From the editor
This week, the RI editorial team headed west to the Oxford Sustainable Finance Summit.
The second edition of the event was if anything even better than the first, with great speakers from finance and academia, topical panels and excellent networking – all in the glorious setting of various historic Oxford venues.
A big thank you to Ben Caldecott and his team at the Oxford Sustainable Finance Group for putting on a great event and making it possible for us to attend.
We look forward to going back in 2024!
The first panel in Oxford, on the future of sustainable finance, was a lively and at times contentious affair. Particularly striking was the readiness of nearly all the speakers to question the structure and even the concept of the Glasgow Financial Alliance for Net Zero (GFANZ).
Never one to shy away from controversy, Bob Eccles said: “I still don’t really get the theory of GFANZ … The financial sector is trying to abrogate to themselves things that should be done by government.”
DBS Bank’s Yulunda Chung went even further, suggesting that some of the promotion around redirecting capital flows at the initiative’s launch “would now be considered greenwashing”.
Nathan Fabian of the PRI took a more moderate line, but agreed that GFANZ “clearly” requires “careful repositioning and clarification” if it is going to work.
“The idea that an [asset] manager… who serves millions of different individual clients can set its own 2050 target and faithfully implement that supposedly on someone else’s behalf was frankly never going to work.”
Is this the start of more critical – and possibly overdue – scrutiny of GFANZ?
We’d love to hear your thoughts, email us at firstname.lastname@example.org
Is 1.5C alive?
A highlight of the Oxford event again this year was the closing debate.
Held in the Baroque splendour of the Sheldonian Theatre, the format was that of an Oxford Union event. Speakers took opposing sides of a motion and were subject to strict time limits – as Cambridge University’s Ellen Quigley learned to her cost!
This year, the motion was: “This House believes that 1.5 degrees is alive in part thanks to the efforts of the finance sector.”
Arguing in favour was always going to be a tough ask – particularly on the same day as leading scientist Sir Bob Watson said he believes the 1.5C target will be missed – but the proposition speakers gave it their best shot.
Tina Mavraki of Chapter Zero stressed the “step change” in the financial industry’s efforts to tackle climate change, while Nathan Fabian of the PRI creatively expanded the definition of the financial sector to include its clients, and thus society as a whole.
The star turn, as last year, was Jakob Thomä, who started with Haitian zombies and finished with the Bee Gees’ Stayin’ Alive, in a bid to convince the audience that being on life support does not mean the 1.5C target is dead.
The opposition had an easier job and embarked on it with gusto. Darian McBain of University of Oxford went in hard, claiming that “1.5 is dead and the financial sector helped to shovel dirt on the grave” – before running through pretty convincing evidence for the former at least.
She was backed up from the floor by Maria Nazarova-Doyle of Scottish Widows, who captured the feel in the room when she said: “We are the good guys, but there is a much, much larger part of the financial sector that is not good, that is destructive.”
Finishing up for the opposition, Ulf Erlandsson of the Anthropocene Fixed Income Institute also stressed the net damage done to the climate by the financial sector, noting that the most successful decarbonisation effort by the industry to date was to set off the 2008 financial crisis.
Perhaps the cruellest blow, though, was reminding Thomä that the name of his own organisation until very recently was the 2 Degrees Investing Initiative (now Theia Finance Labs).
Unsurprisingly, the opposition won the day. A smattering of half-hearted ‘ayes’ was countered by a rousing chorus of ‘noes’, and the motion was defeated.
Heard in Oxford
“Precise information is not all that important actually.”
ISSB board member and academic, Richard Barker, reassured attendees that “ballpark” information is “incredibly useful” when it comes to sustainability disclosures by companies. He highlighted a (mis)perception that, because the ISSB is housed by financial accounting body IFRS, its emerging global corporate sustainability standard will require a similar level of rigour from the off.
“I think as an industry we are overselling the importance of sustainability disclosures. Until there are policy shifts which make ESG factors financially material, I think it can be a bit of a rabbit hole.”
Jenn-Hui Tan, global head of stewardship and sustainable investing, Fidelity International
“The fact that organisations go in and out of [climate] initiatives doesn’t mean anything. A membership says very little to me. The key question is what your lobbying activities are, and what you’re doing through the initiative that you’re a member of. This is what qualifies your membership.”
Tina Mavraki, fellow, Chapter Zero
“I wouldn’t like to comment on how to improve EU climate benchmarks as I think they are beyond salvation.”
Jakob Thomä, project director, Inevitable Policy Response
Finally, off the record, a big global asset manager told RI their firm has been warned by ESG sceptics in the US that they are keeping tabs on how it markets products in other jurisdictions, particularly Europe.
Navigating the anti-ESG backlash is something that investors managing across the divide are increasingly wrestling with, they added, particularly when it comes to use of language and messaging.
Several attendees told RI they are keen to learn how their peers are navigating the situation. Please reach out to speak to us off the record.
This week in RI
The theme for this week’s EU regulation coverage was the inclusion of social aspects in sustainable finance regulations.
On Tuesday, we reported that some of the world’s largest investors have opposed the introduction of mandatory social indicators under the SFDR in their responses to a recent consultation on reforms and additions to the regulation.
In contrast, investors and other stakeholders in France and Germany are pushing ahead with work on social taxonomies, building on the abandoned EU efforts for such an initiative, RI revealed on Thursday.
In the UK, it emerged this week that big asset managers including LGIM and Abrdn had opposed all five climate targets proposals put forward this year by Follow This.
Finally, our senior reporter Khalid Azizuddin dug into a fascinating study suggesting US asset managers may be timing the sale and purchase of sustainable stocks to inflate ESG fund ratings provided by Morningstar. We’re keen to follow up on this, so if you have any thoughts do drop us a line.
Save the date – RI Europe 2024
On the topic of events, we have a date for your diary. Our flagship conference, RI Europe, will be back in London on 12-13 June 2024.
Details to follow in due course, but for the moment please save the date – and we look forward to seeing you there!
Today’s letter was prepared by the RI editorial team.