The minimum commitments of the summit of sovereign funds for the climate

Posted on Nov 22, 2020 at 2:28 PM

Pandemic obliges, it is in videoconference that the French President Emmanuel Macron gathered Friday, the representatives of the large international institutional investors, for the third edition of the One planet sovereign wealth funds summit. Launched in December 2017, the initiative aims to mobilize finance in the face of the climate emergency.

In three years, the group of investors has grown considerably. It now has 33 financial institutions, which manage a total of $ 30 trillion in assets. Among them, 14 sovereign funds, including those of Abu Dhabi (ADIA), Kuwait (KIA), Saudi Arabia (PIF) and Qatar (QIA), joined this year in particular by Bpifrance, the Italian CDP, the fund Mubadala of the United Arab Emirates and the Indian National Investment and Infrastructure Fund. The main French asset managers (Amundi, BNPP AM, Natixis IM, Axa IM) are associated with the initiative, as are BlackRock, Invesco, or State Street. Last year, some big names in private equity have also been added, such as Ardian, Carlyle, Macquarie and SoftBank.

A strike power of 30 trillion dollars

The potential strike power mobilized was multiplied by 10 compared to December 2017, underline the organizers of the summit. However, this $ 30 trillion represents the total capital managed by these institutions and not the volume of green investments or managed in accordance with the Paris Agreement. Some are also regularly criticized because of the gap between their declarations and the limited nature of the pressure exerted on companies as shareholders.

On Friday the international coalition of investors pledged to support the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). They will encourage the companies in which they invest to reveal their exposure to climate risks, using the standardized reporting set up by the TCFD in 2017. There is now a consensus on the need for standardized communication on these issues. So much so that in some countries, regulators are considering making it mandatory. In the United Kingdom, the financial sector regulator (FCA) could unveil new rules this winter to force companies to communicate on their exposure to climate risks on this international model. The objective is above all to help the market to better assess these risks, and investors to make better informed choices.

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