 Hello and welcome to the sixth session of the Green Horizon Summit when we are focusing on nature and nature-related risk. We are making some progress, I believe, on the issue of energy, clean energy, renewables, part of the revolution in the way that people are thinking about climate. We have yet to reach that level of understanding with nature and biodiversity loss. Today we are going to bring together many of the initiatives that are already appearing in this area to try and make sense of them from a financial markets perspective. Firstly, we will hear from Lord Zach Goldsmith and UNEP chief, Inga Anderson, who will make the case for this study that we are doing here. Secondly, we have a panel who will look at the many initiatives that are coming and how we can put them together into a framework that makes sense to the financial community. Thirdly, we have a very exciting presentation on carbon offset markets, which will be making, I believe, some very important proposals. Fourthly, we have a conversation with Professor Partha Desgupta, a leading light on the economics of biodiversity loss. Thank you, Roger, though I can't join you live today, I'm absolutely delighted to be speaking to you. We're at not for the pandemic, today we'd likely be reflecting on the closing of the UN Biodiversity Conference in Cymru, and we'd be welcoming the world to the climate conference in Glasgow. That all seems like a different age now, and in many respects it is. Coronavirus is itself very likely the consequence of our abusive nature, but we know it will be dwarfed by the impacts of environmental degradation and climate breakdown. Populations of key species have declined by more than two-thirds in my lifetime alone. Around a million species currently face extinction, two out of every five species of plants are now threatened, twice what we thought just four years ago. We've brought the world's great fisheries to their knees, to the brink in most cases, and are destroying the world's tropical forests at a rate of 30 football pitches every single minute. We're losing wonders of the world, medicines, foods and materials of the future. This ecological catastrophe is an economic calamity as well. A billion people depend on fish for protein. Around a billion people depend directly on forests, including many indigenous people. Invariably, the world's poorest people are hit hardest when the free, but hopelessly undervalued services that nature provides begin to fail. But clearly all of us depend fundamentally on the natural world that we inhabit. And whether you turn to the Dasgupta review on the economics of biodiversity, the global commission on adaptation or Swiss raise, latest resilience ranking, the news is bleak. For the first time in its 15-year history, the top five places of the World Economic Forum's global risk report were filled by environmental risks. So for the sake of people and the planet, turning this trajectory around is objectively the principal challenge of our age. Now tragically over a million people have been killed and every single economy battered by this pandemic. But if there's a silver lining to this appalling experience, it's an opportunity to use the urgent need and considerable funds for economic recovery to build back better, greener and cleaner, to do things differently. Now clearly that's not just another box to tick. It means making sustainability and resilience the lens through which we map out every decision in our recovery. Now to some extent that's already happening in relation to carbon. The cost of renewables has tumbled. Zero emissions vehicles are right on the cusp of going mainstream. The market in so many respects is racing ahead of the politics, sometimes in spite of the politics. You consider that coal use in the US fell faster under Trump than it did under Obama. So in December the UK alongside France and the UN will be hosting an ambition summit in partnership with Italy and Chile and asking countries who want to join us to announce new commitments on long-term strategies to meet zero targets on adaptation plans and to mobilise at least $100 billion a year for developing countries. But when it comes to attaching a value to nature and a cost to its destruction, we have a very, very long way to go and that has to change. There's no pathway to tackling climate change or indeed preventing poverty and reversing appalling biodiversity loss that does not involve protecting and conserving nature on a massive unprecedented scale. Nature-based solutions could provide a third of the solution we need to climate change but it receives less than 3% of the international climate finance. Now we've committed not only to doubling our climate finance but to increasing the share that is spent on nature-based solutions significantly and we're encouraging others to do similarly. But the task is far too big for public money alone so we need to mobilise private finance as well and we need to identify and shift the incentives that drive destruction the $700 billion in agricultural subsidies paid out by the top 50 food-producing countries, for instance. Working with the private sector to devise systems for understanding better environmental risks. Through the creation of the task force on climate-related financial disclosure which was chaired by Michael Bloomberg and championed by Mark Carney we are beginning to understand the risks associated with carbon emissions and we now need the same global effort for nature but natural systems are vastly more complex than measuring carbon and nature-related risks go far beyond climate alone for example the risk of flooding increases dramatically with the loss of wetlands and the removal of forests. Food production depends completely on the healthy soils that we are disboiling so the finance sector struggles to understand environmental risk and that's why the UK government is working closely with the UN and Global Canopy, WWF and a working group of financial institutions governments and regulators from all around the world to create a market-led task force for nature-related financial disclosures. The market is the most powerful force for change other than nature herself but until it applies value to nature and costs to its destruction that power will continue to drive destruction and that is perhaps the single biggest challenge we now face but facing it isn't merely a choice, it is a duty but with indisputable facts combined with the need for economic recovery all around the world and a year in which the world will be gathering to address all these crisis together. We have a unique opportunity to turn the tide so I want to thank you for what you do and wish you well. Let me begin by thanking the City of London Corporation and the Green Finance Institute as well as the World Economic Forum for organising this forum as part of a critical effort to build momentum on green finance. The COVID-19 pandemic has driven home how exposed to risk our economies and societies are. Risks that those of us working in the environmental field have been calling out for years now. At UNEP we speak of three planetary crisis the climate crisis, the nature and biodiversity crisis and the pollution and waste crisis. These crises are destroying the natural world upon which our economies and societies are built. They are driven by decades of unsustainable consumption and production. We humans have altered 75% of the terrestrial surface of our planet and we risk losing one million species out of 7.8 unless we take action. Climate change continues unabated. The science is clear and yet we remain unprepared for the shocks associated with these crisis. Now as we continue to deal with COVID-19 we must act harder and faster on the commitments already made. We must make further commitments and take real and meaningful action to stabilize the climate, to protect our natural world and to stop pollution. Real and meaningful action means moving investment flows away from unsustainable consumption and production patterns. No more financing of coal, deforestation free food, feed and fiber a regulatory framework that limits pollution and protects the climate and nature. And all of this requires investment. All of this requires shifting gear in the finance sector, both public and private. The initial stimulus packages in response to COVID-19 rightly prioritized health and keeping companies and people afloat. Now we must look to the future. Over the next 6 to 18 months a further $20 trillion in stimulus is likely largely based on government borrowing. Never before have we seen this amount of public resources pumped into the economy. We're doing this to save jobs and to keep businesses alive. We're doing this for us. But the stimulus debt will be saddled with the next generation to pay off. So we must make smart investments. We must ensure that we do not saddle the next generation with both a pandemic debt and a destroyed planet. That would be an inheritance too impossible to bear. So at this moment stimulus funds must go towards zero carbon, nature positive and pollution free societies and economies. Public and private finance must fuel that transition on energy. Must fund a healthy planet and must fund green jobs. This is a golden opportunity to change track and that opportunity will in all likelihood not come back in generations. It is important to acknowledge that some finance and industry leaders have already woken up and are already shifting gear. They are realigning their capital with a future, a green future. Alliances are forming and money is shifting while calls are growing stronger for action all across the industry. This was clear at the UNEP Finance Initiative Global Round Table last month where Christine Lagarde, president of the European Central Bank, suggested that climate risk should be the criteria for selection in its bond purchase program. Mark Carney, former governor of the Bank of England, now advisor to the UN Secretary General, argued that the wages of bank executives should be tied to climate objectives. So we are moving in the right direction. But we need to move faster. You will hear that from Sir Parthadeus Gupta. But let me just say now that the review that he has led on the economics of biodiversity calls for a global financial system that invests in natural assets. We need trillions of dollars in investments to retool and to green our global economy. Yet financial flows supporting natural assets range from only $78 billion to $143 billion per year while governments are spending more than $500 billion on support that could harm biodiversity. We at UNEP see four essential actions needed to make sure that we accelerate our action on closing this gap to make every investment count. One, we need to make sure that financial institutions need to start measuring and accounting for the impact of their financing. The finance sector needs to get better at measuring and communicating their impact, both in the positive outcomes of the financing like emissions reductions and the negatives like biodiversity loss or human rights violations. Two, financiers need to set real and comprehensive sustainability targets. Investors need to treat sustainability as a key indicator of portfolio performance, not as a corporate social responsibility effort, bits of green investments on the fringes of otherwise dirty and toxic portfolios are not the way to go. Entire portfolios and entire organisations need to be consistent with the SDGs and with the Paris Agreement. Two target frameworks that UNEP is pleased to be involved with are the Net Zero Asset Owners Alliance and the Principles for Responsible Banking. And three, financial institutions need to follow the science. The Net Zero Asset Owners Alliance, for example, relies heavily on science to set the timetable for Net Zero emissions in their portfolio. The Alliance has set