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Green Finance Institute
Green Finance Institute
Green Finance Institute
Green Horizon Summit Newsletter #GHS2020
 
Insight from the Green Finance Institute

09 November 2020
Breaking News: Chancellor of the Exchequer Rishi Sunak MP announces UK sovereign green bond to be issued in 2021 with plan to build green sovereign yield curve; says UK is mandating large companies and financial services to report their impact on climate by 2025 in line with TCFD; announces new green taxonomy adjusting EU Taxonomy metrics for UK.
The view from Day 1: Dr Rhian-Mari Thomas OBE, Chief Executive of the Green Finance Institute


Today would have already been an extraordinary day in green finance -- with the publication of Mark Carney’s private finance strategy for COP26 and David Blood’s new report on ‘Measuring Portfolio Alignment’ for transitioning to NetZero – even before the major announcements from the UK Chancellor at the Green Horizons Summit, we co-hosted with City of London Corporation with support from WEF.

As over 30,000 viewers tuned in to the summit today, it was surreal for me to hear the news that the UK government would issue its first green sovereign bond, that so many of us have worked so hard to promote and champion, while sitting at my kitchen table. I can only imagine the cheers that would have met that announcement had we been at London’s Guildhall as in previous green finance summits. Chancellor Sunak also announced that the UK would establish a green taxonomy and introduce mandatory climate disclosures by 2025 – the latter being an action that UN Secretary General Antonio Guterres highlighted earlier in the day as being a necessary step for governments alongside ending fossil fuel subsidies and introducing carbon pricing.

Indeed the collective enthusiasm and engagement of the community across the globe urging greater action has been inspiring whether hearing Christine Lagarde call for greater information and innovation or the IMF’s Kristilina Georgieva calling for us to “harness the firepower of the financial sector” for a global green recovery.

It is also clear that the international climate finance community has been buoyed by the results of the US election including Mary Schapiro who said the difference now for climate would be “extraordinary” and that a Biden Administration would “only be a positive for the future of financial reporting on climate risk.”

Increasingly we’re seeing the rhetoric turn to action. At the Green Finance Institute our focus is on collaboration, practical solutions and financial innovation and we heard those messages loud and clear today.

Listening to the regulators, the politicians and leaders from across the financial and private sectors today I was struck by the pace at which collectively we are ensuring that we have the building blocks in place to channel the capital we desperately need towards a Net Zero transition – within the context of a global recovery.

And I am excited that we’re doing it all again tomorrow. 
 
What you may have missed

Mark Carney, the UK Prime Minister’s Finance Advisor for COP26 and UN Special Envoy for Climate Action, announced a private finance strategy for COP26. Describing climate change as a “crisis which involves the entire world, and from which no one will be able to self-isolate”, Carney set out his framework designed to ensure that every financial decision takes climate change into account. Resting on four pillars – reporting, risk management, returns, and mobilisation – it will mean that every company, bank, insurer and investor will have to adjust their business models.
 
  • Reporting: improving the quantity, quality and comparability of climate-related disclosures, using the Task Force on Climate-related Financial Disclosures (TCFD) as the starting point for any mandatory disclosure regime.
  • Risk management: ensuring that the financial sector can measure and manage climate-related financial risks. This calls for wider use of climate stress tests, and to develop and disclose their management of climate risks on their balance sheets.
  • Returns: helping investors identify the opportunities in the transition to net zero and report their own alignment.
  • Mobilisation: building new public-private partnerships, pipeline of investable projects and market structures to increase sustainable private financial flows, particularly to developing countries.
Key announcement and quotes from today’s speakers:
 
  • Andrew Bailey, Governor of the Bank of England announced the new launch date of climate stress test exercise for June 2021 declaring: "But what is different  [to COVID] with climate change is that we know now it is coming, so we can identify where risks will arise and start managing them in advance. Compared to the financial crisis and the pandemic, the risks from climate change are even bigger and more complex to manage. And acting now gives us the best opportunity to manage those risk”
  • Christine Lagarde, President of the European Bank said: “The economic challenges of the climate transition are phenomenal and often I ask myself what is the cause: survival"
  • Kristalina Georgieva, Managing Director, International Monetary Fund said:To win the fight against climate change, we also must harness the power of the financial sector. We need policies that nurture sustainable finance and mobilize funds for green investments.”
  • European Commissioner for Economy Paolo Gentiloni said: “The EU's budget for the next 7 years will fully earmark 30% for climate-related spending across all areas.
  • John Green, Chief Commercial Officer, Ninety One said: “Mobilising finance for the challenge of climate change will be defining issue of our generation.[…] This is mission possible, not mission impossible.
  • Rt Hon Kwasi Kwarteng MP, Minister for Business, Energy and Clean Growth, BEIS highlighted today that we did not do enough in the 2008/9 financial crisis to ensure a green recovery. He highlighted the importance of innovation and collaboration and offered the Green Finance Institute’s mission-driven alliances as a model, as well as the importance of developing new markets such as Mark Carney’s Taskforce on Scaling Voluntary Carbon Offsets.
  • Antonio Guterres, UN Secretary General gave a rousing speech calling on governments to end fossil fuel subsidies, mandate TCFD and enact carbon pricing. He called on the financial sector to mobilise capital, and on regulators to also take action embedding climate measures in fiscal policy.
  • Mary Schapiro, Vice Chair of Global Public Policy and Special Advisor to the Founder and Chairman, Bloomberg, said that said the difference now for climate following the US Election would be “extraordinary” and that a Biden Administration would “only be a positive for the future of financial reporting on climate risk.” 
  • Anne Marie Verstraeten, UK Country Head, BNP Paribas said “We would challenge oil and gas companies whether the speed of investment is as fast as you would want it to be. Is the speed fast enough to meet Paris alignment?"
Panel session highlights

