It’s not every day that stranded assets and the ‘Aiming for A’ shareholder voting initiative get discussed on the floor of the United Nations.
But they were, during a session held at UN headquarters in New York this week – in a clear demonstration that responsible investment issues are being aired at the global town hall.
The RI staples were brought up by California State Controller Betty Yee, who’s a board member at the two giant state pension funds, CalPERS and CalSTRS.
She outlined the actions the funds and others are taking to combat climate change. The event, though not part of official UN business, was headlined by Secretary-General Antonio Guterres, the Portuguese diplomat who took over from Ban Ki-moon at the start of this year.
Confirming plans for the Global Climate 100 initiative to be launched at PRI in Person next week in Berlin, Yee said, however, that even the largest pension funds can’t change market practices on their own. The UN was in the best position to make the financial sector sustainable on a global scale.
This was set out last year, in a statement from UNGA President Peter Thomson. “It is possible to establish sustainable financial systems that promote long-term investments for sustainable growth over short-term rent and profit-seeking; foster social inclusivity; and encourage environmentally sustainable practices.”
But policy-makers needed to “look at ways to influence investment decisions so that private and institutional finance is not only directed away from high-carbon sectors and into more sustainable investments, but also accelerated and intensified towards SDG implementation”.That Guterres gave his time – and warm words – at the start of the week of the UN’s General Assembly was significant, given the demands on his schedule. He was clear that the current financial system was “not fit for purpose”.
The session was in fact part of Climate Week, the annual series of events that has now become a fixture that takes place alongside the UNGA.
The UN knows it has a potentially pivotal role in mobilising finance towards sustainability (think of the Global Compact, the Sustainable Development Goals, the UN-supported PRI, the UNEP Inquiry etc).
And it’s UN norms that dictate investor exclusions in, for example, the West Bank and Western Sahara. But the institution itself lacks fluency in the language of investment.
Its own huge pension fund could surely be more visible in this area, and its choice of new director will be closely watched in this regard.
The diplomats at the UN clearly recognise the need for “private finance” but, frankly, my impression is that they are unclear about what they mean by that term. Notably, the UN’s existing attempt at mobilising green finance, the Green Climate Fund, has so far stalled despite good intentions.
One ambassador at the session said it was “morally deplorable” for there to be trillions in the global capital markets while the world’s poor go hungry. No doubt true, but the situation demands more than mere hand-wringing, however close to home it is. But he was clear that the UN is “unquestionaby the vehicle” for the developing world in terms of the 2030 agenda.
The SDGs might, just might, be the right path forward. As Argentina’s Vice President Gabriela Michetti said, the SDGs aspire to an “integrated world of cooperation in the context of equity”.
Achim Steiner, the Administrator of the UN Development Programme, said the SDGs throw a spotlight on market failure: “The challenge is to see the SDGs as a tremendous oportunity for those that administer our funds. Pension funds are not institutional money, but our money.”
Also on the panel was World Bank CEO Kristalina Georgieva, who said “somebody has to wake this money up” and remove the barriers to sustainable investment. Examples she gave were green bonds and pandemic bonds — i.e. market instruments.
Moderator Amina Mohammed, the former Nigerian environment minister who is UN Deputy Secretary General, immediately hailed the coining of a new phrase “waking up the trillions”.
“We’ve hit the ground,” Mohammed said, “but we’ve hit it walking.” Mohammed is one of the architects of the 2030 agenda and the SDGs.
Being diplomats, nobody mentioned Donald Trump by name. But the contrast between the UN’s aspirations and the words (if not actions) of the US President could not be starker.Jamaica’s UN Ambassador, Courtenay Rattray, outlined an ambititious programme of debt for climate change, nature investment and blue economy (ocean ecosystems) investments and diaspora bonds. He seemed to have grasped the language of investment.
The UN has unrivalled convening power and is undoubtedly a force for good in the world. You could argue that the formation of the UN in the aftermath of a global war was a historic achievement. And if you accept the idea that climate change is a threat to humanity, then it is clear that the UN should have a leading role.
Article 1 of the UN Charter speaks of its role in achieving international co-operation in solving international problems.
Just what the role should be is one of the most important questions of our times.