What more can companies and investors do to facilitate the transition to cleaner energy and reduce greenhouse gas emissions?
A fundamental reason why public funds are retreating from the climate finance arena is that there is a duration mismatch.
Image: Shutterstock
The weighty and highly charged topic of energy transition – and the role that climate finance plays in it – was the focus of a panel I moderated at the INSEAD Alumni Forum Europe, which was recently held in London.
I was joined by a group of speakers with expert interest and experience in the sector, including Lord John Browne, chairman and co-founder of BeyondNetZero, a US$3.5 billion fund that invests in energy transition and climate-related technology. Also on the panel were Allison Bennington, a partner at investment fund PJT Partners and global head of its environmental, social and governance (ESG) practice, and INSEAD alumnus Huw van Steenis (MBA ’95J), a vice-chair and partner at consulting firm Oliver Wyman who currently sits on the Climate Advisory Board of the Norwegian sovereign wealth fund.
Meanwhile, in the United States, the House of Representatives voted to prevent pension funds from incorporating ESG criteria into their investment decisions, requiring them to return to their fiduciary duty of maximising returns to their clients. My first question for the speakers was therefore whether we are past the days of peak ESG investing.
All the panellists agreed that climate finance – investment in technologies that address climate change and therefore broader than ESG investing – still has much room for growth. “I think we are nowhere close to the peak,†Lord Browne said. “[Globally], we spend about US$3 trillion in this area a year, and I think to [keep warming below] 1.5 degrees [Celsius], we have to take that up to at least US$4 trillion a year immediately. There’s a lot more to do here… and we need to make sure we expand all the possibilities of investment.â€
[This article is republished courtesy of INSEAD Knowledge
http://knowledge.insead.edu, the portal to the latest business insights and views of The Business School of the World. Copyright INSEAD 2023]