Finance, Investment & Business
Through bold and impactful choices, the financial sector must think beyond its traditional sphere. The extent of corporate commitments to net zero and to the science-based targets is increasingly more important than government commitments. We must firmly decouple growth from the use of fossil fuels and associated carbon dioxide emissions, and thus need a broader definition of what it means to have a thriving economy. We have a responsibility to demonstrate through sustainable financial reporting how we can indeed decouple economic growth from carbon emissions.
- Track and rate investments: Track and rate zero-C investible outcomes through reporting systems and advanced digital technology and enforce accountability for corporates in the use of decarbonisation solutions. They must not misuse offsets; for example, forestry is not a scalable offset, as it is already part of the path to net-zero.
- Sustainable bonds: Expand investment in green, social, and sustainable bonds globally, and ensure that only projects with a credible transition plan in line with the 2015 Paris agreement are underwritten.
- Innovative investment: Focus longer-term investments in the reduction to zero-C on the more difficult innovation challenges. These might include aviation fuels, heavy industry (cement, metals) carbon capture, and data centres. Use a regional corridor approach that includes the entire system, and measures the trade-offs and benefits of zero-C solutions.
- Ranking investments in Environmental, Social, Governance (ESG): Provide clarity of purpose through better branding of ESG investments, including the removal of default investment pension positions. Create an open marketplace discussion around the rankings of ESG financial tools and the setting of social values in investment - “saving to save the planet”.
- Disclosure: Make the requirements of the Task Force on Climate-related Financial Disclosures (TCFD) mandatory for investment companies, resulting in a clearer framework and taxonomy for investors’ choices. The UK should show clear leadership in this area.