 So welcome, hardy survivors of last night's parties and people who have not yet left. So welcome to a discussion of a really important issue, how we finance net zero moving from commitment to action. I'm Martin Wolf. I work at the financial times and I have followed this issue moderately closely for a couple of decades. I think it's a very, very timely discussion and we are in one of those phases which have become really the dominant experience of the last few years, perhaps longer than that, perhaps forever, in which urgent matters of the moment overwhelm what we think of as really important for the long term. So I think it's very, very important that we continue not only to discuss these issues to come to it in a moment, but translate them from the important to the really urgent column because otherwise we're going to fail pretty clearly. So I have a super panel. I've come to that, you'll be hearing from very soon. I'll just introduce them. To my left is Ann Richards, who's Chief Executive Officer of Fidelity International. To her left is Mark Carney, who's United Nations Special Envoy for Climate Action and Finance and of course played a very big role in creating the Glasgow Financial Alliance for Net Zero, G-Fans, and whom I of course knew as Governor of the Bank of England and I congratulated him yesterday on getting out in time. Of course, this mess would not have happened if he'd been there. To his left is Martin Diop, who's Managing Director and Executive Vice President of the International Finance Corporation, the Central Institution, and I was reminding him that I spent 10 reasonably happy years in the World Bank in the 70s at the beginning of my supposed career and of course at that stage we're in the World Bank but he has made the transition. He explained to me always regarded the IFC with profound suspicion. I'll go into, I will, I'm sure you recognize that, Marta. To his left is Celine Hewaya, who's the Group Chief Sustainability Officer at HSBC, an institution that has recently been in the news, and finally to her left is David Schwimmer, who's Chief Executive Officer of the London Stock Exchange Group. So we've got a very broad panel with lots to say on this vital subject. All I'm going to say in introduction, because you didn't come here to listen to me, was that it's pretty obvious that if we leave aside the fundamental question of political will, we have three things we need to fix this problem. Technologies that work. We've made a lot of progress on that, though there are still some pretty important holes and lots of that has been discussed here. Incentives. I expect people, I know some people will talk about that. Do we have the necessary incentives and finally, but definitely not least, last but not least, money, finance. And the none of this will happen if people don't put money into it, public and above all, clearly private money. I've got here an estimate that it will need 50 trillion in incremental investment by 2050. That's actually, it sounds a very large sum. It's not quite as large as it sounds if it's over 30 years, but some of the figures I've seen a larger. And I will leave others to decide that, but I've seen double that and Mark will discuss that. Anyway, this is not trivial sums, which will have to be invested to get a return for investors and these sorts of institutions represented here will play a central role in bringing this about. Now, I just finally my role. I'm the moderator, of course, but I'm also a journalist and it is my role and my duty to be, and in this case, I am profoundly skeptical, namely, so I will challenge their assertions about the things that are going to happen. We will talk till about 20 past nine or so. And then we will have Q&A. This is not a large group, you're, I'm sure, all very, very informed. And I hope we to get some lively questions. Please just before we get there, as I like, I've made this comment very often. I do know the difference between a question and a statement. Questions can be questions can be done in one sentence. I promise you and please make it a question and please don't say I've just three questions. It's not fair for the other members of the audience. So with that introduction, I'm going to start with you, Mark, since you represent the United Nations, the world. So how far are we along in fixing this? Thank you, Martin. Thank you all for taking the time and those watching online. First is just on the scale. We need an energy transformation on the scale of the Industrial Revolution at the speed of the digital transformation. And therefore we need a revolution in finance. I mean, just to be clear, we need to change mainstream finance. This is not, we're not going to get to net zero on a niche. I'm on double that number that you quoted like you in terms of the orders of magnitude that need to be invested. So, and if you think about what's the change, look, with the Industrial Revolution, what we had was fractional reserve banking, increased leverage and maturity transformation. You had central banks playing a new role lender of last resort and starting to supervise and you had a international monetary system that was put together around the gold standard and the Bank of England at the center of that. I just wanted to get that in there. Everything was fine. Now, what do we need for our financial system? We need to, instead of increased leverage, we need to reduce carbon leverage. Instead of maturity transformation, we need net zero alignment. And it's not just the banking system, it's the entire financial system. Central banks have a role and supervisors in terms of disclosure, foundational things, and focus on transition risks, not credit risks. And then we do need a new international financial system and Makchar can speak to that in terms of roles of blended finance, roles of carbon markets, carbon credit markets, offset markets. Now, where do we stand? GFANS, thank you for mentioning the start. 130 trillion of balance sheet committed to that net zero alignment, not just 2050, fair share of 50% reduction of the emissions of their clients, so their portfolio, what they've invested in or lent to, by 2030, but also bringing it forward from that five-year decarbonization plans that need to be rolled out and annual reporting. Those commitments made in Glasgow, hence the name, back in November. So what the institutions are doing is working through and developing those decarbonization plans and it won't surprise you that that means engaging with the people they invest in or lend to for their own plans. Last point I'll make by way of introduction is what is coming out in the middle of June for public consultation is very detailed guidance for what is good, what is best practice for financial institution net zero plans, what we expect from private companies for their plans, what are the sectoral pathways because after all if you're transitioning you have to align with the pathway along the route to net zero saying you're going to get there in 2050 doesn't do anybody any good it's where you're getting to over the course of the next several years for alignment and then the last point I'll make and