clear intermediate targets to realign the portfolio on the way to 2050. Recently, Alliance members announced targeted greenhouse gas emissions reductions in the range of 16% to 29% by 2025. We must make more such science-led action and we need to see that across the finance sector so that we can convert target into real, credible sectoral pathways for ensuring sustainability across the entire finance industry. And four, transparency and accountability are essential. History has taught us that power often only serves the public good when held to account. We need financial powerhouses to open their books to scrutiny to ensure that they make good on their commitments. The Principles for Responsible Banking, for example, requires third-party review on signatures' annual reporting. The signatures are establishing a civil society advisory body which allows important inputs from stakeholders that hold them to account. This is the kind of transparency that generates credibility and trust. Following these four tenants will go a long way to move the finance industry in the right direction. But we need every cent to be spent on shifting the needle on sustainability. This is not just because the earth's beleaguered systems need the finance industry. It's because the finance industry and its future profitability need these natural systems much more. As a green horizon summit makes clear, the green transition is a significant commercial opportunity that can drive job creation and deliver sustainable growth and profits. As we head into COP26, I urge all investors listening to this to think hard on how they can mobilize capital to close the financing gap between the net zero and sustainability ambitions and current reality. Doing so is in everybody's interest. I thank you for this opportunity and I look forward to hearing about your deliberations and following your progress. Thank you. A very warm welcome to our panel, Is Nature the Next Frontier? I'm Helen Avery with the Green Finance Institute and I'm joined today by four panellists. We have Andrew Mitchell, Senior Advisor at Global Canopy. Thanks for joining us, Andrew. Margaret Coulow, Global Conservation Director at WWF International. Martin Berg, Partner at Pollination. And David Craig, CEO of Refinitiv. Thank you all so much for joining us for this panel. And we don't have long to convince everyone that nature is indeed the next frontier. So let's just dive in. We'll start with you, Andrew. So for the past, certainly five years since COP21, that there's been such a huge global focus and coming together around climate risk. But the E in ESG, as I've heard you say before, has really been a C. It's been about carbon and climate. And it seems like the financial sector is getting its head around climate risk and investing for net zero. But this year, in particular, it feels like now that the financial value that nature has and the risk of biodiversity loss has been recognised. So you have spearheaded the launch of the task force for nature-related financial disclosures, the nature equivalent of the TCFD, the informal working group ahead of the task force launch this year. Many financial institutions within that group. Were you expecting the level of response you have had from the financial community? Can you tell us a bit more about the TNFD? Actually, I wasn't expecting the response to be as big as it has been. I think there is a sort of penny drop moment that's occurred really in the last 18 months on the importance of nature. And this has been hugely accelerated, I believe, by the COVID pandemic. Because if you ever needed an exemplar of unrecognised nature-related risk, that is it, because it's a tiny speck of nature. It's turned the world upside down. Our economies are all over the place and it's affected all our lives. And this has been caused by the degradation of nature, deforestation, the illegal trade in wildlife and so on. This is just demonstrating how nature-related risk can cut across a lot of sectors. It's big and it's fast. In fact, it's now delivering... Governments are having to deliver around about $12.5 trillion in support finance to keep economies going. And no-one expected this to happen. It came completely out of nowhere. We might have thought about plastics in the ocean or climate change seemed slow and bit lumbering. But this thing came like a rocket. So I think it's really woken up financial institutions to the impact of this. And interestingly, central banks as well. And so the other thing that's coming along, which is exciting, is there are the inflows into ESG funds. And the idea that you have to sacrifice profits for ESG funds is gradually evaporating. Anybody who thinks that is probably about 10 years out of date now. And if you look at the inflows into new products like green bonds, green funds and so on, they really begin to not only get big inflows, but they're getting performance as well. So all of these things combine so that when we put out the idea of having a task force on nature-related disclosure that was in a sense a twin of the TCFD. We got a lot of people knocking on our door. So we have 63 financial institutions, governments, regulators and others now who are working hard on this through an informal working group that started on the 25th of September. And what we're planning to do is to set up the scope and the plan and the resources to launch the task force next year. It'll have four phases of work, framework, reporting a disclosure framework, testing it, consulting and then launching it, probably in early 2023. And I think this will fundamentally create a sort of systemic change in the way in which the financial sector is going to be initially, voluntarily asked to think about its impacts and dependencies on nature and be able to report on it. Of course, this is not easy to do because data is a huge challenge in this sector. There's a lot of data around. It's not always held by companies. It's sometimes held by governments or academic institutions or NGOs. But one thing is certain, it's not in a form which is decision grade. So therefore there's a huge opportunity for data providers and we can see this happening because they're all buying up environmental related kind of service providers that have all been bought up by S&P and Refinitiv No Doubt and MSCI and others. So it's really interesting to see this change. So getting the data right is going to be very important. Getting the regulatory framework right is also beginning to happen because central banks are beginning to pick up on nature-related risk and asking, is this actually a systemic risk in our financial system or not? And the Dutch central bank produced a very interesting report this year called In Debted to Nature using fundamentally a tool which Global Cannopy had produced with UNEPFI, the Encore tool. And they're finding $510 billion worth of risk there just in the Dutch portfolio that they looked at. So I think there's everything to go for. We're really looking forward to the Das Gupta review which will be coming out very shortly which will be looking at nature's stock and flows as assets that underpin our economy. That's going to be very interesting. So I think we're really seeing a change in perspective that's happening this year. Yeah, it's been fantastic and congratulations on the launching of the informal working group. We're really looking forward to it. So nature's not only recognised as a risk as you've mentioned this year but also there's been growing recognition of nature as an opportunity. So Martin coming to you feels like a big year for this realisation that nature needs investment and earlier this year pollination and HSBC came together to announce a natural capital fund aimed at raising £1 billion to invest in nature-based projects. Obviously felt like the right time. How investable is nature right now to an investor seeking risk-adjusted returns? Yeah, thank you very much. Firstly, let me slightly correct you so what we announced is a joint venture a joint venture between pollination and HSBC asset management to form an asset management company focused on nature and on climate. And we do think that the time is absolutely right for this now. There is really a growing momentum on the investor side not to only see nature as a risk in the way that Andrew just outlined but also really as an opportunity. So I've joined pollination in June from the European Investment Bank and they are the European Investment Bank. We've been investing in a lot of smaller scale natural capital investments and I always got the same question from institution investors and they said Martin, why can't you have an investment opportunity that is more sizable because then we could actually invest? So what we've seen now since the laundry that the timing has been quite good there's growing interest in natural capital I would argue that COVID to some extent has helped a little bit on this because I think it really highlighted the interdependence of nature of the economy and on well. And there are also lots of companies out there that try now to really engage on this so if you think about for business for nature 560 companies that really call on governments to reserve nature as over 4 trillion revenues or finance for nature 26 financial institutions and actually including HSBC with a combined 3 trillion asset under management all of those are looking now into nature and really want the the risks we do as well also to see could this be an investment opportunity? The way we look at this in the joint venture the HSBC pollination joint venture is really that we do think there is an investment strategy built around nature related investments on the core of that we see sustainable agriculture and sustainable forestry but also we see many what we call frontier opportunities for example forestry and agriculture could be could be combined and I think the important part now is to really show that these type of investments are actually something that can be done from a commercial seeking institution and combined with impact and the impact part of this strategy that we are looking at is an important part because we want to show that it is not only possible to create return and impact but in particular it is actually possible to create return through impact and if you think about regenerative agriculture for example where there are many business models that allow to actually upgrade and increase yield and have a much more sustainable yield and thereby also increase the return of a project we think this is a significant opportunity Thanks Martin on this sort of point of making sure that there is a positive impact but there is also return Margaret I just want to come to you now we are obviously recognising the risks of nature's destruction the opportunity for investment the importance of impact it feels like at this moment as governments around the world are focusing on recovery that this is a chance to build nature into those plans for recovery are you seeing this happen? Thanks very much and nice to see you all I would say sort of on the one hand the stimulus packages that have come so far have not directed funds in a manner that recognises the potential to build resilience through recovery and much of the funding has been directed at economic activities that have the potential in fact to harm the environment the latest green stimulus index for example from vivid economics and finance for biodiversity shows that there has been almost 13 trillion committed in stimulus funding so far of which about 500 billion is green stimulus so-called and about 93 billion is targeted explicitly to biodiversity in fact that analysis found the announced stimulus packages will have a net negative environmental impact in 16 of the G20 economies so it's concerning that the packages still don't reflect one of the key learnings as was