver, despite months of negotiations. In its last meeting in November, WTO TRIPS Council was the stage of an appeal for change.

South Africa said that failure to agree on a multilateral outcome to address IP barriers, coupled with the imposition of restrictions on certain countries that run contrary to the advice and guidance by the WHO, cast a dim light on the ability of the WTO to act in solidarity during an international emergency.

India regretted that members have not really worked towards what could have saved millions of lives and made everyone safe. “Instead, time has been used in endless consultations and bilateral meetings which have not translated in a meaningful outcome,” the Indian delegation declared.

In a recent publication, Airfinity’s CEO Rasmus Bech Hansen made it clear that if Omicron requires a new vaccine, the world will once again face a dispute for doses. “Even though new vaccines can be configured relatively quickly, and we expect to see fast-track approval, there is no magic bullet for scaling up production. If we need a targeted Omicron vaccine to maintain high levels of protection, we are likely to see a vaccine procurement race early next year, similar to the one we witnessed this spring, where countries were struggling for and competing over limited supply,” he said. “Our data shows that vaccinating the whole world against Omicron is very far off.”

But distribution is not the only element to be dealt with in 2022. In a recent editorial this week in the WHO Monthly Bulletin, Angela Shen, Ann Lindstrand, Benjamin Schreiber, and Kate O’Brien point out that “besides the complex task of securing and distributing billions of doses for vaccination programs, country readiness to administer these doses is a daunting challenge. Vaccination requires more than just vaccines.”

“Achieving the aim of vaccinating 70% of the world’s population by June 2022 would be an extraordinary logistical feat.” According to them, “the world is far from reaching global goals” of immunization. “Many vaccination programs have been constrained by supply, but this situation is about to change as projections expect supply to increase exponentially in the last months of 2021 and in 2022,” the authors claim.

The challenge is not only the fair distribution of doses but the fact that, for decades, countries have ignored their own health systems. “As more vaccine doses flow into countries, implementation challenges are emerging, and addressing such challenges at the operational level is important,” they point out.

“For most countries, adults are a new target population for vaccination, and the design of appropriate strategies for this group is required. In addition, some vaccine products are complex in storage and handling. Systems to monitor products and processes, and identify and vaccinate people, may be weak in some countries, adding complexity to existing challenges, as many health systems are struggling to maintain essential health services. Last, governments need to provide training and supervision of health-care workers, support demand generation and communicate about vaccines,” they conclude.

If 2021 was the year the world saw the largest vaccination campaign in the history of mankind, it should also be marked as the year that it became evident that ensuring immunity is not only a question of science or vaccines. But of politics.


The Sustainability Standards Battle

By Howard Davies*

The recent United Nations Climate Change Conference (COP26) in Glasgow was, it seems, a historic success. We have this on no lesser authority than that of UK Prime Minister Boris Johnson, who happened to be the meeting’s host. COP26 President Alok Sharma also was upbeat afterward regarding the 2015 Paris climate agreement’s target of limiting global warming to 1.5º Celsius above pre-industrial levels. “We set out by saying we wanted to keep 1.5ºC within reach,” Sharma said. “We did do that.” And Johnson claimed that there was little difference between the proposed COP26 agreement to “phase out” coal usage and the final text, which pledged only to “phase down” coal.

Others took a different view. Perhaps predictably, the teenage Swedish climate activist Greta Thunberg described the conference categorically as “a failure.” Climate Action Tracker projects that even if all the COP26 pledges stretching into the future are met, the planet is on track to warm by at least 2.1ºC. And India is phasing out in the particular sense of phasing in, with coal-powered electricity generation expected to increase by almost 5% per year this decade. The Financial Times’s Martin Wolf hedged his bets. For him, COP26 “was both triumph and disaster.”

But for the private business sector, and especially for banks and other financial firms, the conference on the chilly banks of Glasgow’s River Clyde may well prove to have been a watershed moment. Although the cloud of coal dust obscured other issues, the gathering made some significant progress.

