Legendas (166)
0:08Climate finance finds itself
in a confused position today,
0:15It is viewed as insufficient by many,
0:18as a niche by mainstream finance
0:21and as elusive by everyone else.
0:25And yet, financing a clean growth economy
0:29relies entirely on the real money.
0:33Today, we are investing a little over
a trillion dollars every year, globally,
0:38in the energy transition.
0:40By our best estimates,
0:42we need that number
to rise to 3.5 trillion
0:45every year between now and 2050.
0:51As a financier and investor myself,
0:54I've been at the heart
of how financial institutions
0:57and institutional investors,
0:58including sovereign wealth funds,
asset managers,
1:00asset owners and banks,
1:02think and act on the clean
energy transition.
1:05And I believe there is one
major fault line
1:09in global climate finance.
1:12We have prioritized
perfection over progress
1:17by painting entire swaths
of sectors, industries,
1:21companies and countries
1:23in purely binary terms of gray or green.
1:28But as we all know,
there are 50 shades of green.
1:33And we need to work with them all
1:36if we have to solve this challenge
at speed and scale.
1:41And yes, that means that the money
must flow not just to clean solutions
1:48but also, and specifically,
1:51to heavy polluters and emerging markets.
1:55And yes, we are not going
to solve the climate challenge
1:59through purity tests.
2:01The developed world committed
100 billion dollars
2:05for the developing world
2:06to facilitate the clean-energy
transition annually.
2:10That goal was achieved 13 years later.
2:13That time has broadly become symbolic,
2:16in addition to that goal itself,
2:19of our inability to finance the transition
at the speed and scale needed.
2:24By contrast, governments
all over the world
2:27allocated 10 trillion, with a T,
2:30in COVID economic stimulus in two months.
2:37Did we spend years or months
coming up with what COVID finance means?
2:42Did we create standards,
2:43working groups, taxonomies,
2:45frameworks, definitions?
2:48Yet somehow our lexicon of financing
the climate transition grows.
2:57If we are to truly work on this,
3:02But in our quest for perfection,
3:04we are losing out on the goal itself.
3:07On the goal of unleashing the largest
commercial opportunity of our time.
3:13Financing green requires greening finance.
3:17In many cases, it actually makes you money
3:20whilst reducing emissions.
3:23For instance, many utilities
around the world are realizing
3:26that it is more expensive to run
coal plants than renewables
3:29because of the rapidly
falling cost of renewables.
3:32For investors, this is
an incredible opportunity.
3:35By buying up some of those coal plants
3:37and developing a strategy
for an accelerated phaseout,
3:41investors have the opportunity
to not just generate an attractive return.
3:45They can also reduce emissions
3:47as well as reduce costs
for tax for ratepayers.
3:52Why hasn't this happened?
3:57with heavy-emitting
industries and polluters
3:59is incredibly uncomfortable
4:02for a lot of my climate activist friends,
4:04as well as some of the most sophisticated
investors I've worked with,
4:08who have spent decades
trying to understand
4:10the impact of their emissions
on the planet's trajectory.
4:15But not working with them is worse still.
4:19Let me walk you through
a concrete example.
4:21Although I'll talk about steel.
4:24Imagine you are the CEO
of a steel company in India.
4:29You have a decarbonization
strategy in place,
4:32and you want to invest
to reduce the emissions
4:36in your steel-making process
4:37and reduce your reliance on coal
4:39and increase your capacity for renewables.
4:43You go out to the capital markets
to raise capital to fund that plan.
4:50Everyone should love this, right?
4:51Here's what you hear
on the investor roadshow.
4:57I'd love to invest in you,
4:58but my policy prohibits me
from having exposure to coal."
5:02Or, "I'd rather not have the NGOs
demonstrating on my doorstep
5:06if I start working with you."
5:08Or, "I'd love to invest in you,
5:11but I have a net-zero portfolio target,
and that will increase my emissions.”
5:16So after a long and arduous
process of no's,
5:18you go back home and wonder:
5:20should you just scrap the plan,
5:21or should you stick to it
and use your own balance sheet capital?
5:24You stick it through,
5:26and then you go to your shareholders
for approval to allocate the capex.
5:30But your shareholders are not happy
because that affects their dividend.
5:36You've officially found yourself
in a transition trap.
5:41You want to transition,
but your hands are tied.
5:44So as investors and financiers,
5:46this dynamic of potentially
starving companies of capital
5:51is likely to put them back
into their status quo
5:56put them into the hands of investors
who don't really care about the climate.
6:00So how do we prioritize
progress over perfection?
6:08Because trust,
and I say this as a financier,
6:11trust and not capital is the key currency
for the energy transition.
6:19We need to put trust back
on the climate finance term sheet.
6:23And we can do that by mobilizing finance
with less strings attached.
6:28As an example, in the recent past,
6:30several countries,
including major economies,
6:32have refused financing packages
on clean-energy transition
6:36offered by several countries
in the Global North.
6:40Because they're concerned
6:41that they're being asked
to commit to goals
6:43in exchange for capital
that may, at best, come in a trickle
6:46or at worst, increase
national debt levels.
6:51So if we are to truly crack global
climate finance partnerships
6:58we need to make it easier
and faster for entrepreneurs
7:01and those countries
to access that capital.
7:03We need to put that capital to work
to scale the clean-energy ecosystems
7:07and systems in those countries,
7:09but we also need to provide
the enabling infrastructure
7:12in the interim period
7:13to ensure a stable
and secure grid and supply.
7:18We can all work together on this
7:20because we know that if we expand
the investable universe
7:23by expanding the scope
of what is included,
7:26we can together ensure that finance
reaches every part of the global economy.
7:32I often go back to how I thought,
7:34with the frustration and the impatience
of my 12-year-old climate activist self,
7:38demanding that we need
a clean-energy system now.
7:42But with hindsight, and with my years
of experience thus far,
7:47I know that we cannot get perfection
7:51if we don't start acting.
7:54I want us to think about what role
each of us can play.
7:59And I want us to think
about how we can engage
8:01with high-emitting industries
using finance as the language,
8:04because that is the language
they understand and respond to.
8:08So if you're a financier,
8:10embrace the opportunity to work
with all sectors, industries,
8:14companies, countries.
8:16If you're an activist,
hold them accountable,
8:19but not by ostracizing them.
8:21And if you're neither,
8:23then you still have the opportunity
to become the rare breed that is both.
8:27I truly believe in the ability
of our generation
8:31to use the power of markets
8:34and rebuild the trust in climate finance,
8:37to get it out of its confused position
8:39and unleash the trillions that we need
to generate clean energy
8:45and clean growth for everyone.