mentioned of COVID that our own health is intricately tied to our relationship with the natural world and three to four new infectious diseases have emerged each year for the last 60 years or so and the probability of spillover has gone up with deforestation and the expansion of agricultural land intensification of livestock production and increased harvesting of wildlife in fact so the World Economic Forum estimates about half of global GDP is either highly or moderately dependent on nature and almost all aspects of human health and well-being depend on nature we rely on it for food for fiber, water, energy, medicines and nature is key to everything from climate regulation and water quality to pollination services flood control and storm surge protection I think it's also important to understand in the context of recovery that pandemic prevention is cost effective so recent research published in Science magazine found that whereas the cost of actions to prevent the next pandemic may be on the order of about 22 to 31 billion dollars a year that would be less if you net out the climate benefits of some of those measures even the lowest cost estimate of the disease damage is more than 8 trillion dollars and the COVID-19 GDP losses so far are already over 5 trillion so leaders are starting to pay attention during the UN summit on biodiversity in September political leaders from Albania to Uganda over 70 countries all regions of the world signed something called the leaders pledge for nature and the first commitment of that pledge in fact relates to recovery packages they commit to put biodiversity, climate and the environment as a whole at the heart of both the COVID-19 recovery strategies and investments in the pursuit of both national and international development and cooperation priorities so the commitments there now we need to see that commitment translate into a different approach to these recovery programs is there anything to be said about jobs as well tying into how nature creates jobs that maybe we're not thinking about enough or talking about enough sure we recently did some research with the ILO there are about the international labour organization there are about 1.2 billion jobs in sectors like farming fisheries, forestry and tourism so clearly there is a strong opportunity to invest in nature as a way to bring back jobs as part of the recovery so nature based solutions for example can be very job intensive reforestation watershed restoration and as Martin just mentioned some of these regenerative agricultural approaches are also very job intensive so a way to bring back both jobs and the environment there is definitely something that we need to embed as you say within a recovery hopefully that is starting to happen now the elephant in the room perhaps here is the data as Andrew alluded to so David coming to you as our data expert we obviously need to be able to measure the risk of the impact so we need financial institutions and governments and regulators so that they can create the policies internal or regulation and metrics as Andrew mentioned decision useful in climate we have the benefit of having this agreed global scenario of staying within a 1.5 to 2 degree increase and we have emissions that are measurable biodiversity is entirely different so can you fill us in where are we in having the data we need and how do we get to where we need to be well I guess the good news is that certainly the appetite and investment in things related to climate and ESG is very very high and in fact since the crisis we saw a 4 to 5 times increase in the consumption of our ESG data and we have been collecting for 20 years and we have never seen the kind of demand that we are seeing now but I think it was mentioned on the panel that it is not really E at C it is very climate based and in fact if you look at our data sets there is very little in there on nature and biodiversity in fact of the 10,000 companies we track I think 24% declare that they even have a policy so I think it is very very early days and as you say the good news on climate is that we track years of work on standards and scope definitions and others it is quite measurable now and you can argue the accuracy the measurability but the financial market is getting quite used and mature at measuring climate impact and relating it to temperature increase if you look at our infrastructure database for example we track 10,000 infrastructure sorry 30,000 infrastructure projects it is worth about $60 trillion a third of them are in renewable projects increasing appetite in renewable energy regional projects so a lot of interesting demand the problem is that the financial institutions and it is really encouraging to hear them signing up to the TNFD it is very early days there is not that much understanding of this topic there is very little data that is usable industrialized, repeatable so whilst there is a lot of data swimming around actually putting to use is very hard and putting it to use in a repeatable way is even harder so I think this is a multi-year journey satellite data will play a role other alternative data sets and monitoring will play a role but there is a real need for standards for policies for frameworks in which this can be measured so it can be put to use the good news is that we have been through this for climate and I think the financial markets have really grown up and matured the question is how long will it take on nature and biodiversity to go through the same journey yeah thanks David so maybe we can sort of switch gears and talk about the pathway forward certainly over the next 12 months we'll lead up to COP and then a decade ahead and some of the actions we can take to get the capital moving so I guess the first coming back to you Andrew the first is we need to sort of galvanize the port and focus and it sounds like you've done a lot of that already with the TNFD but it can feel a little overwhelming when we start to approach nature there's lots of strands to it, it's deforestation it's plastics in oceans, it's agriculture it's overfishing is there something we can collectively focus on in this decade ahead to reach our goal of reducing by diversity loss in the same way that the transition to renewable energy has sort of captured our attention and focus in this goal of reducing carbon emissions can we find an equivalent of that story to sort of bring us all together Yeah, well people sometimes ask me what's the equivalent of renewable energy in the nature sector and I think it's probably renewable food we need renewable food we're going to see a big shift I think of emphasis from fossil fuels to our food system and the reason is that the food system is the biggest destroyer of nature on the planet caused by supply chains which we all need and use in order to provide commodities that we all use to make the food but it's become heavily industrialised it's not looking after the soil very well and food that we think is cheap actually isn't very cheap because a lot of the costs are externalities that are not included in the price of the products that we all use so I think the food industry is going to come under a lot of scrutiny and things like vertical farming are going to create great opportunities new things like beyond meats and so on, impossible meats all these sort of disruptive factors are going to come into that plus changing diets as well with people not wanting to eat in the same way they've had in the past so I think the food is going to be ripe for opportunity and excitement but of course we've got to look at infrastructure, extractive sectors and so on there are about 22 sectors that are the most acutely affected by dependency on nature and impact so they're going to come into the frame here the problem we have there's two things that we've got big problems to solve there's no number it doesn't have a metric like a ton of CO2 where you can measure progress one way or the other it doesn't have a target like a 1.5 degree target either and we hope that the CBD will come up with some targets one of the targets is let's protect 30% of the earth by 2030 and 50% by 2050 things like this so we need some targets to come out of the conventional biological diversity and the other thing that we really do need to get to grips with is the impact of subsidies I mean all the money that governments are putting in to protect nature are five times less than the harmful subsidies that are being put out to support the agriculture and fossil fuel industry so you really can't win there's no point in doubling the money that governments are putting in to protect nature in that situation so these things really are going to have to be tackled as part of this whole transformation of our economic system well so not too much we have to do but at least we can sort of so as you say focusing down into transition of food 30 by 30 there are some sort of big themes that we can bring everyone collectively together around Margaret mention of governments from the work you've been doing is there anything specific that you've seen that governments could do to help mobilise capital into nature based solutions or reducing money flowing into the destruction of nature well I think to use some of those examples that Andrew just went through if you look at the evolution of renewable energy first there was public investment in R&D for new technology there were public investment incentives and blended finance instruments we're going to need both of those for biodiversity in fact I think for biodiversity we'll especially need public finance and insurance risk tools in the places where it's really hard to get private finance to flow and public funds are especially tight and those also tend to be the places where biodiversity may be richest and most at risk and we'll also need financial tools to scale when we talked about green bonds that was really the way to get renewable energy investment to scale a number of years ago and the green bond market was really started by the public sector public financial institution so I think all of those are good examples for how we might think about the same sort of transition for biodiversity finance and as Andrew mentioned we need governments to stop incentivising damage in the first place so just in the in the agriculture forestry and fisheries sector subsidies that are harmful to nature total more than $500 billion a year and to get to the food sector there are also significant hidden costs so the current market value of the global food system is about $10 trillion at the same time the hidden costs of the global food system from things like GHG emissions food waste cost of obesity is about $12 trillion so that means we have a food system right now that's a net value destroyer so rather than fund environmental degradation public funds need to be put in to work instead to promote a job intensive recovery that rebuilds for climate for economic for social resilience and investment in natural infrastructure like reefs like forests like wetlands they bring climate resilience as well as health benefits and in some cases we're talking to the infrastructure sector natural infrastructure like a mangrove for example maybe a more cost effective way than grey infrastructure for storm surge management so in short we need governments to provide incentives for private investment in nature they need to stop funding and subsidizing harmful activities and they need to invest in nature for a job rich recovery that builds both economic environmental as well as social resilience Thank you Martin maybe then come in to you given that you worked previously with the EIB natural capital finance facility so you've seen the use of public sector financial support to pump prime investments you and I have talked a length before about the challenges of building a pipeline so we end up getting