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COP27: Investors tell their side of the story at Finance Day

COP27: Investors tell their side of the story at Finance Day

IIGCC delegates joined speakers from across the public and private community to reiterate commitments made, a readiness to do more, and how markets and policy makers can catalyse new capital into the climate’s most pressing issues.

“This is about financing the development story of the 21st century: the drive to net zero.” Professor Nick Stern, who’s landmark report first placed a financial figure on the cost of climate inaction, laid out the opportunity in the morning COP Presidency session on ‘mobilising finance for climate action.’

The case itself is clear; mobilising investment for emerging and developing economies is critical if we are to meet global climate goals. And as the only representative of the private sector on the panel, IIGCC CEO, Stephanie Pfeifer was soon asked what role investors can play to cover this burgeoning cost.

“There have been examples already, although not on the scale that is needed,” Stephanie explained to the audience and international livestream: “But strong policy, aligned to 1.5 degrees, is vital.”

Sharing knowledge

Going into more detail, Stephanie stressed that the use of blended finance needs to be scaled to mitigate the risks in these markets. Investors have welcomed the discussion about reform of the multilateral development banks (MDBs) to ensure that the capital deployed is truly catalytic and able to leverage private finance more effectively.

An improved dialogue between investors, MDBs, governments, development finance initiatives and project developers is key to sharing knowledge and understanding each other’s objectives and requirements.

This need for collaboration was echoed in the UNFCCC Marrakech Partnership Action Event at midday with Ninety One CEO, Hendrik du Toit remarking how “refreshing it was to see all parts of the supply chain” on-stage, referring to the representation of asset owner and asset manager as well as speakers from emerging markets.

That same morning the Net Zero Asset Managers Initiative, co-founded by IIGCC, announced initial targets for 86 new investors, bringing the total number to 291.  The Paris Aligned Asset Owners initiative also published its first Progress Report alongside target disclosures for a further 13 signatories.

Hendrik reiterated to the audience that investors have a requirement to make a positive impact on behalf of their clients as well as deliver returns.

Herman Kamil, Head of Sovereign Debt Management at the Ministry of Economy and Finance in Uruguay also outlined the nation’s sustainability-linked bonds. These include a step-down mechanism which is activated if the country reaches certain environmental targets. Demand at launch was more than double the $1.5bn Uruguay issued.

Dispelling a myth

If the action event was about education, its implementation counterpart was one of peer-to-peer brainstorming. Nigel Topping, High Level Climate Champion for the UK laid down the gauntlet, calling on the roundtable of experts to destroy the “myth that there is no business case for investing in resilience.”

“Most of the world doesn’t know,” he challenged, “your job is to show them.”

The collaborative workshop, moderated by Mahesh Roy, IIGCC Investor Practices Programme Director and Marrakech Partnership finance focal point, heard from a range of speakers across the public, private, youth and indigenous communities.

Chris Dodwell, Head of Policy and Advocacy at Impax Asset Management took part in the session. Chris co-leads the IIGCC working group which has helped develop the Climate Resilience Investment Framework discussion paper, presented during the lab by Danielle Boyd, Investor Practices Senior Programme Manager.

After remarking on the breadth of experience in the room, Chris admitted: “What I’m left hungry for now is how much of the problem do we think we’ve solved if we get corporate action to fully integrate climate impacts and adaptations into their plans? Are we getting up the totaliser?”

Setting the standard

The packed IIGCC agenda ended with a special thematic session on ‘finance and the built environment,’ co-hosted by IIGCC’s Hugh Garnett, Investor Practices Senior Programme Manager, alongside the World Business Council for Sustainable Development.

The event showcased the crucial role of private finance sector in transitioning to net zero buildings, as well as the practical steps investors need to take to meet their targets and highlight the outstanding areas for action.

Since expanding its work on real estate earlier this year IIGCC has already held a number of informative webinars and discussions with its member working group. A packed roster of events throughout the week, part of the #BuildingToCOP umbrella, is testament to the importance of this topic.­

As the first of COP27’s thematic days it’s clear that finance is key – with figures of trillions and multiple billions mentioned in almost every event. Though these can be unimaginable to the general public, UN Development Programme Administrator, Achim Steiner reminded the Presidency session that one trillion was “1 to 2% of global wealth.”

Furthermore, he stressed that it was not a transfer of taxpayer money but instead a complex, intermediated system of public and private finance. With this relativity in mind, the hope is that the day’s financial conversations set the standard for the conference to come, just as the right investment can drive progress at speed towards a net zero and resilient future.

We’ll be sharing updates for investors throughout this year’s conference of the parties – follow us on LinkedIn or Twitter for all the latest news.

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