there's other elements to this how you phase out stranded assets etc last point I'll make by way of introduction is this is about real world decarbonization not the false comfort of portfolio decarbonization the easiest thing to do is to sell and walk away make it somebody else's problem the only way we're going to get here and it is a you know your challenges your I wouldn't say skepticism but your challenge is right because of the scale of the issue it requires engagement and putting money behind those companies who have plans to get emissions down. So thank you very much the your opening fits into something that I've sort of thought and written about a lot which is I think a helpful way of framing it at the biggest picture which is we didn't my view is that we didn't have an industrial revolution in the 19th century we had an energy revolution from which industry followed namely the revolution was the shift from essentially direct solar power to fossil fuels and the and the energy system has been the core of our rising prosperity ever since and we basically want to re-engineer the entire energy system in three decades while still having a functioning economy and I think that gives you a sense of the magnitude of this and I would like to talk to you Anna's representative an important institution that fits into the challenge that Mark has specified so can you do it? I don't know but we're going to have a damn good go okay that's that's the bottom line I mean I think you know I think credit to Mark I mean to your introduction of Mark he is regarded as being a very very lucky central banker just going to put that out there so we're hoping he's going to be as lucky in his role that he with the transformation that he's trying to engineer on this because he's done an absolutely fantastic job and unity is one of the key things that I think we're trying to aspire to we can't do it as an investment house on our own Mark can't do it alone none of the people in this room probably can do it alone we've got to try and collaborate and a positive note on that is I see through g-fans and through some of the other collaborations that we work with there is a great coalition of the willing to really try um but it's difficult you don't want every financial institution designing their own framework you don't want every country designing their own accounting standards we've got to try and do the things that make it easy for people to do the right things in their business that's the first point transition frameworks Mark touched on this so important we've got to tackle both the demand and the supply side very much acknowledging that the transition is going to be more painful in certain areas so as we change the supply of energy that you talked about as we move to different forms of energy we've got to try and get the investment into the communities that are going to be most impacted by that so that you create the positive economic virtuous cycle of jobs and prosperity in those communities we've also got to tackle the demand side though and I think that's where there is still a huge gap we haven't got the demand side measures we haven't got the firmness of conviction from governments to create the incentives and the nudges to help people make better choices on the demand side which will be a huge accelerant and what we're trying to do here and then the final point is we spend a lot of time talking about what's going on in listed markets there's a vast swath of the world's economy actually is privately held enterprises it's the SME sector in many many economies so we've got to help those parts of the economy do their heavy lifting and make it easy for them to do that heavy lifting so that we can again try and get this acceleration and this virtuous cycle going coming back to your initial question I don't know if we can do it it's a wicked problem in a social science sense no one actor can do it alone and I think the only way we can really have a good shot at doing what we need to do to keep to that magical one and a half degrees is if we keep trying to work together and persuade the doubters to play their part in giving this a shot for all the reasons that you mentioned at the outset so at this stage I'd like to talk to you go to you Mokha this is a point I may have made in many many presentations I mean this is as is the job of journalists oversimplifying but essentially this is a developing country issue in the sense that developed countries clearly created the problem because no doubt about that in the past but if you look at it where we are now in terms of global emissions and where everybody knows all the potential growth in emissions will come from it will be from emerging and developing countries what is more these the people in these countries the vast majority of humanity many live very energy poor lives which has profound implications for their standards of living in many many ways so they clearly have a right and I've written a lot about this recently to a higher energy future so there you are in the IFC where do you fit into that I think the really the core of the challenge and how are we going to be able to meet that challenge I think that I just will rebound on the couple of things that have been said I think first on on emerging economies for me there is a lot of heterogeneity talking about the low low income countries that you have in Africa talking about the middle income country which are which are large emitters among those middle income countries those who are producing coal for instance and using it for electricity and those who are only using coal for electricity generation we have different categories and different instruments that we need to to use to address those issues and I think that the work that Mark has been you know coordinating looking at some of the middle income country among the 20 largest emitters we have these two these different categories let's take country like South Africa, Indonesia the reality is today different for Vietnam the Vietnam the mainly is the financial issues they have investment in coal that have a life a life cycle of 20 economic life after 40 years and now they have only 11 years so they need to buy back those assets Indonesia is more complicated because there is a social implication and in in South Africa the same because you have miners who are producing it so when we're looking at it we need we will looking at it holistically and I think the transition that we are making in thinking about the financing is to go beyond just getting assets and taking care of assets but also looking at the broader issues which are the social implication of it. Second the point that you make is great about not leaving anybody we are talking about granting the value chain but most of the big part of the value chain is composed of SMEs in developing countries and the risks that we are facing is that by granting it we exclude those people from the global value chain and increase the risk of that we are facing currently so the work that I see we are trying to do is to see how we can accompany specifically those SMEs. It's more complicated because the financial sector