It is not narrowing the gap of 10 to 20 years between leaders in developed and developing countries.

 

"I have a long way to go." However, we are cautiously optimistic about achieving our goals such as "carbon neutrality." This is what British Prime Minister Boris Johnson, the chairman of the 26th UN Convention on Climate Change (COP26) said at the closing ceremony of the main event, the Climate Summit, on November 2 (local time). Analysts say that international cooperation toward carbon neutrality, which means a state in which carbon dioxide concentration does not increase in the atmosphere by increasing absorption as much as carbon dioxide is emitted, has not been easy. It has nothing to do with the failure to draw up a single goal at the time of carbon neutrality at the COP26 Climate Summit in Glasgow, England, with all 190 countries participating.

Earlier, at the G20 summit in Rome, Italy, from Oct. 30 to 31, it agreed to "limit the global average temperature increase to less than 1.5 degrees by 2100 compared to before industrialization (1850 to 1900), but failed to set the carbon neutral time to 2050. Representatives from more than 190 COP26 countries will hold working-level consultations until November 12, but critics point out that there is a limit to narrowing the carbon neutrality gap between developed and developing countries (developing countries) leadership groups ranging from 10 to 20 years.

In fact, on November 1, the first day of the COP26 Climate Summit, Indian Prime Minister Narendra Modi suggested the time of carbon neutrality as 2070. Not only India, the world's third-largest carbon emitter, but also China, the No. 1 country, are refusing to comply with the demands of developed countries to unify the point of carbon neutrality. It adheres to the point of carbon neutrality in 2060 proposed last year. Chinese President Xi Jinping was also absent from the COP26. President Xi said in a written greeting, "Advanced countries should not only act more to respond to climate change, but also support developing countries to respond better." They say that developed countries, which have produced enormous carbon for more than 200 years since the Industrial Revolution, should be responsible for some of the carbon reduction in developing countries, where carbon emissions are increasing belatedly increasing. Some developing countries in Africa and Southeast Asia seem to support the position of leaders in developing countries such as China and India, which are advocating responsibility for advanced countries, as if they regret joining the declaration of carbon neutrality in 2050.

The U.S. has started to check China's move to claim to be the eldest brother of developing countries. U.S. President Joe Biden aimed at President Xi and criticized, "It is a big mistake that China did not attend the meeting," adding, "It is losing its influence on the world."

The decarbonized frostbite dream between the leaders of developed and developing countries is also revealed in the "2030 pledge to reduce methane gas emissions by 30%" agreed by COP26 leaders. The leaders of more than 100 countries signed, but China, Russia, and India were excluded. The Wall Street Journal (WSJ) said, "The world's leaders have not been able to find a breakthrough in resolving climate change."

G20 leaders, digital tax on IT dinosaurs.

"In the digital age, you have to pay taxes to countries that make money".

On October 31, the G20 leaders officially approved an agreement to implement a digital tax for multinational companies from 2023.

The digital tax is a system that requires global IT conglomerates to pay taxes not only on corporate taxes in their headquarters but also on countries that actually provide services and generate sales. Big Tech such as Google, Apple, and Facebook in the U.S., which have generated huge profits overseas due to the expansion of the online market but have only paid taxes based on the location of their business sites like existing offline companies, is also called the "Google Tax." In the case of Korean companies, Samsung Electronics and SK Hynix are mentioned as targets for digital taxes.

The digital tax agreed at the G20 summit consists of "allocation of taxation rights to countries generating sales (Pilla 1)" and "introduction of global minimum tax (Pilla 2). The main goal of the taxation rights of the countries that generate sales is to allocate taxation rights on sales of large companies with annual sales of 20 billion euros (about 27 trillion won) and profits of more than 10%. Starting in 2023, Big Tech will have to pay taxes to each market location country on 25% of excess profits that usually exceed 10% of global sales.

According to the Organization for Economic Cooperation and Development (OECD), more than 100 global companies around the world are subject to the distribution of taxation rights to countries generating sales, which is expected to redistribute $125 billion (about 149 trillion won) annually.

The global minimum tax is a concept that applies a tax rate of at least 15% to global companies with sales of more than 750 million euros (about 1 trillion won) in any country. The move is aimed at preventing big tech companies from setting up corporations in tax havens or low-tax countries and siphoning off profits to reduce taxes. The OECD predicts that an additional $150 billion (about 179 trillion won) in taxes will be collected annually around the world as a global minimum tax.

German Prime Minister Angela Merkel, who attended the G20 summit, said, "The digital tax agreement is a clear sign of justice being implemented in the era of digitalization."

US Biden to convene 14 allies during the G20.

"Dirty China". "Encouraging the supply chain to China".

U.S. President Joe Biden urgently convened the summit of 14 major U.S. allies, including South Korea, the European Union (EU), the U.K., Japan, India, Indonesia, Singapore and Congo, who attended the G20 summit on October 31. Analysts say that the summit was urgently convened to discuss global supply chain measures and is delaying the U.S. economic recovery due to the recent worsening "logistics crisis." At the same time, it is pointed out that it has confirmed its willingness to reorganize its highly dependent global supply chain with its allies. Participating Congo is believed to be an intention to check China's large-scale investment in cobalt, a key raw material for electric vehicle batteries.

