Global finance chiefs support low carbon economy

by Search Gate staff. Published Sat 30 Jan 2010 18:32
Finance chiefs make good progress on supporting low carbon

CEOs from some of the world’s leading global financial institutions met with their industry and clients in Davos last week to stress their role in unlocking a low carbon economy and the business benefits this will bring.

Despite a year of economic turmoil and the lack of a legally binding agreement in Copenhagen, the institutions, representing total assets of over US$ 5.5 trillion, said they were undeterred in their ambition and efforts to be a leading part of the transition to a low carbon economy.

They maintain that tackling climate change presents significant opportunities for their business and their clients, but if left unchecked, could reduce economic growth and significantly increase risks to the sector.

Crédit Agricole, HSBC, Munich Re, Standard Chartered Bank and Swiss Re and international NGO The Climate Group spoke at the meeting. All are all founding members of the Climate Principles – the industry’s landmark response to dealing with the risks and opportunities of climate change.

Steve Howard, CEO The Climate Group and Chair of the World Economic Forum’s Global Agenda Council on Climate Change, said: “The finance sector is alive to the risks and opportunities posed by climate change.

“This group of leading financial institutions is already charting a clear course for the low carbon economy.

“Policy uncertainty makes their passage more challenging, but the low carbon opportunity is so profound that banks are not waiting for government to fire a starting pistol. As the policy fog lifts over coming months, our Climate Principles will act as a crucial low carbon compass for the finance sector and allow other international institutions to follow swiftly the wake of these pioneers.”

PricewaterhouseCoopers LLP (PwC) undertook an independent review of progress made against the Climate Principles by the founding group over the last year. The report, launched today, finds that the group has made good progress in 2009 towards understanding the risks associated with climate change, although opportunities remain to build upon progress to date.

The insurance sector has been particularly successful in converting this knowledge into new products and services. Munich Re and Swiss Re both offer products that minimise the financial stress of changing weather patterns and extreme weather events.

Banks are also advancing development of specific climate related funds and indices to make it easier for investors to take advantage of a low carbon economy.

Jon Williams, Partner, Sustainability & Climate Change, PwC: “The group has made good progress on implementing the Climate Principles across most aspects of finance. We have seen strong examples of leading practice.

“However, more can always be done and two areas in particular stand out for focus in 2010 – project finance and retail banking. Institutions should aim to improve disclosure on their approaches to financing carbon-intensive projects, and their strategies to align lending portfolios with carbon targets in the countries where they operate.

“Developing products and services for consumers to help them address personal carbon emissions and invest in the low carbon economy is another area of potential opportunity that is currently under-served.”

The group went on to welcome fund manager F&C; Asset Management as a new adopter of the Climate Principles.

Alain Grisay, CEO, F&C; Asset Management, said: “If there is one lesson to be learned from the credit crisis, it is that apparently rational, competitively-driven behaviour can have tragic consequences when there is a systemic failure to recognise and price in unconventional risks.

“The signs of a looming climate crisis are now clearly before us. As major participants in the financial markets, we have the ability to facilitate, through targeted financing, the transformation to a low-carbon economy.

“But, to achieve this, we need to ensure that the policy environment makes it possible for us do it. As with the credit crisis, we need a systemic approach to avert disaster.

“The Climate Principles represent our response to this crisis-in-the-making and our commitment to do something concrete and powerful to avert it.”




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