which is trying to set standard in terms of granting the financial sector has to to trace their lending to the sub loans at the loan to the small companies and there is more challenging so all our work right now is to understand more more specifics our dynamics and be able. Last point is about working together it's interesting the COP 21 government NGOs COP26 the private sector and they say that it was at the four steps that they let in COP27 I think everybody agrees that this is the solution but what we are seeing is that we need to to be risk and blind so we have instrument for low income countries for middle income countries that's what I think with Mark we are looking at those countries how to get this large amount of money able to to blind and de-risk it and I think the solution that we have now with philanthropy coming and working with us DFIs and and also a different part will help us find a way to de-risk more investment in this area. Thank you very much that certainly sets out a big agenda to discuss. May I move to you Celine so you are representing a very large bank which operates globally particularly in Asia so how does this issue and challenge look to you how does it affect your actual lending operations a very different sort of function from fidelity I mean what sort of actually what do you do about it yeah it's so I think the first thing is there's there's been a massive shift in our operating environment since we've all made these net zero commitments and I want to bring that a little bit to life and this is all new and we're all learning by doing a lot this is this is very nascent right so the first thing is when a bank like ours sets a net zero by 2050 commitment the other thing we also do is have a shorter term 2030 commitment around our financed emissions that's the emissions that come from our portfolio of customers these aren't just targets that we kind of think about in 2030 the work starts today so we set these targets they then it then means we need to adjust our risk appetite how we do financial planning our strategic portfolio allocation and decisions we make at the point of origination as we look at the financed emissions from a deal now how that actually gets brought to life for us is there's this whole new thing of a client transition plan a whole new ask so this year we published in February our targets for oil and gas and power and utility sectors the most carbon intensive ones first we've got another seven to come next year but straight away when we publish those we have an ask out now to our largest clients in those sectors over hundreds to say we need your transition plan by the end of the year and if you're in a non-ECD country by the end of the year after that so now there's a period of really active engagement with our bankers with our experts to discuss these transition plans and it's a transition plans where you bring it to life because it's not just about emissions today it's it's where is the Capex investment going what is your strategy to adjust your business model if you're an oil and gas to a future where you actually have you know no longer growth in oil demand but decline term you know decline in oil demands over the decades to come and alongside that we also have to make structural changes to our policies so we have a coal phase out policy that we launched at the end of last year this year we're working we're going to be working very hard on how do we update oil and gas how do we think about the IA's recommendations around no new oil and gas reserves how do we think about the treatment of unconventionals and conventionals how do we think about methane given the Glasgow climate pact the important role of methane we're going to be looking at metrological coal we're going to be looking at deforestation again so we really have to align our policy framework but fundamentally in coming back to your point Martin you know HSBC is very very different from a French or even some of the UK banks that have more of a western exposure you know the biggest role HSBC can play in and our goal has to be a net zero global economy not just a net zero finance emissions portfolio of HSBC because that won't help the world our goal has to be a net zero global economy and that means we have to be involved in the the transition finance of the heavy industry in Asia of the energy sector in Asia and that means we can't introduce very blunt policy tools or thresholds that might work in the west we can't say overnight okay you can only have 30 percent or 20 percent coal in your energy mix because that would mean we couldn't work we couldn't finance the large energy state and energy companies in Indonesia or Philippines or Malaysia and then we couldn't help on the transition and and that's the biggest carbon wedge impact we can have is helping on the transition in the areas where the emissions growth is the highest and just quickly on the other side we also made a commitment you know and many of the banks have made commitments to unleash capital for the green the transition so we have a one trillion commitment by 2030 we've got you know seven and a half years left and there's challenges with that there's a lot of challenges because actually the green stuff at the moment is quite hard to finance on one side of it you've got the infrastructure the project infrastructure long tenor even if you have a sovereign backing and a high rwa high risk weighted assets it's still our bank sheets as a commercial bank aren't used to having lots of long tenor deals on them right and so it's difficult for us to get involved in the clean infrastructure finance so if we want to which we do want to we have to make some adjustments we have to have a culture a mindset shift a risk appetite shift for a portion of our balance sheet and on the other side you've got the new stuff the technologies our bankers and our credit risk teams aren't used to evaluating the new companies and likewise there you've got lower rwa's and again we're going to have to have capital loading on them for the early year so actually at the moment there's a there's a disincentive for us to invest in the stuff we really need to scale and invest in and so we have to work out how to do that and you know a big thing for us is building that new capability building that new capability of of internally of people upskilling our frontline bankers but people that can really help advise our bankers internally on what the future of industry looks like thank you very much very good introduction to the many complicated issues and finally david um public markets what a role do they play well more and i've seen as an mentioned it's a lot about a lot more than just public markets but a critical role uh for public markets private markets policymakers uh london stock exchange group we're a financial markets infrastructure and data provider across the trade life cycle in that role we are an intermediary we are an enabler and within that space we spend a lot of time dealing with uh issuers we spend a lot of time dealing with investors the allocators of capital and a number of my fellow panelists have talked about the uh the