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This session looked at green stimulus measures and the ingredients of success that will generate economic growth, create jobs and bring about environmental benefits. It studied the lessons of the GFC and the opportunity for greening the recovery from the COVID-19 crisis.
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As of early June, almost USD$10 trillion had been committed by governments worldwide to combat COVID-19 in the form of loans, stimulus and bailouts. This figure included up to 1 trillion in green related packages.
Our preliminary assessment is that the stimulus response so far has been more brown than green and that should be a big concern to all of us.
Large, timely and well-designed green stimulus can generate economic growth.
To build back greener, we should resist the urge to cut and paste the response measures put in place during the Global Financial Crisis.
More work is needed to ensure the ESG ratings are fit for purpose. We need to make sure the E component continues to get adequate attention and adequate weight.
A more precise common understanding of the criteria for ‘green’ and ‘sustainable’ would help facilitate a green recovery.
One of the most important, upcoming challenges at CalSTRS is how the fund should evaluate Chinese investments from a human capital and environmental standpoint, says Chris Ailman, chief investment officer at the giant pension fund.
Stewardship and engagement will become an integral part of investment in the future, and asset owners need to write stewardship and non-financial objectives into their mandates with managers, according to Saker Nusseibeh, chief executive international of Federated Hermes.
Climate Action 100+ illustrates asset owners’ ability to come together to solve the tragedy of the commons, said Anne Simpson, managing investment director, board governance and sustainability at US pension giant CalPERS. She said once investors realise that risk and return comes from managing financial, human and natural capital then ESG became a fundamental part of investing.
Shardul Agrawala, head, environment and economy integration division at the OECD laid out the challenges and opportunities for governments to build back better. He highlighted the industries and that may undergo transformation and the underlying market failures that need fixing.
There is moment driven by the COVID-19 crisis to invest in line with the Sustainable Development Goals, according to chief executive of Robeco, Gilbert van Hassel. But investing in companies of the future, and avoiding risks of the past, requires real expertise and changing mindsets about investment poses one of the biggest challenge for investors.
Nigel Topping, Champion of COP26, says institutional investors should put their fund managers on notice to provide more net zero products. He was speaking at the Top1000funds.com Sustainability conference in a session detailing how asset owners can move towards net zero.
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