Notes from the Green Horizon Summit
The City of London Corporation, Green Finance Institute and the World Economic Forum organised an amazing line up of speakers at the Green Horizon Summit, a big event looking at the pivotal role of finance in tackling Climate Change that took place between 9 and 11 November.
It has really felt as if change was in the air, with international recognition at the highest level that both public and private finance is going to be needed on a huge scale to address climate change. Many of the speakers are well used to that idea, and tossed around ‘billions’ and ‘trillions’ as though zeroes were going out of fashion. There were many highlights, of which these are just a few:
Lord Mayor of London William Russell opened the event and summoned the resources of the City of London’s financial sector to the task.
UN and UK Finance Envoy Mark Carney announced a private finance strategy for COP26, ‘Building a Private Finance Strategy for Net Zero’. He quoted a Goldman Sachs report, on ‘Carbonomics’, which predicts that renewable power will become the largest area of spending in the energy industry in 2021, surpassing oil and gas for the first time in history: and which also notes that the cost of capital for long term oil projects will be four times that for renewables. The overall aim was that “every financial decision must consider the risks of climate change”.
European Central Bank President Christine Lagarde accepted that the numbers being talked of were enormous, but noted that as the issue was “survival”, that helped to put them in perspective.
IMF Managing Director Kristalina Georgieva underlined the scale and urgency of the transformation needed in international financial operations.
European Commissioner for the Economy Paolo Gentiloni discussed the EU’s plans for a Green Deal and its issuance of Green Bonds, with its opportunities for green jobs as countries emerged from the effects of the COVID-19 pandemic.
UN Secretary General Antonio Guterres said that “the science is clear”, that 110 countries covering 50% of global GDP have given a net zero commitment, and in blunt terms he told banks, insurers, asset managers and financial firms what was now needed from them.
HRH the Prince of Wales noted ruefully that having been making these points for about 40 years, climate action was certainly not for the faint hearted. He set out a technical 10 point plan of action needed from financial firms to support it.
UK Chancellor of the Exchequer Rishi Sunak MP announced the UK’s intention to mandate climate risk disclosures by 2025 for all listed corporates and financial firms. He discussed a new green taxonomy, allowing for comparisons between ‘green’ products. And he announced that the UK would issue its first sovereign Green Bonds in 2021.
UK Bank of England Governor Andrew Bailey announced climate stress tests for financial firms that would take place in June 2021.
The UN’s Net Zero Asset Owner Alliance published a Thermal Coal Position Paper with plans to transition $5 trillion of investment away from coal.
David Blood of the Portfolio Alignment Team released a new report on alignment of investment portfolios with climate impact and Paris Agreement goals.
Jean-Laurent Bonnafé, CEO of BNP Paribas, said that the financial sector had a crucial role to play. He discussed the development of new methodologies for measuring investments against Paris Agreement goals, and the pressing need to address natural capital and biodiversity.
Nicola Sturgeon, First Minister of Scotland, noted that Glasgow had been one of the cradles of the Industrial revolution in the 19th Century, and “nothing would please us more” than to be the cradle of the net zero revolution in the 21st Century. She referred to the Just Transition Commission advising on the societal shifts needed to take account of the moves away from oil and gas employment in Scotland’s North East. She also discussed the Scottish National Investment Bank, supporting the transition to net zero, and Scotland’s Green Investment Portfolio. Scotland was aiming not only to be a good host but also a good example.
Richard Curtis, CEO, Make My Money Matter, gave a talk and showed a film about the impact of consumer empowerment and interest in where and how investments such as pensions were invested.
Dr Rhian-Mari Thomas CEO of the Green Finance Initiative had a discussion with Christiana Figueres, one of the architects of the Paris Agreement on Climate Change in 2015. Christiana Figueres discussed her definition of ‘stubborn optimism’ about progress on climate change, and her hopes for progress with a carbon market and carbon pricing, and with progress at COP26 on a first round of the Global Stocktake required by the Paris Agreement.
Bill Gates discussed his work with Breakthrough Energy, and its aim to facilitate investments in sustainable energy.
Larry Fink, CEO of Blackrock, discussed a tectonic shift in investments and the approach of financial houses’ approach to climate risk. Commentary in some of the online chat asked whether Blackrock was doing enough about its billions of dollars on fossil fuel investment.
Alok Sharma, President-Elect of COP26 explained how the UK Presidency, co-hosted with Italy, had opted to make finance one of the central pillars of its work on COP26, and he called on governments, regulators, banks and financial firms to commit now to net zero emissions and to re-double their efforts to demonstrate action by the time of the COP.