engagement the dialogue that has taken place already but also the need for more so whether it's g fans whether it's climate action 100 plus a number of other different organizations have attempted to make this a clearer space a more understandable transition but we have a lot more work to do from that perspective so for example in our interaction with issuers there are there are a lot of issuers out there who do not understand the kind of transformation we are going through the transformation the world has to go through and by that i mean a significant change in how capital is allocated a change in the cost of capital based on sustainability change in the cost of capital based on transition plans so we've made big changes in a lot of progress in the last couple years but a lot more to do and i would say similarly on the issuer side i'm sorry on the uh on the investor side those who have the capital uh and who are looking to allocate it they are making enormous demands as part of this transition and they don't always understand the impact that those demands have on the issuers and the confusion it creates and the challenge that it creates so there is a disconnect there uh that is one thing that i am working on with a number of others in the industry we we have a work stream within g fans on real economy transition pathways with a focus on the particularly high-emitting sectors aviation steel oil and gas as mark mentioned a number of reports coming out soon our report in that particular work stream is coming out in september to try to bridge this disconnect between those who have the capital and those who are looking for the capital a second critical element of this and there's been a lot of discussion around this but we're not there yet is disclosure and getting standardized comparable disclosure on a global basis today again we've made a lot of progress but today 40 plus of global large and mid cap companies do not disclose their emissions and those that do disclose often their data because of the lack of standards on or a standardized framework for those who do disclose they're often wildly inaccurate so we have a real challenge there in terms of disclosure and in part due to that el seg has called for we put out a paper on this a couple weeks ago we have called for governments to require on a global basis publicly traded companies private sector companies across economies disclosure of emissions based on a baseline of issb work that is coming we would also like to see a required disclosure of climate transition plans again across economies on a global basis and we would also like to see governments policy makers require companies to disclose their revenue broken down by green and non-green sources so that that can help the allocators of capital allocate that capital to the sources that they are looking to invest in and then the final piece of this and mark touched on this in his opening remarks is that we have to focus on the transition for the big carbon emitters we cannot just green the portfolios we have been relying on fossil fuels as Martin you mentioned for 200 years we cannot flick a switch and make this kind of transformation it will take decades and the allocators of capital need to work with those high emitters in terms of helping to drive that transition so those are maybe some of the more operating level developments that we have to go through just two or three really big issues that arise here and to get some sense of from this the specific aspects you're each looking at what it looks like as a big picture so one of some things we've discussed in the past mark and which I think we should bring in here because pretty obvious reasons I'll come to this in the moment I'm really concerned about all sorts of ways people arbitrage around this so the the incentive environment and the regulatory environment to make this actually work in the timetable how far are we from what we need and what needs to be done and obviously a fundamental role is government policy and this I don't want to go into but just you know a couple yeah sort of people come to you and say yeah this is a lovely idea but I might make money doing this yeah look I think that it's fair to say that what happened in COP26 is the private sector moved ahead of governments and there is some closure of the gap between the two but there needs governments need to move much much faster part of that is around and I'm just going to want to endorse everything that David just said about mandatory disclosure mandatory net zero transition plans that's where we need to go and that's partly a role of government but your core of your question is not that it is about the incentives and the credibility of those incentives and the clarity around it let me give you a few examples quickly of what works and what has the impact so yes it does matter that 90 percent of global emissions are under some form of net zero commitment by countries or and you know that was a third of global emissions last time people got together Davos so huge shift there it does matter those countries the UK would be an example EU Canada's are becoming an example that mark to market their policies relative to their commitments so they have independent bodies that check the climate change commission in the I think that's the name of it in the UK is probably the best example of this and shows the gap between the policies and the commitments and the question of course is for the private sector and all stakeholders is well are they going to close the gap and and do they have credibility to close the gap and if so the financial sector one of its strengths is it looks forward and it allocates capital in anticipation of that that's what everyone is doing at the moment is expecting that some of this gap is going to be closed maybe not all of it but some of it's going to be closed so what are the policies that are most effective and I'll stop with this they are deep decarbonization policies that are far enough in the future that companies can do something about them but near enough that they have to so in Canada the carbon price is legislated to 170 dollars a ton in 2030 it is now going to be backed up by something called a contract carbon contract for differences and that's that's what's decisive for investment today it happens to be 50 dollars a ton today but the hundred that's interesting the hundred and seventy is what matters in the UK in Europe the end of internal combustion engine vehicle sales in 2035 2030 in some countries that's decisive for the auto industry and investment in auto fuel blends or other examples so those types of very clear commitments that are anchored probably around 2030 are there abouts help to focus the mind for the types of investments that are necessary and then last thing I'll say is that we talk about sectoral pathways it seems an innocuous phrase but it's a very important thing because the question is what are you transitioning to as a country as a financial sector as companies and how do you know how do you mark your homework how do you know that you're doing a good job and how do you know the company you're backing with a loan