There were several panels at today’s Summit. We have picked out a couple below:

Breakout Session: The Built Environment: The Green Finance Institute held a breakout session on the built environment and financing the net-zero transition:
  • Dr Rhian-Mari Thomas (CEO, Green Finance Institute) was joined by Minister Kwarteng (Minister for Business, Energy & Clean Growth), Joe Garner (CEO, Nationwide), Julie Hirigoyen (CEO, UKGBC) and Nigel Wilson (CEO, L&G) to explore the practical, impactful and scalable financial solutions to help decarbonise the built environment.
  • The panellists explored the growth in measurement, disclosure and financial product innovation in relation to the built environment; examples include the commitments by L&G and Nationwide to decarbonise the building stock they fund, the £1 billion commitment to green home products announced by Nationwide earlier this year, and the mechanisms under development by the Institute’s Coalition for the Energy Efficiency of Buildings including Property Assessed Clean Energy finance and Building Renovation Passports.
  • Universal agreement among the panellist on the “win-win opportunities” in the decarbonisation of buildings, from emissions reduction and biodiversity gains, to jobs creation and health improvements.
  • The panellists highlighted to opportunity to integrate embodied carbon and nature into the decarbonisation journey of our homes, as summarised by Minister Kwarteng who states “we’ve got to work with nature and nature-based solutions… and use market mechanisms” to bring in green pricing differentials.
 
Breakout Session: The Future of climate-related Financial Disclosures
 
  • Mary Schapiro, Vice Chair of Global Public Policy, Special Advisor to the Founder and Chairman, Bloomberg, lauded New Zealand’s decision to make climate-related financial disclosure mandatory, adding that it can “hopefully be a model for the rest of the world”.
  • The latest TCFD status report showed progress in mainstreaming TCFD disclosure requirements driven by: investor demand (from large investors such as Blackrock and LGIM); policy and regulatory actions of central banks; and green COVID-19 recovery programs.
  • Progress is welcome, but what we also need more data, said Audrey Choi, CSO, Morgan Stanley, adding that we cannot measure something if we do not have robust metrics and benchmarks. This will also help avoid greenwashing, allowing us to compare “apples to apples”.
  • The panel agreed that regulatory oversight was important, with global standardisation required. Lucrezia Reichlin, Professor of Economics, London business School, stated “companies have given us the message, now is the moment of the global regulators”. The panel further stressed that discussions around disclosure and risk must be accompanied with discussions on the opportunities available. When looking forward, “we have seen tremendous opportunities for outsized growth” added Choi.
Day Two of the Green Horizon Summit: What to look out for tomorrow 
 
  • 0940 GMT: Guidelines on how to support green investment in emerging markets from the Climate Forum Leaders Initiative. According to the OECD 70% of energy transition investment needs to be in developing economies. Find out more at the CFLI website  
  • 1130 GMT: Nature and Net Zero: Is Nature the Next Frontier session? The Taskforce for Nature-related Financial Disclosures is coming, but what can governments, investors and data providers do to help prevent further biodiversity loss and build nature into a green recovery.
  • 1220 GMT: The Taskforce on Scaling Voluntary Carbon Markets announces its recommendations and opens consultation period.  Voluntary carbon markets need to grow by more than 15 times in size by the end of the decade to meet the targets set in the Paris Climate Agreement.
     
  • Post Panel: Release of Green Finance Institute podcast interview with Taskforce Operating Lead Annette Nazareth.
     
  • 1310 GMT: GFI Chair Sir Roger Gifford in conversation with Professor Sir Partha Dasgupta on the economics of biodiversity and the work of the Dasgupta Review. 
  • 1610 GMT: GFI CEO Dr Rhian-Mari Thomas OBE in conversation with Christiana Figueres
  • 1630 GMT: GFI Chair Sir Roger Gifford in conversation with Noel Quinn, Group Chief Executive of HSBC
  • 1650 GMT: Closing session
    • Bill Gates, philanthropist 
    • Larry Fink, Chairman and CEO of Blackrock
    • The Rt Hon Alok Sharma MP, COP26 President and Secretary of State for Business, Energy and Industrial Strategy 
       
Tomorrow’s highlights also include  
  • 0900 GMT: HRH the Prince of Wales addresses the Green Horizon Summit
  • 0935 GMT: Michael Bloomberg, Founder, Bloomberg LP and Bloomberg Philanthropies
  • 1045 GMT: Dr Ma Jun, President of the Beijing Institute for Finance and Sustainability
Watch the livestream at www.greenhorizonsummit.com
 
About the Green Finance Institute

The Green Finance Institute is a co-host of today’s event with the City of London Corporation, supported by the World Economic Forum.
Established in 2019, the Green Finance Institute is the UK’s principal forum for public and private sector collaboration in green finance.
As part of its work, the Green Finance Institute convenes and leads mission-led coalitions, such as the Coalition for the Energy Efficiency of Buildings (CEEB) to identify and unlock barriers to deploy capital at pace and scale towards impactful, practical, real-economy outcomes. The Green Finance Institute is also among those recommending the establishment of a National Infrastructure Bank and has proposed the issuance of a Green+ Gilt.

The Institute is an independent, commercially focused organisation, supported by Her Majesty’s Treasury, the Department for Business, Energy and Industrial Strategy, the Foreign, Commonwealth and Development Office and the City of London Corporation. 

Find out more about the Green Horizon Summit and the work of the Green Finance Institute here.
 
Useful Links to Upcoming Events:
London Climate Action Week  
Finance in Common Summit
Natural Capital Finance and Investment Conference 2020
 
Other Links:
COP 26 Website  
 
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