As part of HSBC’s day of Green Great Britain Week finance events at the Tate Modern last week, CMIA had the honour of joining the Accelerating Green Finance in Emerging Markets panel on Wednesday with CMIA Board members Chris Dodwell on the panel and Madeline Rawlins as moderator.
The highly regarded panel of experts was introduced by none other than Professor Lord Nicholas Stern. Stern, whose career at the forefront of climate change and finance spans nearly 4 decades, brought things home to the crowd. Reflecting upon the Stern Review (2006) and the IPCC report of earlier this month, the cost of inaction now, looks much higher and the science much more troubling. However, while the costs of inaction have gone up, the relative cost of action, largely through rapidly falling costs of clean energy technologies, have come down. It is this precise predicament, that Stern claimed, gives us the possibility of the growth story of the 21st century and the ability to reach the 1.5 degrees Celsius goals outlined in the IPCC report earlier this month.
The private sector will be at the core of meeting these goals. Stern noted that in order to marshal opportunities through private sector capital markets, what is necessary is sound market policy and pricing market failures (such as pricing carbon). Citing the Global Commission on the Economy and Climate’s recent report “Unlocking the Inclusive Growth Story of the 21st Century” makes these points clear, that business needs credible policy, that is “predictably flexible” and that “uncertainty is the biggest killer to investment around the world” Stern concluded that driving down uncertainty is the best way to encourage green investment in developed and developing economies alike. Stern concluded that the best way to meet the 1.5 degrees Celsius goals are to ramp up carbon pricing, put investment and sustainable infrastructure at the centre stage and that the power of private sector, he reiterated that innovation is incredibly important in these endeavours and of course you need social protection “It’s good policy, give us revenues, manages risk and drives investment”.
John Glen MP, City Minister highlighted how the UK government was supporting emerging markets through Green Finance provided through DFID and BEIS. The government intends to publish its future plans for green finance initiatives in the spring.
Madeleine Rawlins from Mott MacDonald, Chair of CMIA, outlined CMIA’s vision to accelerate private sector investment by stimulating a shift in the direction and scale of private and public financial flows into investments which are consistent with the objectives of the Paris Agreement. CMIA and its members do this not only by developing the necessary investment opportunities but also by helping to establish the enabling environments needed to increase deal flow to the scale required.
Panellist and CMIA Board member, Chris Dodwell provided a lively overview of the Climate Finance Accelerator (CFA), and how it spawned from a conversation at a COP with concept originators Ian Callaghan and Tessa Tennant. The CFA is a flagship private sector initiative supported by the UK Government. CFA is a uniquely transaction-focused approach and innovates the way climate finance is connected between project concepts and project funders. The CFA brings together policy makers, project developers and public and private investors with financial experts from the City of London to help develop outline financing propositions for priority NDC projects and come away with an action plan for securing investment, effectively turning low carbon investment concepts into bankable projects.
Panellist, Jenny McInnes from UK Government’s Department for Business, Energy & Industrial Strategy (BEIS) laid out the additional work plans of the UK Government to work to “green the trillions” necessary in order to stimulate Clean Growth to meet the Paris Agreement goals. Graham Smith of HSBC and Naina Lal Kidwai of Altico Capital gave some real world examples of leading the way to stimulate green growth and connect examples of how to collaborate with developing country governments and markets to develop the primary project finance pipeline that can later be refinanced into green bonds and other investment opportunities for institutional investors.
We were delighted to be involved in this event and thank the organisers HSBC plus the UK Government’s Department for Business, Energy & Industrial Strategy (BEIS), Ricardo Energy & Environment, PwC, CFA and NDCi Global and all attendees for their support.