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Sustainable Investment in North America


My thanks to Climate Action, and of course the UNEP Finance Initiative, for organizing today’s forum. I hope that your discussions were enlightening and, more importantly, productive.

The science is clear on the danger and immediacy of the triple planetary crisis of climate change, nature and biodiversity loss and pollution and waste. The Intergovernmental Panel on Climate Change has told us that climate change is here, now, and intensifying. The Intergovernmental Platform on Biodiversity and Ecosystem services has told us that resource-hungry growth is eating into the nature that sustains us. The triple crisis is a threat to human health, prosperity and equity. And it is a threat to businesses and investors, as the World Economic Forum has made abundantly clear.

Despite this knowledge, action on and investment in addressing the triple crisis is falling far short. Economies and businesses are still largely geared up to use harmful practices to feed short-term profits. Global investments that degrade nature exceed conservation efforts by USD 600-852 billion annually.

The costs of remedying the challenges are higher than public sector alone can finance. Investments need to triple by 2030 to meet climate, biodiversity and land neutrality targets. We need to align financial flows towards efforts that protect and restore the natural assets that underpin human wellbeing, including clean air, water and land. We need the financial system to step up and accelerate the transition to a sustainable economy.
 

Sustainable Investment Forum

We know the power that financial institutions have to support sustainability in financial decision-making and investing. Provide capital to scale low-emitting technologies and align sectors with science-based targets. Increase demand for climate disclosure from companies. Help high-emitting companies and industries to transition to lower-emitting technologies and business models, while ensuring a just and equitable transition. Set science-based targets across portfolios and increase transparency to avoid greenwashing.

Financial institutions also have a responsibility to get involved in implementing the many international processes designed to reverse the triple crisis, such as the Paris Agreement and the upcoming Global Biodiversity Framework. In particular, they have a chance to get in on the ground floor on ending plastic pollution. The International Negotiating Committee that is hammering out a deal to stop plastic pollution is holding dialogues and encouraging businesses and financial institutions to get involved. This is a unique opportunity for financial institutions to bring their voice to negotiations and support a global shift to a circular plastics economy – which will not just protect the planet but create jobs and retain the value of plastics rather than throwing it away.

UNEP FI frameworks and partnerships allow banks and financial institutions to strategically align financial flows, while joining a global movement to drive change and creating opportunities.

The Finance Initiative convenes a finance community of practice on nature and is developing technical capabilities for the financial sector to integrate nature into decision-making. The Finance Initiative’s efforts to catalyse action across the global financial system has led to the creation of ground-breaking international frameworks and sub-sector alliances that are helping to shape a new paradigm for finance in the 21st century.

Please allow me to run through these frameworks and alliances so you can see where you can make a difference.

The UN coined the concept of ESG and – through the Finance Initiative and the UN Global Compact – established the Principles for Responsible Investment. Today, this is the global framework for responsible conduct amongst institutional investors.

In the 2000s, the legal basis for including environmental and social factors within fiduciary duties was firmly established. Since then, green finance has boomed, with the green bond market growing to 5 per cent of the fixed income market. But investment in low-carbon solutions is not nearly enough. The challenge is transitioning entire portfolios. Reshaping the industry’s purpose and strategic alignment with society’s goals to deliver inter-generational value will become a crucial determinant of competitiveness.

Through the Principles for Responsible Banking and the Principles for Sustainable Insurance, the Finance Initiative convenes financial institutions to apply industry frameworks, develop practical guidance and tools, and set targets on environmental and social aspects that align with the Sustainable Development Goals. These frameworks raise ambition beyond just integrating ESG risks to achieve portfolio-wide impacts.

The Finance Initiative also convenes three major financial sector net-zero alliances.

The members of these alliances focus on mitigating climate change by implementing commitments to achieve net-zero emissions in their portfolios by 2050, as you have heard today.

The Net Zero Banking Alliance has over 115 banks and USD 70 trillion, about half of global banking industry assets. The Net-Zero Asset Owner Alliance,  convened by UNEP’s Finance Initiative and the PRI, is now signed by more than 70 institutional asset owners with over USD 10 trillion in assets, covers about 7 per cent of global investment. The Net-Zero Insurance Alliance convenes 25 leading insurers, representing about 12 per cent of world premium.

The alliances drive progress within their organizations, across the financial industry and across the global economy by setting concrete portfolio targets, and engaging companies as they invest to accelerate the global transition to a net-zero world. To avoid greenwashing, the alliances have put in place accountability mechanisms, or require third party auditing of the actors’ commitments and progress.

Emerging regulatory standards will improve the integrity, transparency and accountability of financial markets on ESG, as well as put in place the right policy incentives to drive the transition. This is why the members of many of these alliances also engage policymakers, further accelerating the transition.

Friends,

In closing, let me say that sustainability is not optional. ESG is not an add-on, or a selling point, or a PR tool. By making it a core business practice, you can seize the opportunity to position the finance industry to help address society’s challenges in the 21st century. So, I encourage you to join leadership initiatives and alliances and strengthen the resilience of the whole financial system because at the end of the day: our financial systems are dependent on a resilient society and planet. To steer your business towards integrating sustainability considerations fully into financial practice. Because doing so is in the best interests of your people, planet and your operations.

Thank you.





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