or an investment is sufficiently ambitious given the incentive environment and given what has to be done if we're going to stay on this very narrow pathway to one and a half degrees I think it is true I'm just remembering this that more than half of global emissions come from China in the US is that correct I think it is about half yeah that's yeah let's say that let's say that I'm really I think that's roughly right I mean comes to me correct this because I'm from dredge from memory but the point is the world of countries that have actually gone a long way in your direction is still a pretty small share of the world's emissions I think it's this yeah gonna come to this with mark that because it's yeah how the policy um that's a pretty big issue isn't it it's a big issue I think that the it is a big issue although um there is some of this progress in China including with the ETS um I would say that thus far what has happened is because the EU and the UK are relatively big markets for multinational corporations and they have the greater policy clarity that some other countries have been free riding on the policy leadership and not that it's perfect in the EU and the UK uh and they need to catch up there is this argument that we can't produce anything but we're very good at exporting regulation um I won't go into that it's a gross it's a gross industry it's a global public good Mark I'd like you to talk a little bit about um the cooperation collaboration between developed high-income countries and developing countries particularly low-income countries which your institution embodies and what needs to be done to de-risk investment or uh in uh and finance and um and what role public uh in multilateral institutions like yours can play in immensely increasing the flow of investment that will be needed um to support the transition in and the growth of energy supply in the sorts of countries you're dealing with I think that we talked a lot about financial intermediation and capital market not enough about real sector right and I think that when you talk about the bankers and the financiers what they tell you do we have enough bankable projects which are can help us have the impact that we want so the first thing is to really work harder to have a much stronger pipeline secondly we need to be much more centrally adaptation adaptation I think is a bit so often in that conversation and we talk a lot about mitigation but much less about about and I'm very glad that we have now the commission that has been uh by Taaman on water so it will be discussing a little bit the impact of water the relation between water and climate change because I think there will be so big uh discussion on on on it on the policy front I think Mark you you already did it uh carbon price and fossil fuel subsidies we need to go to continue discussing up on fossil fuel subsidies is still there and it's a little bit forgotten right now but we need to bring back that conversation uh at the center when I thinking about real real sector we have uh low-hunging fruits that we are not really tapping on gas flaring right we have huge amount of of gas flaring which is here and if the regulation was put in place in more advanced economy we could do something about it cooling if you look at the demand the evolution of the demand in emerging countries it happens that most of these countries are hot countries so the demand for cooling and the impact on on emission and things would be very little is done about it in Glasgow basically we didn't have a panel on on on cooling third housing and norm we see urbanization growing fast in emerging economies we are working on at IFC on having standard on edge to make sure that we are reducing the consumption of household so those are public policies and regulations that can help very much on the demand side on the energy efficiency because I think that we have a long way to go I would there are some countries where we live where you in winter you have to be to wear to to wear a t-shirt and and in your house and in in summer you have to put a sweater I'm not sure that is more efficient way of managing electricity consumption so all these kind of things are for me low-hanging foods and which have a political cost which is much lower so some of the questions that we will we are talking about lastly is having annual measurement and there mark I fully agree with you when you got the first generation of NDCs it was a nicely defined longer term not always very precise on in term of commitment and we are at the World Bank Group and IFC moving now with CCDRs which are diagnosed by country where we're trying every year now to say what as investment needed where should be done by by the country and to have some things that we can measure over time but in a very big precisely last thing measurement we're talking about measurement issues in in listed companies think about measurement issues in in in emerging economies you go in every ministry of environment in developing countries and you ask them how they measure emission you know you and you leave the meeting with some big questions about really the measurement impact so technical assistance companies those countries important to be able to do the taxonomies that we need to have in countries extremely important points which underline even more the challenges we face and let me ask you a question meaning to ask somebody like you for some time which goes something like this you are a fiduciary people put money with you not because they may put money with you because they profoundly admire your climate goals but they probably put money with you because they want you to make them rich so and that's your duty in a sense and certainly not you don't have a business if you make them poor so how do you persuade them that your climate goals the ambitions you have are consistent with their goals and keep their money so you know and that's actually at the core of you know what we're trying to do as a business it's a great question and it's and it's both I mean nobody wants to see their long run financial returns sacrificed on the order you know on the altar of some principles so but they do want to know that the returns that they have made have contributed to rather than damage the planet that we all share to take it down to its sort of absolute core and I think it's interesting if you look back over the last I would say four years now clients are not absolutely unanimous in how they approach this there are different approaches from different clients so it's important to say that there are different priorities in different parts of the world and even within different client groups within that but in general if you look at the client meetings that we're having today and have been having over the last two years it is almost never that you don't have sustainability raised as part of that conversation whereas if you went back even five years the sri the esg agenda was a niche and a strand as opposed to a mainstream part of the conversation so yes we have a duty to create financial returns for our clients that's why they hire us but we have to do it as an and and so