President Biden said on the same day, "Our supply chain must be diverse in order not to rely on one source that can fail." President Biden also hinted at taking measures such as providing additional funds to Central American countries such as Mexico and issuing administrative orders related to the use of defense reserves to resolve the global supply chain problem.

President Biden did not use the word "China" in his remarks released that day. However, he did not hide that "Our supply chain should be free from forced labor and child labor, and sustainable by supporting the dignity and voice of workers." Currently, the United States continues to raise human rights issues, including China's forced labor centered on Xinjiang. President Biden attended a joint press conference after agreeing to end the steel and aluminum tariff dispute at the summit with the EU and said, "We will restrict dirty steel from accessing our market in countries like China."

At the G20 summit attended by video, Chinese President Xi Jinping indirectly refuted the U.S.-led Anti-China meeting, saying, "Artificially creating small groups or drawing lines with ideology only creates gaps and increases obstacles."

Central bank to respond to climate change.

 The central bank's response is also accelerating as major countries around the world have come up with a carbon-neutral goal of zeroing actual carbon emissions. "Climate change is an important factor affecting the economy and financial system," said Haruhiko Kuroda, president of the Bank of Japan (BOJ), in March. "Climate change is related to the central bank's mission." The Federal Reserve, the U.S. central bank, has also established an organization dedicated to responding to climate change. Central banks have been arguing over the methodology while agreeing that they should respond to the climate change crisis. In particular, there was a lot of controversy over the "quantitative easing," an economic stimulus measure that induces long-term interest rate cuts while the central bank purchases bonds and other assets and releases money. There were conflicting opinions that the central bank should first consider the risks of climate change when introducing monetary policy and that giving monetary policy "other goals" could undermine its main goal, price stability. Some argue that passive response to climate change could lead to an economic crisis and that stronger-than-expected environmental regulatory policies could lead to financial difficulties for some companies. In the era of carbon neutrality, attention is drawn to what conclusion central banks in major countries will make.

Recently, almost everywhere, including the government, businesses, and the media, has dealt with climate change as a major agenda. Central banks around the world have also begun to pay attention to climate change and respond. Representatively, the Bank of England (BOE), the UK's central bank, has taken on the task of responding to climate change in addition to its basic responsibility for price stability. Among the major central banks, the Bank of England is the first to make climate change its official policy responsibility. The European Central Bank (ECB) is discussing ways to reflect climate and environmental factors in monetary policy. The number of members of the Green Financial Council (NGFS), a voluntary discussion body of central banks and supervisory bodies for financial risk management due to climate and environmental changes, has more than doubled over the past two years.

Senior central bank officials around the world are paying attention to how climate change affects financial soundness. According to the Bank for International Settlements (BIS), only four central bank presidents spoke on green finance in 2018, but increased to 13 in 2020. About half of NGFS member countries are conducting stress tests (health surveys) to predict how climate change will impact the real economy and financial system, and more than 10% have already conducted climate impact assessments, BlackRock said.

The central bank also invests in consideration of climate risk. Six out of 10 central banks in developed countries purchase assets based on ESG (Environmental, Social, and Governance). The ECB is reportedly considering reflecting climate risk when conducting economic analysis in the bond purchase program. The Swedish National Bank is applying a norm-based screening test that reduces or excludes asset purchases to industries and companies that fail to reduce carbon emissions. The Bank of England is also expected to reveal how much corporate bonds held by the end of this year are related to the climate.

There are three reasons for the change in the attitude of the central bank. First of all, more than 130 governments around the world have declared that they will reduce carbon dioxide emissions over the next decades. Although related policies have not yet been fully materialized, changes are expected to emerge gradually. If the central bank supports the government's climate policy, it will have no choice but to break the "market neutrality," which is considered the top priority when purchasing corporate bonds.

Second, climate change is having a stronger impact on macroeconomic modeling. 이상 As natural disasters become more frequent due to abnormal climates, it is confirmed that climate change is affecting economic growth and inflation. In addition, as the amount of climate data increases and data quality improves, the utilization of investment strategies reflecting climate change improves, and returns are not bad. 전 Institutional investors around the world cite sustainability as the basic principle of investment strategy.

The third reason is that the central bank is increasingly aware that expressing opinions on climate change alone is not enough. It is argued that in order to have a greater impact on the market, it is necessary to actively and set an example. They say that transparency should be shown in modeling and asset pricing methods that reflect awareness of climate risk. Better corporate disclosures can be made when central banks receive appropriate data from companies, financial firms, and institutions.

Changes in the central bank's attitude are expected to have a great influence on the pace at which climate risks are reflected in the financial system. If the speed is too slow or too fast, the risk is high, so a clear roadmap should be created.

Of course, central banks' response to climate change is only in its infancy. The Bank of England issued a statement saying, "listed companies should disclose their information transparently by 2022 in accordance with the recommendations of the TCFD," but other European central banks only promised to "issue a statement within two years." Many central banks have not even joined NGFS, let alone reflecting climate change in their policies. Central banks in emerging economies tend to be indifferent to climate change.

Central banks should be wary of "mission creep," which changes missions differently than planned, but other central banks that are set aside from climate change should be given the justification to be interested in climate change. Although the situation in each country is different, there is no excuse for being insincere about climate change.