sizeable, scalable, replicable projects that invest and get behind Do we need more blended finance facilities to Margaret's point? How do we start mobilizing the capital? Thank you Perhaps I wouldn't call it pump the prime but demonstrating business models that are feasible and I think there blended finance can play a huge role and as you said that's in my prior job with the EIB that's exactly what we've been working on in the industry, business models helping the private sector to invest in investment opportunities that they perhaps perceived as too risky but overall were actually were too viable I think to be honest as usual with all of those things the proof is in the pudding in the end a lot of those blended finance vehicles are very long-term vehicles and we will see where they lead I think the one thing though I'd like to mention is one issue I see with many of the blended finance vehicles is really the scale and the scalability and I think this is really what we ought to know if we want to bring nature to the next level we have to really think about that they are quite a few really good example where blended finance has helped institution investors or other private investors to invest into international but we also see quite a few examples where they get stuck there i.e. that you always need this public finance in order to get the private sector investors in there and I think in order to reach really scale what we need to demonstrate is that natural capital and nature-related investments are actually good investment opportunities and I think that's exactly what we are trying to do now on pollination to see whether in the fund that we are proposing to really go on and say we have to actually start with the economic return and we have to really combine this with impact and in our view it's actually really possible to create financial returns through impact so that's a really important point of them having said that in particular we all know that nature is undervalued so there are situations where it's extremely difficult to even demonstrate those products on an individual project level I think there is still a lot of scope for blended finance to demonstrate new forms for example payment for ecosystem services or actually help to create the data requirements that larger investors actually have so that they can invest in the longer term Thank you and David you are going to round us up here I think in this discussion and perhaps coming back full circle to disclosures and reporting what can we do to ensure that financial institutions and private sector are equipped well the financial institutions really to reorient their loan to sort of become nature positive if you will whether that's assessing risk and not investing in certain things or putting their money to other things Well I think to your phrase nature positive helping the financial institutions understand what that means is probably the first step because if we've heard from this discussion it's not black and white there's very many different techniques technologies, scientific developments it's different by use of land I do worry a little bit that the financial institutions might be expected to be the policeman of nature and biodiversity but it's very hard to be the policeman if the laws, the rules are very unclear and so we've got to help them on that journey as I said earlier it's very very early days there's a lot of expertise around but for the financial institutions this is early days I think disclosures play a role but they're not a silver bullet I think helping the financial institutions understand through disclosures particularly at an asset level what's happening in terms of biodiversity and nature focus is really important disclosures tend to focus on large public companies though a lot of the disclosures that are required tend to be the smaller private companies particularly in emerging markets so we've got to focus differently I think from climate decision grade data access to data sources such as usability, relevance, land use is really important I think governments do have a lot of this data there's a lot of data trapped in satellite information be it on land or in oceans we shouldn't pretend there's suddenly a magic alternative data source that addresses this but there is data available that could be made more widely available and also industrialised and scaled to help it and materiality we need to consider what the priorities are and which sectors, geographies or context have the greatest materiality and all the opportunity that's there and I think that can be extremely helpful it's been a strong debate in climate around materiality I think some great breakthroughs were made I think we need that materiality debate in nature as well and then policies you can push for biodiversity and forestation policies and banks again it's helpful but it's not sufficient but it's a start but I think we need to help the financial institutions develop those through either government initiatives or other sectors because it's again it's a specialist topic at the moment they need a lot of learning and understanding and skills to help to create those kind of policies before they can really become effective so a few things there it's early days the data is not yet widely available it can be, it needs to be industrialised but it needs to map the materiality it needs to map the policies and the rules that are set out and it needs to map the priorities of what really matters so a lot to do but too much to lose to not just get along and doing it so I really appreciate all of your insights and your dedication to nature and hopefully together you've set this trajectory for the next 12 months and certainly the decade ahead so thank you so much again for sharing your time with us today I look forward to continuing to hear your work Thank you Achieving a transition to a net zero economy will require a whole economy transition that means every bank, every insurer, every investor every company will need to adapt their business model and that's why the focus for COP26 is to create a framework for the private financial sector in which every financial decision takes climate change into account now that's a simple objective but it has a number of components components covered in other sessions of this meeting on risk, on return and on reporting and the focus now is on creating the right markets mobilization and there's no more important market than a new market professional market for carbon offsets because after all as companies move to have zero transition plans it's exceptionally important that the net in the net zero the offset is credible verifiable, transparent and is preserving truly preserving that precious and very limited carbon budget it also creating this market will also create an enormous green investment opportunity much of which if not most of which will flow to emerging and developing economies bringing vital capital flows and investment at a time when the transition is imperative but in order for any of that to happen we need a functioning and professional market the current market or markets for carbon offsets are fragmented the verification standards are limited the data availability is sparse there's confusion between buyers and sellers unstable demand low prices in fact very wide range of prices for very similar objectives and so as a consequence these current voluntary markets struggle with low liquidity and scarce financing in fact I think the case for professionalizing this market is made by the size of the market last year just a little over 300 million dollars of transactions when these projects should be measured in the tens of millions of dollars per year so in order to get there we need to address barriers across the value chain and that's why the task force for scaling voluntary carbon markets was set up under the sponsorship of the institute for international finance and Tim Adams leadership chaired by Bill Winters the CEO of Standard Chartered and the operating lead Annette Nazareth of Davis Polk formerly of the SCC incredibly powerful and informed and insightful group there's over 50 firms from 20 different sectors of the financial sector including some of the buyers of these offsets of companies in the real economy and they're spread across 6 continents they've been working hard since September discussing concrete barriers and proposing solutions to scale up these markets and their potential to drive up this critical area of finance now today they've published a report it's a draft for consultation it's a result of those months of intensive discussion and generation of potential solutions I want to thank all the members of the task force and the more than 80 members of the accompanying consultation group for providing their time their expertise, their energy and their ideas in developing this valuable report this is a report with a purpose it is not an academic exercise it is not going to sit on a shelf it is going to be translated in the coming weeks into a blueprint for that market and our intention is to have a pilot market up and running in 12 months time by Glasgow in November 2021 so the report feeds into action encourage all of you to get all of you watching to get engaged to help translate these ideas into reality create this critical market to help conserve our precious carbon budget to drive investment around the world to move towards a net zero future and with that I'm going to hand it over to the panel to discuss in more detail thank you very much Mark, thanks very much for that very very warm and robust introduction I think you covered a lot of the ground that we will need to but before we dive into the panel that Sir Ronald Cullen will be moderating for me and Tim Adams and Annette and with us I thought I'd make just a few comments to try to expand on some of the things that you said as you pointed out this is a private sector initiative we know that there are multiple government efforts both individual and coordinated to address the climate problem we also know that the level of commitments that are being made by many if not eventually all of us will be in the private sector be those corporations individuals or everything in between these commitments are both robust they're increasing in size and in order for us to hit those commitments and as you said to make the net in net zero effective we're going to have to have a very large robust transparent verifiable carbon market and we've under at your initiative we have set up this task force you mentioned the composition over 50 global corporations representing all elements of the carbon supply and value chain as well as NGOs, intermediaries infrastructure providers etc but maybe we just take a step back and talk about why we need to do this surely the primary focus is much of the rest of what we've been talking about at this green horizon summit which is ways that each of us whether we're corporations or individuals can reduce our carbon footprint reduce our emissions of greenhouse gases and we know just looking at the math how this works out that if we all do everything that we think we can do today it's not enough to contain the rise in global temperatures to 1.5 degrees centigrade we need a significant amount of incremental money that will go into outright reductions further reductions in our carbon footprint and sequestration that money needs to come from some place and we know that there have been many investors and other savers who have said we want to put our money into this high impact high impact requirement but the facility to get the money from the people that want to invest into the hands of the people that can make a difference through these many cases cutting edge and expensive projects that mechanism isn't very clear right now and as Mark pointed out the market is not transparent