Will Climate Finance Power the Next Industrial Revolution?

Ashley Lester, Chief Research Officer, MSCI
Leaders from BlackRock, Morgan Stanley, BNP Paribas & NatWest told MSCI’s Capital for Climate Conference that green investment is a growing power source

Climate finance is the “critical catalyst” for a global economic reset, helping the globe to fund sustainability and net zero, a conference heard.

Leaders from BlackRock, Morgan Stanley, BNP Paribas & NatWest were among the speakers at MSCI’s Capital for Climate Conference in London.

They heard a consistent call to action throughout the event, with delegates being told that financiers are perfectly placed to guide investors towards green – and profitable – investments.

Ashley Lester, Chief Research Officer, MSCI, said: “The question which we face today is ‘what is the role of capital going to be in framing the new world?’

“How do we go about assessing the many risks and opportunities around climate change? Just relying on governments would be to abdicate our responsibilities.

“Our mission is to bring actionable climate data and models to investors.”

Caroline Haas, Head of Climate and ESG Capital Markets, NatWest

An impressive line-up

The half-day event featured senior executives from major investment banks, consultants, green finance organisations and start-ups.

They heard from experts including:

  • Ashley Lester, Chief Research Officer, MSCI
  • Rhian-Mari Thomas, CEO, Green Finance Institute
  • Caroline Haas, Head of Climate and ESG Capital Markets, NatWest
  • Franck Rizzoli, Managing Director, Head of ESG Financing Advisory, BNP Paribas
  • Vikram Raju, Managing Director, Head of Climate Investing, Morgan Stanley
  • Michael Viehs, Global Head of Sustainable Investing, Partners Capital
  • Jenn-Hui Tan, Chief Sustainability Officer, Fidelity International
  • David Oelker, Head of ESG Investment EMEA, BlackRock
Rhian-Mari Thomas, CEO, Green Finance Institute

Finance as a facilitator

Rhian-Mari, speaking in a fireside chat with Ashley, was keen to emphasise that climate finance is in everyone’s interests.

She said: “How do we use finance as a facilitator? It will take US$4-6tn to profoundly reset the global economy.

“It’s the biggest redeployment of capital we’ve ever seen.”

She added: “We need to make sure that opportunities to make capital are as attractive in the green sector as in the traditional sector.

“It is in our enlightened self-interest. If we are not recognising that, we are storing up huge problems. Not acting will cost us an awful lot more than acting.

“We have to find a way to get over the blockages and unlock the capital.”

Rhian-Mari said there is a role for “forceful stewardship”, with tangible requirements and assessments to ensure that companies’ spending is in line with climate targets.

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NatWest and BlackRock seeing the bright side

Caroline said: “Climate finance is going to be the new industrial revolution. It will stimulate growth, jobs and innovation.

“The reporting requirements are brutal, but they drive change.”

David Oelker, Head of ESG Investment EMEA, BlackRock, talked up green bonds – a subject that recurred throughout.

He said the green bonds market is worth US$3tn, adding that a key advantage is their transparency.

He said: “It’s so valuable as investors because you get insight reports on an annual basis.”

David said he believes green bonds can play a key role in driving the green transition in emerging markets.

A note of caution

Rhian-Mari added a note of caution, telling delegates that companies still have a way to go on the path to green finance.

She said there are four stages of development for companies in terms of climate investment:

1 – Initial engagement: making sure risk and compliance are at the forefront

2 – Systematic change: where organisations start to develop reporting and target setting

3 – Transforming the core: where sustainability is starting to drive revenue and growth

4 – Competitive differentiation: where everything is being driven by sustainability “front and centre”.

Rhian-Mari said financial organisations are “largely at stage one and two”.

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