By Rosalinda Sanquiche, Executive Director, Ethical Markets Media
On a sunny October 18, 2011, at the Newseum in Washington, DC, UNEP FI kicked off the “Tipping Point” Global Roundtable at a reception sponsored by Bloomberg. A mile away, OccupyDC, sister to Occupy Wall Street, is camped at FreedomPlaza, across the street from the RonaldReaganBuildingwhere the UNEP FI Roundtable held two days of meetings to address the role finance should play in moving the globe toward sustainability. Both groups share a goal of transitioning to a green economy, as does Ethical Markets Media (USA andBrazil) which participated as a media partner for the Roundtable.
The Roundtable opened October 19th with Barbara Krumsiek, CEO of Calvert Investments and a member of Ethical Markets’ Advisory Board, and her UNEP-FI Co-Chair Paul Clements-Hunt. Krumsiek maintained that attendees have the vision and means to encourage economic policies that will lead to sustainability and a financial system that serves people and planet, while acknowledging that finance does not hold all the solutions. As Occupy DC protesters huddled in the rain under the awning of the National Theatre, Roundtable participants gathered in a deluxe conference center – the first of many contrasts between the grassroots movement and the full force of Global Finance. Nassim Taleb, a highly promoted featured speaker, author of the much misunderstood The Black Swan, was a no show – instead appearing on Bloomberg TV (subsidiary of the opening reception sponsor), calling for Occupy Wall Street (OWS) to demand a $2 trillion clawback of taxpayer funds from big banks.
The “Sustained Stability in the Next Economy” mantra: that finance provides opportunities toward greater sustainability, was emphasized by Lisa Jackson, Administrator of the US EPA. Rick Lacaille of State Street echoed the call for sustainable investments in fixed income, not just equities; while Alexandra Liftman of Bank of America listed several of their projects built around sustainability. These opening speakers were positive, listing projects and assets represented, investments counted in Ethical Markets’ Green Transition Scoreboard®, tracking over $2.4 trillion invested in the green economy since 2007. Brian Tracey, Bank of America’s Community Development Executive, confirmed the significance of investments to date compelling a larger role for finance.
Other sessions were not as hopeful. Many debated the finance tools needed for sustainability: government regulation, increased allocation within investment portfolios and including climate change in risk assessment. Changing the metrics of how sustainability is measured is key in valuing ecosystem services. There was a sense of urgency and implicit support of the OWS movement as speakers reminded attendees that finance must involve civic movements. Ethical Markets goes further by reminding us that finance is part of the global commons (Transforming Finance).
There was also a call for transparency within banks, investment firms and insurance companies. Yet, this issue was a perfect example of the finance community voicing support for the fundamental concepts of sustainability while shying from complete implementation. At the concurrent conference ESG Europe 2011, skepticism about financial firm signatories of the UN Principles for Responsible Investing (PRI) was voiced concerning their commitment and follow through. During theWashington,DC, session on Integrated Reporting, when asked what “material issues” should be included in an integrated report, Robert Eccles, professor of Management Practice fromHarvardBusinessSchool, immediately and succinctly answered, “that’s for the board of directors to decide,” end of discussion. In fact, Harvard’s loss-prone endowment fund has yet to even sign on to the UN PRI. So, Harvard feels that companies need only be transparent about what they want to be transparent? Another issue for OWS’ list of grievances, it seems.
The Roundtable significantly based its call to action on the perils of climate change. Given that climate change denial is largely a USphenomena, perhaps this was the correct motivator, emphasized by the video address from Prince Charles. Several “climate change” officers from various organizations were panelists. Climate change was cited as an example of why the world is arguably in worse environmental shape heading into Rio+20 than it was in Rio1992. From the Carbon War Room to the Carbon Disclosure Project, carbon-efficiency was the hot topic. Energy-efficiency was left behind, even though it is a better overall goal when initiating a sustainable project. The 2011 Global Investor Statement on Climate Change, a joint statement of 285 international investors representing more than $20 trillion in assets, was launched to coincide with the Roundtable. The statement, coordinated by the Investor Network on Climate Risk (INCR), the Institutional Investors Group on Climate Change (IIGCC), the Investors Group on Climate Change (IGCC), UNEP FI and UN PRI, calls for policy action to stimulate private sector investment into climate change solutions.
Beyond the focus on climate change and financiers’ obsession with the marketability of carbon, we at Ethical Markets use a more systemic approach. Our mission is reforming markets and metrics while growing the green economy globally. We see the transition to a cleaner, greener, information-rich economy as the next step toward better science, technology and a low-entropy economy. Such deeper considerations were offered by Pavan Sukhdev of TEEB, a member of the Ethical Markets Advisory Board, with a call to measure ecosystem services. Also discussed was including water risks in long-term planning, rather than waiting on governments. A surprisingly well attended last session on Human Rights and Due Diligence addressed the “S” of ESG with a special appearance by Mary Robinson, former UN High Commissioner for Human Rights and former President of Ireland.
Opening the second day, Gordon Brown, former Prime Minister of Britain, scolded financiers for their “willful blindness” to the urgent issues of sustainability. He compared the “exorbitant remuneration” within the finance industry in the past 10 years as equal to theUK’s bailout. He cautioned that from the outside, it appears that “decisions favor older people over younger,” leading to organizing outside the traditional political system, a nod to the very OWS organizing found across the street. Brown stepped away from climate change as the driving force for sustainable investment, stating that “the public tells us that what they’re worried about is diminishing resources – pressure, cost, absence, rather than climate change.”
The Roundtable closed on a positive note with Weihua Ma, president of China Merchants Bank, listing the many things China is doing which will increase in the future. True to the market driven perspective of finance, he stressed that Chinese consumers are willing to pay more for green products, i.e., the opportunities for financial growth within sustainability are potentially a billion strong. This positive note, however, was tempered by Matthew Kiernan, chief executive of Inflection Point Capital Management, also on Ethical Markets’ Advisory Board. He pointed out that despite the laudable intent, he doubted even 1% of UN PRI member investments are directed toward the green economy, ridiculously short of the 80% claimed. Kiernan urged the investors gathered inWashington,DC, to show much more courage because, contrary to the Roundtable’s press, he framed their lack of leadership as “everyone wants to be first to be second.”