it's not large it's constantly credible and we think that it's just absolutely essential that the voluntary carbon market fill that gap to make sure that that increment of financing that's required to get us from what we can all do in the ordinary course of our improvements through to the amount of capital and change that's required to keep within this 1.5 degree target to make sure that that happens so how have we gone about this well we've got a set of recommendations that we've released today strongly encourage all of you to read through those and engage in this process 52 members from around the world and across the carbon value chain or over 85 institutions that have provided expert advice and are really pressure testing the recommendations that we're making we've had some good healthy discussions about this there's not consensus on everything which is why when you read the report you'll see that there are plenty of questions that are asked about things that are still open or things where we would benefit from the views of incremental thoughtfulness from the much broader community what do we hope that this achieves well we hope that we can achieve a consensus on a way to get to the core foundations of the voluntary carbon market that hits all the attributes that mark set out in terms of transparency verifiability, credibility and the like of course there will always be a call it an over the counter market or a buy appointment market that can operate alongside the core markets that we would like to help develop but the key for the overall market to grow and achieve this required level of robustness is to have a core market that is understandable, verifiable and gives a very clear pricing signal so we talked a little bit about the interplay between public and private sector that the bulk of what you say virtually all of what you'll see in the report is the role that the private sector can play we've all made commitments my bank has committed to be net zero by 2030 for our own operations we know that a lot of our carbon footprint relates to the activity of our clients who are producing power or shipping or transporting or manufacturing we want to play our role in helping those companies to migrate from higher carbon intensity to lower carbon intensity like us it's unlikely that they can reduce their net emissions to zero they will need to go into the market to buy offsets in order to hit their net zero targets much as we can for this to be effective we will need to have clear standards we've got some very crisp thoughts in the report on how we might achieve that transparent data a robust market infrastructure an agreed set of financial instruments that can trade on that infrastructure these are the necessary ingredients for a successful carbon market and as you'll see in the task force blueprint that we've set out we've got six specific areas for action first is to identify those core carbon principles and the taxonomy of attributes so what are the characteristics of the core contract that we want to identify and would hope would get the market attention to establish a liquid, robust and transparent market where are the taxonomy of attributes by definition what are the attributes that aren't included in the core carbon contract those may be the basis either for future contracts or for over the counter or by appointment transactions that are done separately but ideally referencing that core carbon contract having contributing to the underlying liquidity of this market second is that these core contracts should be traded on a recognized exchange they should be supported number three by an infrastructure for trade post trade financing and data critical to the success of the establishment of this market is an understandable and transparent meta registry of the things that are supporting these core contracts number four is a consensus on the legitimacy of the offset market at times we've heard people say please don't focus on offsets just focus on reduction but that's our way to cheat to get around the carbon commitments that we're making that's not the way we see it rather we think we can create a carbon contract and an offset contract that is recognized as legitimate in terms of achieving the purpose for which it was created that it's key through governance structures and through understanding that we develop that consistency and that consensus on the legitimacy of carbon offsets fifth is the integrity of the market so we know that all markets are subject to abuse or subject to the shortcomings of a lack of transparency we also know that markets can be used by bad actors for illicit purposes so we want to make sure that as we build this market that we've got a clear eye on integrity and the assurance of integrity and finally is demand while we've all been encouraged by the number of companies that have stepped forward to say that they're going to reduce their carbon footprint dramatically in many cases we know that the demand for carbon offsets is still actually lower than the supply hence the price that I think we would all recognize is quite low to the extent that you can observe that at all so getting that demand drive up and running is absolutely critical now where are we here we'll take the thoughts coming back from this consultation paper and we'll now shift our focus to implementations from now until January we'll focus on taking the feedback that we can get through the consultation developing an implementation roadmap we want to ensure that this is more than just a report this is going to do no good if it's just a doorstop rather we want to catalyse future market actors to pursue tangible actions that means that if you're bothering to listen to this conversation at all you're intending to make a difference in this fight to the extent that we can coalesce around the actions the concrete actions that we can all be taking now to scale up this voluntary carbon market we'll be contributing to our end goal and we want to set up a committed coalition to collaborate so this is not a one firm or one person effort this will require the market to come together into a common and collective area of focus instead of areas of focus so like the the task force for climate financing disclosures which was an earlier effort led by Mark Carney that had a substantially catalyzing effect on the disclosure of climate related risks and exposures we would like the task force for scaling voluntary carbon markets to also have a catalytic effect so that we can have a much greater impact than the sum of our individual contributions to this effort so the wheels are in motion things are happening we want this to turn into from a set of ideas to a set of commitments we're all very keen to get going and actually watch this market grow from the paltry size that Mark mentioned to something in the billions of dollars that will get the money into the hands of the people that can really make a difference in reducing our carbon footprint so with that I'd like to hand over to Sir Ronald Cohen to lead the rest of this discussion Thank you very much Bill It's a pleasure to be on this panel with you at the summit organised by the City of London and I'm delighted that the City of London is planting its flag firmly in the space because I do think it's the space of the future I'm delighted to welcome Annette Nazareth a former commissioner of the Securities and Exchange Commission and the partner at David Spoker Waldwell and Tim Adams the CEO of the Institute of International Finance who speaks to us from Washington and I'd like to just set the scene as I said I read your report with great interest and with my perspective a share of the global steering group for impact investment but also as chair over the impact-weighted accounts initiative at Harvard Business School I have been following your efforts with great interest the reason as the previous session before ours was saying the reason is that we are moving towards greater transparent on the environmental damage and indeed the social damage that companies are creating the effort I lead or I chair at the Harvard Business School it's led by George Perufim Professor of Accounting has already published a data set of 1800 companies and if I just illustrate a couple of the conclusions it sets the scene of the discussion we're about to engage in you can see in dollar terms that these 1800 companies deliver 3 trillion dollars of environmental damage a year 3 trillion dollars just 1800 companies you can see that 250 of these companies deliver more environmental damage in a year than they do in profit and that the third deliver 25% or more of their profit in environmental damage so this suggests that as we begin to realise that this impact information is price sensitive which shows up in the Harvard data you can see a correlation between greater environmental damage and lower stock market ratings relative to competitors regulators are going to have to step in and to mandate the publication by companies of impact weighted accounts that reflect not just their profit but also their operational impact their employment impact and their product impact on people and planet so we have 3 trillion dollars worth of potential demand for offsets during a transition period which companies are going to have to go through before they become net impact positive and so Tim if I may ask this question your organisation has sponsored the work of the task force following this work do you emerge more comfortable that the carbon market can actually play a major role in getting us to bring companies to become impact positive? Sure, great question Seron thank you and it's such an honour to be here with Bill and Annette, good friends and really leading this effort and I don't know where we'd be without them in the positions they're in yes I think this initiative is an incredibly important catalyst for intermediating the trillions of dollars of demand that I think is out there that will develop and become visible over the coming years it's not only the right thing to do it's also a good business for us our industry and we represent the full spectrum of financial intermediation every node across the spectrum is interested in this topic they're listening to their clients they're listening to their investors they're listening to their employees they see where trends are going they want to be a part of it and we see trillions that we want to put to work for a noble and important cause maybe the most important if not the most important most consequential issue we will work on in our professional careers thank you Annette if I may ask you a question you've been a regulator and you're very conscious of the inadequacies today of regulation of this carbon offset market do you feel that there really is scope to create a transparent and liquid market of real scale here that will be in the billions and even trillions well thank you for asking that question I think I'm very optimistic about that I think that we have all of the building blocks for a liquid and transparent market I mean the wonderful thing about this group that we brought together was we brought together participants from all over the market ecosystem and as a result I think we have a really wonderful opportunity to build a market that excuse me I have a little connectivity trouble here so let me just get off that we have an opportunity to take all as I said all the building blocks so for instance we have participants from existing exchanges these people obviously know what it takes to have a regulated market that functions well we had market infrastructure providers those who would provide pricing data we had representatives of buyers and sellers and we had participants who would be involved in ratings or that kind of thing so when you bring together all of these pieces and you build a model based on