The intensifying impact of climate change is felt in many places across the globe and the Amazon rainforest is reaching an irreversible tipping point. (UBS)

Voters supported the move to safeguard the unique biosphere in the Amazon basin with almost 60% in favor.


Mining in the Yasuni has long been controversial, but this vote is definitive: Ecuador’s government will honor the results of the referendum, with a target to have machinery removed within a year and an estimated loss of USD 16bn over the next two decades—a crushing blow to the country’s already strained fiscal health.


This electoral outcome comes at a time when governments around the world have had to make judgement calls on energy security vs decarbonization, grappling with a shifting outlook and expected volatility in both energy prices and stability of supply. For the most part, the preferred solution has been pragmatism, and several countries have resumed or expanded the use of coal for power generation, including Germany and China, for example.


Meanwhile, the intensifying impact of climate change is felt in many places across the globe and the Amazon rainforest is reaching an irreversible tipping point. Although these forces appear to be at odds with each other, we argue that this view is myopic. The global energy crisis has laid out starkly the gaps and vulnerabilities in infrastructure and transition plans: it has called into question the reliability of gas, the importance of modern regional power networks, and it has also kickstarted a record wave of investments in renewable energy as the long-term answer to both energy security and decarbonization.


While the Yasuni referendum is unique, this instance of democratizing climate politics nonetheless sends a signal that everyday voters are willing and prepared to accept near-term challenges to protect long-term value—an understanding that sustainability is a challenge for all. It is worth noting that the movement to protect Yasuni aims to not only protect the rainforest as natural capital, but also for the protection of indigenous rights and its cultural value, thus tying natural capital, energy security and social capital preservation into one question. All this should be seen in the context of Ecuador's short-term Nationally Determined Contribution, which aims to reduce emissions by 8% in 2025 relative to 2015 levels (but with no long-term commitment or targets to reach net zero emissions).


Not only does the fate of Yasuni National Park have noteworthy influence at the national level, but there are also possible international implications. In another example of climate democracy from a different part of the world, earlier this year the Swiss electorate voted on a referendum codifying Net Zero objectives (see: Perspectives: US anti-ESG backlash implications, Swiss emissions vote, wildfire season impact). As the UN COP28 meeting in November looms, policymakers will be increasingly pushed to recognize and identify their position on the policy tightrope between near-term energy security and long-term decarbonization, and multilateral funding for the protection of the world’s dwindling natural capital is top of agenda. We remain confident that decarbonization commitments are likely to tighten further, with implications across markets and sectors.


Takeaways for investors:

  • The energy transition is complex and long term, and CIO continues to expect an “all of the above” approach that involves both a responsible, gradual phase-out of fossil fuels and a ramp-up of renewable alternatives.
  • National and international ambition to decarbonize is further accelerating the energy transition momentum. We continue to see strong tailwinds for longer-term investment themes including Clean air and carbonreduction, Energy efficiency, and Smart mobility.


For much more, see Perspectives: Fashion industry change, Ecuador's deforestation vote, Exxon proxy votes , 11 September, 2023.


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