Sean Kidney

Climate Finance session at UN Summit is electric.  Insurers go wild with promises; investors plead for green investments; Jim Kim almost breaks out in song about green bonds.

It’s the day after the UN Climate Summit party in New York. Yes I do feel as if I’m hungover; but it was a gas. If you’re one of those who worry about the world, there is something magical in being inside the totemic General Assembly, with it’s embodiment of one world idealism.

Ban Ki Moon’s audacious Summit convening (that’s really the only power we allow him) made for a really useful event: it bought out marchers around the world to ask their governments for action; and it extracted some useful new commitments, such as:

§ Germany and France each announced $1bn for the Green Climate Fund.

§ China said it will reduce carbon emissions (per unit of GDP) by 45% by 2020 compared with 2005 levels.?

§ The International Development Finance Club (IDFC) announced that it’s on track to increase direct climate financing to $100bn a year by the end of 2015.

But above all there was an awful lot of talk about green bonds (and no, it wasn’t just me being noisy). UN Secretary-General Ban Ki Moon talked about the opportunities of green bonds in his speech, World Bank President Jim Yong Kim spoke about scaling up – in fact he spoke rhapsodically on the topic – and the CEOs of Credit Agricole and Bank of America waxed lyrical on their application. And that was just the start of it.

Best of all, the Summit elicited some pretty cool commitments from institutional investors, those folks who now own half the planet on our behalfs (after all, we’re the pension fund or insurance beneficiaries). We got:

§ A new Portfolio Decarbonization Coalition (PDC) made up of coalition of institutional investors, coordinated by our friends at CDP. They committed to decarbonizing $100bn of their investments by end 2015 and to measure and disclose the carbon footprint of $500 billion in investments. In fact spokesperson Mats Anderson, the CEO of Swedish pension fund AP4, said his fund would fully decabornize by 2020.

§ Three big pension funds announced they would grow their investments in low-carbon assets to more than $31 billion by 2020.

§ The media statement we put out yesterday listed more, like Barclay’s new $1bn green bonds fund, ACTIAM’s promise to have invested $1bn in green bonds by end 2015, and Zurich Insurance Group’s $2bn commitment.

?Then the two insurance industry associations, ICMIF and the IIS, representing the majority of insurance companies globally, put out a humdinger. This is an industry that manages a third of the world’s investment capital – approximately $30 trillion. That gets attention. But only $42 billion can be called climate related investment (what have they been doing!). So they announced they would double the industry investment in climate investments to $84 billion by end of 2015. That’s good.

Then they went further and announced then would multiply current investment in climate investments by 10 times by 2020 = $420 billion. A that point I was in love – that’s a big kicker for climate change related investments. Of course the majority of their investments are in the form of bonds – which will mean increased demand for climate bonds and green bonds. Yes, that’s increased demand in the already hot market.

But wait, there’s more! Then, Angelien Kemna, CEO of the $400bn+ APG Asset Management came on, representing a coalition of investors with $24 trillion of assets under management – coordinated by the the Global Investor Council on Climate Change, the Principles for Responsible Investment and UNEP Finance Initiative. She effectively said “we stand ready to invest; please get us some deals” and called on policymakers to take action that supports greater investments in clean energy and climate solutions. That was also the theme of the Investor Statement we published yesterday.

So there’s the theme. “The capital is ready, bring on the investments to be made! And green bonds.”

——— Sean Kidney is Chair of the Climate Bonds Initiative, an “investor-focused” not-for-profit promoting long-term debt models to fund a rapid, global transition to a low-carbon economy.