existing vibrant markets it makes me very optimistic that this will work and who do you think is going to be the regulator of this market well you know I don't know if we know that just yet I think part of the consultation that we're going to we'll have people sort of recommend who they think could do it certainly I think to the extent that we have not only a cash market but a futures market it would probably be likely that an organization like a regulator such as the commodity futures trading commission would be involved but for the cash market we'll see we'll see what what existing organisations may be involved and could really help oversee this activity because obviously market integrity is going to be very important and I know Bill talked about all the building blocks and the general principles of our report but certainly having a market that is not just robust but free of fraud has integrity that's going to be certainly focused on sort of the traditional issues such as AML know your customer type principles as well all of those things will be built in thank you and so Bill you've been a great proponent of business and that includes banking and investment helping government to overcome these huge climate challenges that we face but as you hinted in your comments the way to reduce these carbon emissions is to change the behaviour of companies governments talking together can't do it on their own how do you see the carbon market interacting with companies and banks and investors over the next four or five years to achieve real scale today there are issues both of supply of opportunities of offset opportunities and demand for carbon offsets so if you look ahead four or five years how do you see us actually making progress in scaling up this market I think the objective has to be and I think we can achieve this objective to create a virtuous circle so we've started with the first item in the virtuous circle is the recognition that we have a problem and I think that's pretty universally accepted right now number two is to have companies or just say broadly emitters because of course some of the emitters are us as individuals as well but to have us accept that there's a problem and also feel pressure for one reason or other to do our part to address that problem I think many of us will act out of a sense of civic duty others will act because their stakeholders have told them that they really want them to act so we've seen that the owners of companies the owners of emitters have been putting increasing pressure on the companies in their portfolio to take action to address a problem that we all see and that's a good thing I think the corporate world has responded to stakeholders saying we want you to take action in exchange for that we see that there's money flowing into the hands of the people who can actually create the reduction technology that can actually remove carbon from the atmosphere through one mean or other there's endless good ideas and people that would like to do good things that simply don't have the financing or even if they could get the financing it's just a little bit too hard and a little bit too slow so part of the virtuous circle is to congeal the community of offset creators so that people can get the carbon out of our environment to get them out asking for their share of the money that's coming out of the hands of the people that are being pressured through themselves or others to reduce their own emissions or purchase offsets so as we get this virtuous circle going so far you notice I've not mentioned government but as we get this virtuous circle going we'll have increasing pressure on all of us to reduce our emissions and we'll have an increasing moral imperative we'll have improving technology that will consistently drive down the cost of offsetting carbon that should lead to a dramatic expansion of the size of the market now along the way governments will take action we've seen very discreet actions from a number of governments typically on a relatively local basis and I think like any other market when you have a state actor that comes in and intervenes in the market it can have a big effect we need to look no further than the market for interest rates where governments and central banks regularly intervene it doesn't mean the market doesn't function it means that the market adapts very very quickly and I think governments can play an enormously catalyzing role or accelerating role through their actions but we shouldn't wait for that the private sector should get its act together and go out there and do the things that we can do today and then if the government comes in and makes it all a little bit easier or a little bit faster so much the better so as we look at what is driving today the effort to tackle climate change we see that it started off with consumers and employees of companies refusing to purchase the products or work for companies that were polluting heavily or using child labour and then that investors became aware of it and today we see more than 30 trillion dollars of ESG funding flowing to achieve impact as well as profit we see a trillion dollars this year of impact investment where you don't just have as you do in ESG the intention to create a positive impact on the environment or on society but you also measure the impact that has been created so we have more than 30% of professionally managed assets going now to achieve impact as well as profit and we see at the shareholder meeting a couple of weeks ago of Proctor and Gamble a rebellion by shareholders where two thirds of shareholders vote against management and require information on the deforestation which P&G's use of palm oil is causing I think we're going to see these rebellions multiply both in the environmental but also in the social area around diversity and economic inequality and so on and so forth so how if I'm right and if this transparency will be with us within the next three to five years in the form of mandated publication of impact weighted accounts and for those who may not have followed it just this year alone we have had IFRS which is in charge of international accounting outside of the US we've had the International Federation of Accountants we have had the World Economic Forum and we have IOSCO the organizations that brings regulators together talking about sustainability accounting so this is on the way the reason I take time to just wrap this point and I open the question to the three of you is we're going to need a massive increase in the offset opportunities that exist I tried to buy an offset just a few weeks ago the types of opportunities that are around don't really deliver significant environmental impact many of them so how are we going to I know that the supplied money creates a term of demand but over a long period of time we will see new offset opportunities but in your work have you found a way to boost now the supply of decent offset opportunities that really have impact on the environment Ronny the issue isn't supply there are plenty of projects that have been tabled that can get us on the path to one and a half degrees and that's zero by 2050 the problem is financing of those supplies those projects require money we put out a report just yesterday we surveyed the international investors $50 trillion question around the amount of financing that's required in order for us to hit these targets the amount of funding against that $50 trillion of required financing is less than 60% and if you get into critical regions like the continent of Africa the available funding is less than 10% of the amount that's required so what's preventing the capital from getting from the hands of all those investors that you mentioned all the investors that are in our $50 trillion question survey is that money from getting into the hands of the African project managers that can actually affect the climate output that we're all looking for there's a long list but one of them is having exactly the clarity that you talked about when you went out to buy your carbon offsets personally that you weren't sure that the offset that you were buying was going to have the desired or intended impact or the advertised impact so that's why standards are so important that's why transparency is so important and allowing a centralized metaregistry is so important perhaps using blockchain technology or something like that that can add to a sense of assurance that's why it's not just about at the time that you purchase the carbon offset but the way that those projects are monitored over their life to make sure that the impact that was intended at the outset carries on that's why we're having discussions about whether we should be attaching a lower carbon offset weighting to older offsets or whether they have a sell-by date these are some of the questions that we've raised but in answering those questions we will be making it much more likely that the $50 trillion that eventually is needed makes its way from the hands of the people who are prepared to invest into the hands of the people who are willing and able to invest that capital for the climate purposes that we've committed to but there's a real break in the transmission mechanism between the two and one critical part of achieving that transmission mechanism effectively is a large, robust, verifiable scalable carbon market and when you all think in terms of investors participating in this market is the bulk of the market going to be companies trying to offset the environmental damage you described that I've described based on the Harvard data do you see a role for financial investors to get involved in this market? To be precluded from doing so but don't you think, Tim? I should like to speak as well but I think certainly I would expect there to be a large institutional component and as you said it's certainly going to be a number of large corporations that are not able to get their carbon footprint down fast enough to meet the goals and therefore purchasing the offsets to meet the goals of the Paris Agreement as quickly as possible but I don't think that the participation in this market will be limited to that and as you say, even as an individual yourself you've looked for opportunities to invest in offsets I'm sorry, Tim, did you have something as well? The demand is there not only from the corporate sector and will more so over time not only from the small and medium-sized businesses but at the retail level you have a whole generation that is coming into the workforce and financial capacity and their demanding change and I was at my favorite coffee shop this morning getting coffee I thought what if at the point of sale I could spend an extra quarter that went to the carbon offset for that coffee getting here it doesn't exist the technology companies the Silicon Valley of the world will certainly once inspired and once incentivized will come up with solutions and we know the demand over time will scale as well and with that as long as we have the market mechanisms in place price discovery and integrity and consistency and good quality data that the demand will come you know, ultimately my staff hear me say this all the time I'd love to see a day when the retail sector when it's like food labeling that when you go by a box of cereal you know how much they're sugar and trans fats and it's easy to compare we need the same kind of transparency simplicity for retail products so that we know what products that we're buying what is their carbon content and so that's ultimately my dream how do we get there but you got to have good data and you got to have the markets that we're trying to build so I think the good news is that the data exists now and I encourage you all to go to the impact weighted account site at Harvard Business School where you can see the different environmental impacts monetized