the climate goals the things that we're aspiring to do with the portfolios are very much in conjunction with where the clients are telling us and how they how they expect their money to be looked after and that's how you bring it together i'm going to you david and slina the last word in this exchange one of the things that is obvious to anyone who looks at markets and from outside is that we're getting a pretty massive reshuffling of companies from public into private holding and there are some very famous cases you know them better than i do so one of the things i've been wondering is whether at the end of your efforts stock markets as hopeful what we're going to see is all the as it were good respectable low carbon non-problematic sectors will be with you and you can add up the carbon emissions of the publicly quoted companies in the yet london stock exchange or new york so and they're all wonderful and all the heavy emitters the oil companies the aviation companies will be held in some other way which makes them effectively invisible in which case we've just reshuffled on the ownership of lots of assets and have changed nothing useful by this how would you respond to that because i mean it's a genuine concern of mine about all this and i'd be interested in your reaction so it should be a genuine concern of yours because in many ways it's already happening yeah and if there's no clean way to describe or define this but over the last couple of years we have seen that happening as there has been a focus on what has been referred to as greening portfolios yep and whether that's greening investors public investors portfolios or whether that's greening the asset portfolios of publicly traded companies we have seen sales of whether it's coal assets or other high emission assets brown assets whatever whatever you want to call them to in some cases private equity and in some cases state-owned businesses that are not being held to these kinds of standards that we are all talking about here so this is why when i was talking earlier if there are disclosure standards if there are requirements by governments to put better information out on this it has to be economy-wide it cannot be just for publicly traded companies has to be for private has to be for state-owned companies and there we are working on this issue a lot of the big private equity firms a lot of big pension funds are aware of this issue are aware of the challenge their LPs are focused on it and so again as with much of what we're trying to do here it's about building coalitions and getting the best from voluntary behavior but it is critical when this does become mandatory as it should it has to be mandatory across the economies across private and public silly i've come back to you in the last word i'm doing very badly on timing this entirely my fault of course but the very similar question arise about banking and i couldn't not raise this form a colleague or i don't know where he is now stewart kirk challenged the model of the the bank as i understood it and happened to know stewart very well he was a colleague of mine so i'm not at all surprised but the there's an interesting question which is related to what he said and i hope you can comment very briefly to clarify your position okay you come along as a lender with all these requirements in your lending of the the sort of loans you want to make and your clients say well this is a competitive business you're a firefight bank i love your relation my relationship with you for the last 30 years but i want to go through all these hoops i'm going to go through any one of a number of other major banks in the asia region for example you know the list um so you're not going to make any difference at all you're just going to reshuffle your portfolio too how would you respond to that so first of all i expected a question on the recent yeah i have a point of line you warm me up for that in coffee time um i mean i think the starting point is i mean you just heard for the entire panel about the the kind of secular risk that we're now facing um and you know and i think there was you know i won't go and dissect and i can say that for another time the arguments that were were made in that but i think the starting point for us don't have the time no the starting point for us is um you know transition to net zero is one of our four strategic pillars it's you know the focus pretty much of every single board meeting since i joined a year ago every single exact meeting it's a huge transformation job across the bank it's a huge capability build and yes there are a lot of people in the bank working on this because there's a massive value creation and destruction happening in the economy because of it and we have to understand that as an said it's a co issue now any one of our clients is the top issue that executives wants to want to engage on and as i said you know earlier when i was talking i think the reason when we're when it's down to client by client conversations we're having the conversation around transition so we're not trying to make a decision asap on exit we're trying to have the engagement process the conversation the push you know how robust is that transition plan how uh how quickly are you phasing down your coal ppas for example how what is your level of kpex investment is it fast enough is it good enough who could you collaborate with so it's that process of engagement with the area the sectors that are hardest to abate where the highest emissions are coming from which is crucial and if we don't do that right and i know we yes we need policy interventions but finance does have a critical responsibility to uh to play a role as well and we're taking that very seriously mark you had a word before i go to the audience yeah just very quickly on this issue it's an important issue but let me let me put it in context first every major system in every global systemic bank with the exception of tune in china is part of g-fans therefore any leverage for a transaction that goes into the into these dark shadows they own those emissions they have to disclose those emissions if they provided leverage against it as do a number of other leverage providers so you know okay great you can take it private uh and hide but if you can't leverage it your return is changed a bit so that's one element of it second that's one point second is uh we need all the big private equity firms in to have the same standards as the public investors there are some in they're not all in they should all be in just to be absolutely clear thirdly david's absolutely right the disclosure has to cover the whole thing the whole market the uk is phasing it in its mandatory disclosure but that has to happen for the world and then the last thing which is and this we're putting this out for consultation over the next six months is um look there are a lot of stakeholders and i understand why they do this and they stand up and they say you have to divest you have to get out of no coal know this know that well who's going to wind it down who's going to manage like what is responsible phasing out of these assets what is the framework