Consider a major issue impeding progress toward greening the business sector: the absence of a clear, generally agreed framework for reporting the climate impact of corporate activity. The problem is not that there is no framework at all, but rather that several competing models present different pictures.

The Sustainability Accounting Standards Board (SASB) in the United States, established by the Value Reporting Foundation (VRF) and supported by Bloomberg, has developed one model. The World Economic Forum (WEF) has worked on another. The Global Reporting Initiative (GRI), based in Amsterdam, has produced a wide range of sustainability standards. And the Task Force on Climate-Related Financial Disclosures (TCFD), convened by the Financial Stability Board (FSB) in Basel, recommends a set of disclosures that many banks have adopted under pressure from their regulators – many of whom are members of the Network for Greening the Financial System (NGFS).

That, you may think, is quite enough acronyms for one paragraph. But another one entered the field of battle in Glasgow. The Chair of the Trustees of the International Financial Reporting Standards Foundation, Erkki Liikanen, announced the creation of the International Sustainability Standards Board (ISSB) to sit alongside the foundation’s other offspring, the International Accounting Standards Board (IASB). The new board will be based in Frankfurt (no doubt the Germans will avoid another acronym by melding the four words into one). The ISSB will aim to produce standards that “will help investors understand how companies are responding to ESG [environmental, social, and governance] issues, like climate, to inform capital allocation decisions.”

There is no doubt that standardization is needed, and the organization that has produced a suite of international accounting standards looks like the obvious body to take on the job. But will the ISSB attract enough support to knock together the other acronyms and carry the day?

One obvious problem is that after years of effort by the IASB to reconcile its standards with those of the US standard-setters, the Americans have still not adopted them and seem unlikely to do so. Given opposition from most of the US accounting profession, the US Securities and Exchange Commission is reluctant to push the idea onto a suspicious Congress.

There is also hesitancy on the other side of the Atlantic, where the European Commission has been working on its own taxonomy of green and brown assets. In an interview that the European Central Bank supervisors circulated to banks in the week after the ISSB announcement at COP26, John Berrigan, the Commission’s financial services director-general, discussed the EU’s taxonomy and plans for a new Sustainable Finance Disclosure Regulation, without mentioning the ISSB.

Nor did Berrigan mention the other major financial-sector initiative to emerge from COP26: the Glasgow Financial Alliance for Net Zero (GFANZ) assembled by Mark Carney, the former FSB Chair who is now the UN Special Envoy for Climate Action and Finance. Carney has corralled 450 banks and insurers to, among other goals, mobilize trillions of dollars of capital to finance decarbonization in emerging and developing countries. The precise figure he quoted, $130 trillion, has raised a few skeptical eyebrows, but the scale of the ambition is impressive, and most banks of any consequence have signed up to the scheme.

These developments reflect the sea change in financial-sector opinion on climate change in the last couple of years. Pressure from some outspoken investors has contributed to this shift, while regulatory stress tests have exposed the vulnerability of loan portfolios to rising temperatures and policy-driven increases in the carbon price. But bankers are people, too. They now believe they will sleep easier and be able to look their children in the eye if they are part of the green transition rather than holdouts myopically financing the last ton of mined coal and the last barrel of Brent crude.

The ISSB and the GFANZ could give bankers the tools they need to help their clients fund and manage the green transition. And US and European authorities, if they bury their differences, could allow those good intentions to be translated into more effective action. That would mean fewer acronyms – and, more importantly, a clearer path to net zero.

Howard Davies, the first chairman of the United Kingdom’s Financial Services Authority (1997-2003), is Chairman of NatWest Group. He was Director of the London School of Economics (2003-11) and served as Deputy Governor of the Bank of England and Director-General of the Confederation of British Industry.

©Project Syndicate

Today's Briefing: Philippe Mottaz - Jamil Chade

Editorial Assistance: Ciara O'Donoghue

Edited by: Dan Wheeler