of these 1800 companies and I agree with you we're not far we're not far from the day when you will have a nap on your phone and you will point it at the barcode of a product and you will find out how much if you want to buy a box of Twining's Tea in the UK and you point your phone at the barcode on it you will discover that Associated British Foods creates $1.8 billion of environmental damage a year against $1.6 billion of profit and you will find out also the environmental and the health impact as you were saying saturated fats and sugar content and so on, monetized I think we are really getting close to that technology enables us will enable us to to do it I suppose the question in all our minds must be if we want to have a huge increase in the size of this market what is going to drive it and you're all saying we need to create a market that is capable of being a proper market the supply and the demand exist for that market to take off so all we need to do is to perfect that market I personally agree with you but is that is that the general view as you've worked on your consultation or do you have do you have skeptics who think otherwise I don't think we've had skeptics I think we've had you know we've been very heartened by the enthusiasm for this I mean hearkening back to something that Bill said you know said that there's no shortage of supply I think that's right I think the problem we've had is the demand signals there's not been the demand for the offsets has not been as clear and I think once we get the transparency around the types of things that you're talking about I mean we are seeing a groundswell of interest in climate change in our carbon footprint and you've talked about what's happening in corporations all over the world where shareholders are speaking up and saying that they want this to be something that the companies that they're investing in are working towards and I think that once we bring together that information and bring together the demand side and the supply side I think if we build it as they like to say they will come and I think that the timing couldn't be better for this because I think we're going to see a very big pop as we I think you're seeing in the interest of investing in these types of things I think that demand will be driven by the increasing transparency and that Proctor and Gamble being exposed now on the extent of diversification and having to publish numbers about the extent of it we're going to find this pressure coming from all different directions and we have to achieve this transparency sooner rather than later if we want to have real impact on climate it seems to me because we've taken three or four decades for governments to talk to each other to try to find a solution but the solution lies in changing the behaviour of companies in bill when a standard chartered is making a loan having the information to be able to understand whether the company involved is net impact positive or net impact negative and if it is negative then whether it's negative in areas that are going to be risky for for its future so it seems to me that your task force has come at a crucial time when this market really is poised for growth what do you hope to achieve now in the implementation phase that is coming up we just have a minute left so perhaps each of you will start with you Annette well you know we're not finished as you know we worked very hard and we're very grateful to Green Horizon Summit for giving us this hard date where we were issuing our blueprint but there's more work to be done I mean we're in a consultation phase now and we're very much encouraging of all participants around the globe to you know to engage in our survey and give us their comments then that survey is available on the IAF website and we're going to take those findings and those of you know our task force and our consultation group and issue you know the final blueprint in January but in addition we are working on a roadmap now which is the next steps and so it says as both Bill and Tim like to say you know we're not doing this report just to sit on a shelf or serve as a doorstop we're continuing our work now you know towards the roadmap and what are the concrete things that we need to do to actually get a market up and running well Annette I think you've answered all the panellists we're out of time thank you very much, thank you Tim thank you Bill a great panel we will leave the last word to Dr Sandroian CEO of Conservation International who's a member of the Task Force Consultative Group Hello my name is Sanjan I'm the CEO of Conservation International and thank you for giving me a couple of minutes to speak to you first and foremost really thankful and appreciative of the work that the Task Force is doing and very encouraged by by recent progress look conservation financing carbon financing even though this is a voluntary market carbon financing is absolutely crucial to scale there's no way we are going to even approach some of the targets that have been set by the Paris climate agreement if we don't have that scale behind us and the financing carbon financing even though we're operating in this voluntary market is going to be crucial to it now what's encouraging to me is that there is a hunger there's a demand by customers by companies, by private citizens by consumers if you will for carbon projects in some sense constrained really by supply by high quality supply and that is the thing that I really want to focus on right now because yes the infrastructure, the plumbing if you will is crucially important what really drives markets what markets depend on is confidence and for us to be able to give that confidence to the market we have to have high quality projects we cannot let our guard down we have to maintain a high bar we cannot just scale and go for size we have to go for also quality with size right so quality becomes really important as well and what I mean by quality it means not only being able to drive a return this we all understand but it also means having an impact a positive impact obviously on climate but also on the communities on people, on jobs and on nature and biodiversity especially in these early days there's no doubt going to be some bubbles we will get some things wrong that's the nature of new markets however it's important that transparency good monitoring and transparency is built into our projects so that when we do stumble we can learn from it and we are not afraid of owning up to it as a way of continually raising the bar if we can do that if we can use the task force we can use this to really push for impact and build that confidence in the markets I think this is probably the most exciting thing I certainly as a conservationist have ever seen in my life and maybe maybe forever this amount of potential support and funding for conservation is extraordinary but in order to tap that and trap that effectively we have to get it right thank you so much, appreciate it look forward to engaging further Martha hello we've just heard about the nature crisis being a global challenge and attacking the twin threats of biodiversity loss and climate change requires to invest more in nature Martha you are commissioned by the UK's Treasury to review the economics of biodiversity loss a huge subject and may I say it's been a privilege and a pleasure to be working on that review with you, it really has but as your interview as your reviews interim report made clear back in April you frame the current nature crisis as an asset management problem could you unpack that and explain how the concept of nature as a financial asset fits into traditional economic thinking thank you very much, yes it's um I think the best thing to do is to start by asking what we might mean by asset management and one usually thinks of it as a of a financier moving far some so money around but I'm thinking of assets here the review thinks of assets here as and it's correct way to do it is real goods and services goods in particular an asset is a durable good OK, in contrast with service and of course the asset offers services and in that for that point of view we are all asset managers every one of us, whether you're a farmer fisherman, whether in Niger or whether you're in China whether you're in India United States UK doesn't matter every householder is an asset manager and we might think of buying assets and it's correct way to do things thinking of produced capital assets roads, buildings human capital education, health these are conventional terms now even human capital is conventional but then there is nature and we now call it natural capital to bring it in proximity to the others I mean ecosystems generally speaking could be mangroves or wetlands these are real goods durable goods which can be tarnished and we aspire to manage these portfolios of assets whether it's the farmer or the fisherman as best as they can under the circumstances given the constraints they face the scarcity values they observe for them now humanity is failing to manage its global portfolio of assets efficiently we are continually depleting our natural capital ecosystems like estuaries forests and mangroves in some cases to the point of collapse and it is important to recognize that it's not about the future only poor people in the poorest of countries have observed their own local assets collapse so we're not talking about unexplained phenomena or anticipated phenomena only and biodiversity the subject of my review is a characteristic of portfolios of ecosystems they make ecosystems productive and resilient estimates show that between 1994 and 2014 to give you just an example of how we have tarnished nature produced that period produced capital per head globally doubled and human capital per head increased by about 13% this is all written real terms but the value of stock of natural capital per head declined by 40% that's a huge disparity between the directions of movement of the two three categories of assets a world healthy with a healthy biosphere could choose to draw down its natural capital to accumulate produced capital and human capital that's a plausible scenario and that is what economic development has come to mean among most economists but that view and the practices it encourages has meant that in recent decades humanity's demands have come to fast the outstripped nature supply it is the definition of unsustainable behaviour certainly this language resonates very strongly with the financial community part there as you of course will realise we're used to thinking in terms of assets and of risk and of commercial opportunity that arises from those risks and of course the downside that can come too clearly the thinking that you're bringing in here and the thinking that is developing around natural world natural capital it has almost revolutionary consequences for much of the world because these factors have not been included in the discussion before but it also implies that one of the problems to be overcome is also a lack of investment both a lack of regard for the value of that asset but also a lack of investment and of course finance is perfectly placed to help with that if we can understand, if we can assess and if we can manage those risks and because the mismanagement of asset portfolios also implies opening ourselves up to risk and those risks become material in several different ways for the finance sector that we're dealing with as the review demonstrates and as we've heard about earlier from Helen Avery's panel discussion with regards to initiatives like TNFD so in a way one of the central problems is that nature's worth to society or the value, the financial value of our natural assets it's not reflected in market prices it's not reflected in market thinking either and I think maybe the thinking needs to come before the prices