Investor group stresses appetite for climate bonds at key UN experts meeting

Investor Group on Climate Change at event in the Philippines

The Investor Group on Climate Change (IGCC), which represents Australasian investors, has used a United Nations climate finance meeting to stress that there is an investor appetite for vehicles such as climate bonds to help mitigate environmental damage.

IGCC Chief Executive Nathan Fabian said climate bonds backed by multilateral development banks and development finance institutions “work for investors” – as do instruments that address risks. These include feed-in tariff risk insurance, credit enhancement of project debt and the idea of a “first loss” public/private fund.

Investors were also comfortable with copying what they use now: direct investments that they can understand and provide liquidity as well as fund managers who can build expertise and aggregate/spread risk.

There was an opportunity, Fabian said, for public climate finance to “de-risk, reduce cost, pool, promote and demonstrate”.

The remarks came in a presentation at a United Nations meeting of experts in long-term finance that will feed in to the latest round of climate change talks later this year.

Last November the IGCC joined forces with other regional investor climate groups to create the Global Coalition on Climate Change, to act as a unified body for lobbying governments on international climate treaties.

The ‘First Meeting of Experts on Long-term Finance’ took place in the Philippines last week, convened under the UN Framework Convention on Climate Change (UNFCCC) to discuss the “parameters of pathways” for mobilizing $100bn of climate finance a year by 2020.There will be a second meeting in August and a wrap-up event in September before a final report will go to the 19th ministerial-level ‘Conference of the Parties’ [COP19] in Warsaw, Poland, on November 11-12.

As the event closed it was clear that “further consideration of the issue would be required” according to the official report of the meeting. The second expert meeting would be an opportunity to “separate the technical and analytical elements” from issues needing discussion at the political level.
It comes as the UN Environment Programme Finance Initiative (UNEP FI) has teamed up with a group of leading investors to launch an investor briefing on climate change called Portfolio Carbon: Measuring, disclosing and managing the carbon intensity of investments and investment portfolios.

It was developed with Allianz, Aviva, Hermes, HSBC, Eurizon Capital, Inflection Point Capital, Pax World Investments, Robeco SAM and Trillium Asset Management. It argues that carbon footprinting is one way that investors can “understand, assess and mitigate” their portfolio carbon risk, given that it’s likely that investors will face more calls to be transparent about their exposure to greenhouse gas emissions.

UNEP FI is collaborating with the Greenhouse Gas Protocol to develop guidelines for investors and other financial intermediaries. Nathan Fabian presentation