RI Interview: New UNEP Head Erik Solheim and “greening all the investors in the world”

Erik Solheim, a seasoned Norwegian diplomat and politician who took over this week as the new Head of the UN Environment Programme, says the finance world will be one of his main priorities.

Solheim, who joins UNEP from the OECD where he was head of development, tells Responsible Investor that one of the keys to protecting the planet is “greening all the investors in the world”.

“If we can’t do that we will feel pain,” he muses.

He calls his new role at UNEP, where he takes over from German-Brazilian Achim Steiner, a “dream job”, having driven action on protecting the environment throughout his political life.

Until 2012, Solheim was Norway’s Minister of the Environment and International Development. During this time, he put in place the Nature Diversity Act, which many consider to be Norway’s most important piece of environmental legislation.

He also helped broker the Norwegian International Climate and Forest Initiative, under which Norway cooperates closely with Brazil, Indonesia, Guyana and other countries on the reduction of greenhouse gas emissions through conservation and sustainable use of rainforests.

This deal helped the development of the UN-REDD programme (Reducing Emissions from Deforestation and forest Degradation) – a forest carbon finance scheme which has had a mixed reception.

Solheim will continue this focus on climate finance in his new role at UNEP, saying the UNEP Finance Initiative (FI), a partnership with the financial sector which among other things helped incubate the Principles for Responsible Investment, will be one of his main priorities.

He says UNEP FI is already at the forefront of the issue, citing its work with the G20, China’s central bank and the Bank of England on bringing the environmental considerations on climate into the operations of central banks.

But, he also stresses that the UN needs to go further. “I think we need a to be a little more modest. I still think there are realities that the UN and people in politics tend not to very often have the proper understanding of the dynamics of business and particularly the dynamics of the financial sector.”

He continues that very often decisions are made at a very early stage, with a preference on working with the public sector over the private sector. He also highlights communication problems. “People don’t speak the same language and don’t really understand each other, when there is a need for a much, much deeper dialogue.“Essentially that dialogue must not be in the CSR outfit, but with key decision makers deciding on the big investments.”

Expanding on his thoughts on finance, Solheim focuses on the development sector and the remit of the UN Sustainable Development Goals. “All the idiots can think big investment is not the key to development. But development aid is much less than 1% of global investments. So while development aid is still important for some countries, you must focus on the big money rather than the small.”

Solheim has publicly said tackling the issue of climate change and development has to be brought together. He says he will spend a lot of time with investors around this.

“I will speak with investors to see what are driving their decisions and how can political decisions at a global level through the UN or at a national level assist them.

“How can we frame the markets, through use of subsidies or taxes or other incentives to make this change happen? But it must be done in such a way that people who are closer to the problem, the investors themselves, can influence how they operate.”

He is optimistic a shift in finance can happen, reflecting on the Paris climate change talks six months ago.

Solheim, somewhat a climate conference veteran who has led Norwegian delegations at five global meetings, says the change in attitude between Copenhagen in 2009 and Paris last year was pronounced.

“In Copenhagen it was all about how costly tackling the climate and the environment will be. While, in Paris it was a lot more about seeing new business opportunities in renewable energy.”

He also believes business is well ahead of politics on the sustainability agenda, citing well-known leaders in this area including Unilever and Nestle. He also credits French oil and gas firm Total. “It has said it aims to be one of the three biggest solar companies in the world by 2030, and they have also said they will not do drilling in Arctic. In Norwegian politics only a few green politicians have the same view as Total. So it is very well ahead of the political lag in my nation.”

Big investors, he says, are also becoming more cognizant of the huge risk of not factoring climate change into their decision-making processes.

But, he does not underestimate the job of convening these different actors. Again, he stresses the need for “modesty”. “There is still a long way to go for UN systems and other ministries of foreign affairs that often drive the global agenda to really understand the core operation of business and investors.

“It’s a crucial time. We have global goals which have been accepted by everyone and integrating environmental development for the first time. We will only achieve this if we work effectively with business and investors.”