for doing that what's the time frame what's the ownership do you want the people who are committed to transition to net zero to have that exposure and ensure that it's wound down or do you want it to keep the incentives to push it out so we've run a little over but we can now go to questions what i will do i will take three questions in a group they will be one sentence if you want it for a particular person say who it is say who you are ask the question i'll start with the lady there please stand up wait you need there's a microphone and go ahead just go ahead thanks martin i'm vishali sinna from renew power which is india's leading renewable energy company and we generate 13 gigawatts of renewable energy very pointed question to multilaterals and financial institutions i think the pace of innovation and creative finance is limited we experience that on the ground the capitalist requirements are different and i think institutions such as yours can do a lot more to keep up with the growth which is required in the sector for mitigation and adaptation can you tell us is it possible to see you do more to what is the possible to do to be more innovative as far as green finances concerns for renewable energy companies yes i um further the lady there yeah hello debra mccoy with bane and company my question is about exchanges i was interested in the g fans that some but not all exchanges have signed up to have net zero commitments could you comment on either market efficiency potential arbitrage or what do you think about exchanges as intermediaries for that and i'll take a third question gentleman there so my name is lao i'm CEO of company called mighty buildings we're decarbonizing the physical construction process with 3d printing and composite materials i have a question to private banks are there any like efforts to share quick wins and you know programs that really work to decarbonize the uh you know industries that are heavy emitters because i think like the private sector can do a lot in sharing those and you know and especially those that were verified so this is about sharing information sharing information building global database of like quick wins and programs that help decarbonize the real industries not just you know green washing or selling off car carbon so i'm going to start with uh martin sedine have you are you being sufficiently creative in i think particularly in the context of a well very major developing countries india but in in green finance does it work well enough i think it works i mean you give you a very specific example uh between 2012 and 2018 in africa so solar cost was in 2012 23 cents uh with the support of ifc it the last auction at that time was at six cents six cents since then it went down to one cents just to show that that the innovation that we brought was the transparency simplifying the the the contractual process because one of the big problem that we have seen developer facing the time it takes to complete the preparation of the project so we try to compress as much as possible the time of standard documents and that help a lot on bringing the bidding and the competition enterprise down uh in terms of financing we are using a lot of branded finance for lowering our account low income country to use what you call the private sector window which is basically de-rescuing and we are currently working closely with foundations rockefeller foundation uh bezels foundation to increase the part of money available to the risk uh the cost of investing in a green in green uh energy particularly in low income countries so those are the type of innovations that we are having in addition we're expanding it to other part of of of the of other sectors blue we have issues the first blue born for indorama recently because we consider that also an important issue that we need to tackle in the climate change conversation we are also ensuring that we are moving solely from green and uh bonds that we're issuing to social bond and the very much of questions that was asked about how we help country to transition and company to transition because part of this transition is to buy assets but also to help on the social cost of the transition which are linked to to moving from a carbon intensive activities so this is the type of innovation but you know we are welcoming new ideas and we would love to to have new ideas selen anything more on making this less ponderous i mean i the top line issue is that we're not doing enough of it yet anywhere near enough no one is right if you think about we've got a 40 percent increase in energy demand by the end of this decade the amount we need to decline in coal in the energy mix and now we've got the energy crisis on top it was already a very unstable transition that we were in at the moment we need whatever we can do to accelerate capital so you know as i mentioned before it's not easy for banks to digest on our balance sheet these large project finance deal even when we have sovereigns backing them policy environments are very important i take the example of indonesia one of the most abundant areas in terms of renewable resource potential but probably the most difficult uh geography to finance renewables in at the moment because of a number of different uh difficult policy things from local content laws to contract issues and things so i think there's a combination of of working with policymakers working with dfis macdu and i discussing a lot in terms of what we can do on the blended finance and innovation around there but absolutely a huge focus i think our attention very in our appetite very much is to scale up what we can do in financing renewables and related infrastructure grid infrastructure and also things like hydrogen which are going to be critical from an energy storage perspective so david the role of exchanges so debba's question raise is a really important issue that applies to potential arbitrage among exchanges but it could apply to potential arbitrage among regulatory regimes in any context regulatory arbitrage exactly so uh that is why i mark and others uh have been emphatic on this point that if we are putting these rules in place we have to uh put them in place on a global basis and is sp is pushing down that path in terms of standards but we will need governments and policymakers to implement them again on a global basis specifically to the question on exchanges just to spell out the issue if the london stock exchange has uh more onerous requirements and other exchanges do not that leads to issuance in other places by those who don't want to deal with the more challenging standards uh your your specific question was are all exchanges in gfans so uh a number of exchanges are in gfans but i should point out gfans is a critical alliance here but it is not the only one uh mark and i were uh pre gfans involved in pulling exchanges together around the world in under the auspices of the un the un sustainable stock exchanges initiative and we do have exchanges all over the world it's not everyone but it is most of the critical exchanges around the world who have signed up to model guidance aligned with tcfd