This year’s PRI in Person conference in Toronto opened to a collective bang, quite literally, with an audience of almost 2,000 delegates being welcomed to the conference with a stirring drumming performance by members of the indigenous Canadian First Nation.
For the First Nation, drumming symbolises the circle of life, and the heartbeat of mother earth, a sentiment echoed by Claire Sault, chief of the Mississaugas of the Credit First Nation, who then spoke on the importance of aligning her ancestral teachings of living in harmony and nature with investments while considering their long-term impacts.
Sault’s opening remarks on the lessons the sustainable finance industry could learn from her aboriginal heritage appeared to strike a poignant, if not sobering, chord with the audience of responsible investors.
Now in its 16th year, the annual responsible investment conference organised by Principles for Responsible Investment (PRI), featured 150 speakers covering key issues within sustainable finance and impact investing.
Adaptation and the ‘new normal’
During a plenary addressing climate adaptation and resilience in investment strategies, Faith Ward, chief responsible investment officer at Brunel Pension Partnership, along with a group of panellists discussed barriers to climate risk management, including the lack of expertise, complex risk models, and the need for adaptation and resilience solutions.
“Climate risk really is the mother of all systemic risks,” said Ward.
“As an investor, I think it’s very much about building our capacity and toolkits. A lot of the tools that we have now probably aren’t giving us all the answers that we need in that area, but we can see from the evidence that economically it [climate resilience] is going to be very important,” she added.
Some examples of climate adaptation work currently being done in this area included infrastructure projects, such as Brisbane Airport’s flood risk analysis. Panellists also shared ideas around more practical adaptation investment strategies, such as stormwater management and rainwater harvesting.
Biodiversity and nature
In a breakout talk on how investors can accelerate action on climate and biodiversity, panellists discussed the importance of aligning financial flows with climate and nature goals, and the necessity of clear policy signals and incentives.
Moderating the session was PRI’s chief sustainable systems officer, Nathan Fabian, who said: “We hope to see an acceleration of both ambition and implementation of both global climate and nature agendas. And of course, the two agreements that we’re focused on here are the United Nations Framework Convention on Climate Change (UNFCCC) and Convention on Biological Diversity (CBD).”
In order to meet this goal, it was revealed that financing for nature needs to be at least quadrupled from current rates, with the panel pointing to the significant gap between the €6.4trn in investment that is negatively impacting nature, versus the limited €32.2bn in positive finance for nature.
Keeping 1.5°C alive
Elsewhere, the question of whether investors should be prioritising engagement with policymakers, or alternatively, whether corporate engagement should remain the focus, was tackled in a spirited debate.
Making the case for the role of corporate engagement with the opening gambit of declaring policymakers as being “slow, confused and conflicted”, Anne Simpson, global head of sustainability at Franklin Templeton, stressed how it took no less than 28 COP meetings to even mention the words “fossil fuels”.
“Government alone will not be able to get us there. Imagine the financial system being run in the same way as the place that generates your driving licence, a kind of Department of Motor Vehicles government model,” she said to a chuckling audience.
“We are making progress on reporting, but gosh, it’s taking too long,” Simpson said.
Mark Carney, the United Nations’ special envoy for climate action, took to the stage and spoke of the need to close the investment gap for emerging economies as well as the potential of high-integrity voluntary carbon markets to provide financing.
The former governor of the Bank of England went on to call for increased investment in clean energy, particularly in heavy industry, and highlighted the role of nature in mitigating emissions.
Taxonomy
Other announcements throughout the event included the introduction of a sustainable taxonomy for Canada to help identify green and transition investments, from deputy prime minister Chrystia Freeland.
Off stage, the announcement was met with eyeball rolling from some asset managers who told IPE they did not believe the taxonomy was worth the paper it was written on.
Mainly due to the fact they do not envisage the current government implementing it with the upcoming elections, which many predict will see the Liberal Party lose power.
For Oscar Warwick Thompson, head of policy and regulatory affairs at the UK Sustainable Investment and Finance Association (UKSIF), the announcement served as a signal for the UK government to urgently implement its own green taxonomy which he added has effectively been “left on the shelf”.
“Mixed messages have circulated in recent years about when the industry could expect to receive the taxonomy consultation, and indications prior to the general election were that the consultation paper would be delivered imminently, but it would appear the election upset those timelines, effectively leaving the UK’s taxonomy on the shelf.
“The opportunity to help bolster the UK’s leadership position on green taxonomies globally should not be put off any longer,” he said.
PRI chief executive officer David Atkins also introduced a progression of pathways to offer tailored guidance and resources for signatories at different stages of their responsible investment journey.
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