RI Interview: Sir Roger Gifford, the former Lord Mayor leading London’s green finance push

Link to sign up for a free trial to Responsible Investor

When Sir Roger Gifford became Lord Mayor of London in 2012, he memorably described himself in the press as “a joyfully boring banker” after 30+ years of working for Skandinaviska Enskilda Banken (SEB), the investment bank, where he is UK Head. This week, launching and leading London’s new Green Finance Initiative (GFI) – the City’s play to become a major world hub for environmental investing – Gifford modestly updated his profile to “sustainably joyful boring banker”. Gifford – anything but dull – is not just a titular head of the new push, he is integral to it. He tells RI he’d been pushing for the UK capital to take the green finance step “for the last couple of years” since he finished his one year stint as Lord Mayor, during which he was known as a partisan. And it is to his credit that the UK Treasury, The Department of Energy & Climate Change and the City of London Corporation, the entity that lobbies for London as a finance centre, are on board, giving it political heft.
The GFI has been incubated alongside the UN Environment Programme’s high-level ‘Inquiry: Design of a Sustainable Financial System’, led by Nick Robins, the former Head of HSBC’s Climate Change Centre of Excellence and Simon Zadek, Senior Fellow at the Global Green Growth Institute, which produced the report for the London GFI launch.
The Inquiry was begun just under two years ago and consulted widely across the highest echelons of global finance, regulation and policy, before releasing its well-respected report in October 2015: Link
Speaking at the GFI launch, Achim Steiner, Executive Director of the United Nations Environment Programme (UNEP), said the Inquiry had been extended for a further two years to run until the end of 2017 in order to support the implementation of its findings.
Steiner also said there was a new race to the top amongst global financial capitals to be at the forefront of sustainable capital on the back of what was widely regarded as a successful COP21 climate conference in Paris, France. Paris is itself jockeying for pole position after bringing in a raft of green initiatives post COP and listing many green bonds. Beijing is already backing the China Green Finance Initiative, and is working closely with London. Other capitals are expected to make similar announcements soon. Gifford is keen to see that race as mutually supportive: “We welcome working with other capitals such as Paris, Luxembourg and elsewhere on building green finance capacity. We want them all to develop strongly.”Nonetheless, this is a competitive market, and the City of London Corporation’s role is to boost the UK capital as a financial centre. Gifford said the green push by London was about “creating a platform for investors to back new technology and infrastructure” and that it would be calling on City expertise in insurance, banking and asset management to achieve this. Other priorities for the GFI suggested by the UNEP paper include work on sustainability in fiduciary duty, stewardship and investment structures, notably scaling up asset owner capacity in environmental finance, which Gifford highlights. Domestically, the initiative aims to look at alternative green finance such as peer-to-peer lending for green finance and interesting consumer incentives for retrofits to create more energy efficient housing. Internationally, one its main tasks will be to evolve a UK Green Bond Market Development Committee to consolidate market innovation and encourage growth akin to the listing last year on the London Stock Exchange of a $1bn dual currency green bond by the Agricultural Bank of China. Link to RI story
Gifford says the GFI will work with the London Stock Exchange (LSE) on accreditation and quality control for green bond listing.
Other areas for development on green bonds, he says, include credit enhancement, which he says could come through public-private partnerships where the government might take a first loss position, and much more consumer/retail interest. He says he would also like to see more aggregation of green projects into issuances, which was the case with the Agricultural Bank of China bond.
The broader plans for the GFI are still fluid, but Gifford says the idea is not to be a controlling green finance organisation, but to plant the seeds in London for it to grow organically. A second convening event is expected in June.
Initial success for the GFI, Gifford says, would be an increase in the aggregate number of green bonds issued globally, and a rise in retail issuance to 10 green bonds compared to the just one at the moment, the €150m issuance last May by Shanks Group, the waste business. While that bond listed on the LSE, it was euro denominated and sold to retail investors in Belgium and Luxembourg!
Link to sign up for a free trial to Responsible Investor