uh as the i ssb moves forward i would expect that we we uh bring that alignment forward so that there is work across the exchanges to try to avoid that kind of regulatory arbitrage but we need to avoid it uh across regulation as opposed not just in the context of exchanges is any either of you want either any of you particularly mark and uh want a comment on information sharing i could have a go at that one actually because i was just thinking i think it's a great question and i think it's particularly relevant when you look at fragmented industries you mentioned construction i think agriculture is another one um i think policy really helps at a government level in some of these industries but playbooks help and the development of sector specific playbooks which get quite granular and which then can be disseminated and it will vary whether it's through trade associations or other mechanisms but we have to actually drive at quite a granular level right the way down so that you're you know one step up from subsistence farming for example or your small-scale house builder in in a developing country actually knows how to easily to make good choices that you know lower intensity in the materials that are used the way that the buildings are put together or the way that the crops are actually managed that they make easy for them to make good choices because at the moment it's quite hard i think it's a great point yeah three very quick points on it one um there is an example on information sharing or common approaches around infrastructure fast infrastructure which and one of the things g fans has done has gone through about 70 different types of approaches to this and said these are the ones we think work best but for the built environment uh or you're i think you were speaking to commercial real estate um it's something but it's not everything so we uh sharing those best practices developing that and also on residential real estate and retrofitting i think it's hugely important there's been some innovation on that secondly very quickly uh to the question about renewable and innovation uh we do need more innovation at a country level that's what these jet p partnerships we don't have time to go through but just if you remember that and that's going to be a test case for that and then actually Martin i should hand back so you've got time for more questions i can take i think probably just one more question um this gentleman here uh um because i will be shocked if i run over schedule but if you're very brief i might manage to thanks bastia i'm a member of the swiss parliament looking at net zero of switzerland and also working at south pole looking at net zero of companies so my question is in financing net zero where do you see the role of article six no and and carbon credits in enabling this okay do you want to comment on that mark uh very quickly yes um i think the carbon credit market uh can play an important role it can give us 10 15 percent additional carbon budget if done correctly so it's huge opportunity it's not clear that we will have that market at scale um uh we need high integrity on the supply side good works being done on that the principles are going to come out we implement that around and then the question is on the demand side for companies what's their responsibility is it only when they get to 2040 2050 and they've done everything they can that they have to offset so-called offset or should they compensate for their emissions along that journey there is an order of several orders of magnitude difference between those two um the latter has the prospect of creating a very large market for carbon credits and offsets which extend from as you would know from nature based solutions all the way through to break through energy technologies so uh and the next i would say 12 18 months are going to be critical which path we we choose i'll take one more question lady there yes please you sit down stand up uh my name is Zaina Bosman director of the africa program at the Carnegie Endowment in Washington DC my question is mainly for mark and maybe for uh makhtar um how do we uh expand private capital private investments for climate action uh to emerging and developing economies and i asked this question because uh Bloomberg had a report a couple of months ago saying that g fans has uh rich world bias so i'm wondering if one thing that could help would be perhaps a greater clarity of roles among different financial institutions so where uh development finance institutions such as ifc etc play a more the risk in role to allow private you know investment banks others be able to operate in emerging markets would that help so let me let me have 20 seconds 20 seconds head on i i reject that that characterization the bias first point second g fans made clear we think we need to scale an additional trillion dollars a year the world does to the emerging and developing world if we're going to be on track and you you've did this in the opening comments the issue is are we going to have structures that include blended finance and very clear uh elements of what is transition finance in in the developing world which is different than in the advanced world we've made that clear there's a new uh uh approach to this which we're putting out uh in the next few weeks and we're working with the mdbs including very much the ifc which is one of the leaders on this in terms of how we develop this so i should give the last time for yeah mark that 10 seconds sorry i agree for everything you said just add this you need to sort of think about developing the capital market in those countries so part of it is that those capital market are underdeveloped so it limits also the ability to to to get those financing and intermediation yeah so i have to bring this discussion which i feel is just the beginning to a close and this is what i what i have learned from this is there's actually been vastly more progress in this area broadly defined than most people could have imagined a few years ago uh and this is i'm sure due in significant part to the efforts of all of you um second uh this is unbelievably complicated and it's a whole system issue that's crucial and the people who are here will play a part but they will they will definitely not determine the outcome and there are lots of people who aren't as it were here and committed who will play a big part in determining the outcome and i'm not clear they are committed and that we have to remember that we've got a long way further to go um and uh while we are making i think very very substantial progress we have very very little time to start this so i hope that everybody here will feel encouraged that progress is being made and remain fully aware that it doesn't begin yet to be enough uh that's at least what i take away from this admittedly it's what i thought before i came but the this wonderful discussion and the issues that have been raised which have been so clear and so well done clarifies i think this sense which is um that among many other things complacency is an immense danger um so thank the panelists thank you for listening and i hope you've enjoyed it