but can you explain or help us to understand why this is and how we might particularly affect market thinking around the value of the assets that we're dealing with? Thank you very much these are of course exactly, your observations are totally in line with the one you're taking in the review there are three features of nature that make nature a very problematic asset in terms of economic thinking one is that nature is always on the move it's not like a building you own a building it stays put but the wind blows the rivers flow ocean circulate even continents drift but of course the time that it takes to drift is very slow but it is powerful influence over time so that's one movement and that makes property rights very hard to define let alone enforce on those goods property rights I don't mean necessarily private rights could be community rights could be state rights a second feature of nature is that it's silent many of the process are silent what happens beneath our feet you don't hear and yet it's doing an enormous amount of work which we enjoy the benefits from a third is that it's invisible again what happens in the soils you don't observe but the enormous amount of work is going on it's like a factory churning out services for us these three characteristics makes institutions it's very hard for institutions it's not just markets even the state has difficulty coming to terms with natural capital as a result market prices certainly are zero their free goods for many many of the services that we enjoy I mean regulating services I mean carbon sequestration decomposition these are incredible services that we enjoy silently, invisibly and we don't have to pay for it in fact the irony is that we governments subsidise the use of nature in a big way and of course that means we're paying a negative price we're being paid to exploit nature so we should recognise that there's an undervaluation of nature and I should say it's not just the markets fault states also at fault the only institution I know of which broadly speaking recognises the value of nature are communities, small communities which live on their local resource base because they can observe what's happening and if communities have power to adjudicate the use of their local resource bases threshing grounds local forests, woodlands waterholes then they don't manage it we've got lots of evidence of that from anthropologists' work in third world countries but on the whole we're rapacious in our use of nature because it comes for free yes that sounds familiar the history of capitalism is one of excellent growth and the reduction poverty it is also a history of exploitation in one form or another as we are constantly reminded and I really wonder what future generations will say about our use of natural resources as effectively a free asset but it's for me part as a financier I like to point out that financial services are a service they're not the prime mover in the very beginning and they're often not the solution either but the services that we can provide love this language I think there's a huge willingness that I hear amongst investors and bankers to address this and to find the right solutions I also hear a lot from companies that are major food companies are major utilities are major traders of commodities that want to get this right but it has to be a global discussion not a one off because as exactly as you say individual governments need to need to be speaking the same language and not come from a different angle so we need to excuse the competitive situation so in that respect this is a much more complicated discussion than climate climate in a way we focus on a single metric around carbon and this the energy revolution that is now happening in renewables is fantastic we want to get to a similar situation with land with land deforestation with land degradation with the oceans and the like therefore the language here about putting a value price on the resources that we're using complex though it is I'm absolutely certain it's the way forward as your review says one of the one of the conclusions is that we are mismanaging our asset portfolios and I wonder if we could move on to talking about how we find solutions to that what are the ways in which academia and your study the sense that the financial community are basically on site to find a solution how do we work together with those to find as we've just been discussing in the panel and before the real solutions to valuing these assets correctly well it has to happen at various layers and it has to happen in different various ways first and foremost we need to have something like a common grammar for understanding our place in nature the fact that so much of nature is silent, invisible and travels and is as a result free has made us think that there is no bounds on nature we may recognize that the biosphere is finite but we pride ourselves in our ingenuity to overcome that boundedness we feel it's almost like a fisherman who goes fishing and knows he can take the fish away home, cook it, eat it dump it somewhere and then comes back next day to fish some more we are not external to the biosphere we are embedded in it we are part of the biosphere and that perception that idea that this is our home will be the first step towards any change secondly of course you are quite right I have been speaking with financiers and particularly your own influence on the review has been enormous I don't know if you have recognized that because I think we think alike on these matters and of course you have right to be fearful of the future you have right to worry whether your supply chain is going to come crashing down because an entire ecosystem 5000 miles away collapses you need to have, if you are a financier here, you need to have some notion of what the state of the ecosystems there are it is out there the problem is again as I say prices are not forthcoming on the other hand there are ways of managing assets without having to think about explicit prices the quality management you want to ensure that the biosphere is not hurt undoing by the transactions that you are taking because at the end of the day it poses risks to you if you don't care about how your activities are how your portfolio is affecting the activities put for you the choice we need a combination of a cooperation between financiers governments and of course local communities because that's so much of the economies of the first world if you like the rich countries are built on the primary products of the poor world and there needs to be genuine cooperation with governments their communities there to ensure that processes are not treating nature there as value less a third root there are many ways of attacking this problem they have all to be done simultaneously we need to describe our economies in the right way we think of economic progress as income increases but income is a flow and when we look at income say GDP we look at the gross income we don't look at net income we don't take into account the fact that in raising income you may be depreciating the assets on the basis of which your income is generated so even if your GDP a country's GDP increases it could imply a sinking floor on which you're operating if you run down your assets so we need to change the accounting system and move more towards company accounts I mean balance sheets national accounts are not balance sheets they are about income flows income and expenditure flows and of course that hides a lot of stuff that's going on in the economies transactions so you have to worry about that we have to bring these things together a final point about in the response to you is that we investing in nature it's important to recognize that investing in nature can mean doing nothing we're not we're not to interpret investment invariably as people workers with hard hats digging holes on the ground to lay tarmac planting a seed and leaving it alone put a little bit of nurturing maybe but the nurturing part is minimal it's the waiting part which is costly so investment here metaphorically could be would be wait do not harm leaving alone a woodland is investing in that woodland because it will do better next year that's extremely important and the value of that increase should be captured in your profitability calculations and you need to be able to do that if there were ideal prices of course it will figure it but even if there are no ideal prices on offer the agreement between government civil society business communities would ensure that that is protected and we do that in various bits and pieces we have protected zones for example in the oceans on land why do we do that because we've implicitly given a price to it a high price do not touch it if you're a very traditional society is very often bits and pieces of nature and I use the term not I'm using the term intentionally in economic terms are regarded as sacred well that's giving a huge value to that object and preserving it is the equivalent of investing in it because if you don't preserve it of course it gets destroyed so there are many ways of going about it the one really good news I think in the post COVID period is the fact that as I say the nurturing part of nature requires labour it doesn't require machinery it doesn't require chainsaws just the reverse you don't want to cut down the trees you want to grow trees so investment in nature is likely to be a deal of evidence is labour intensive and that's good news it means the employment issue is not going to be a trade off between employment and investment in nature I think there are other aspects of the problem we could discuss but I think the accommodation of these aspects of accounting, behaviour cooperation is what is needed for us to move forward Thank you I think Parthie will give a new meaning to the traditional phrase in asset management of passive investing I find very attractive when I think about my own garden and my own few trees I have to be a bit more active but I love the idea of letting them just grow and I think the concept of passive investing applied to nature is absolutely excellent Parthie, I'm afraid our time is almost running up but I wanted to ask you just a word about the sense of urgency how we instill that sense of urgency we've had some fantastic media and film related we've had in Edinburgh's wonderful witness statement in which you also appeared and I think to me Covid has been a stimulus to this discussion it's been a stimulus to the idea that we aren't in the right place in many of the ways that we're living what we're wearing, what we're eating, how we're behaving what's your feeling about the urgency that's required here and are you in the very end are you optimistic that we will come through and succeed in restoring nature to where it should be that's a hard one to answer the first part is easy yes there is enormous of urgency a state of the environment reports that have been compiled over the past two decades starting with the millennium ecosystem assessment and more recently IPBS report on the state of the environment is there a very sobering reading we have really trashed a good deal of in the process of economic development as we have as we have defined it in the past so yes there's no question about that what can be done well it really depends on us we're not looking at a government problem we're not looking at a problem of the market we're looking at the fact that we as citizens throughout the world have been extremely negligent particularly I mean I can't speak for countries outside my own experience but I do have data to show that what might be going through people's minds which has resulted us into being here the job is ours as citizens the one great possibility that I see is the internet we citizens need we have access to people we have never met so it's not just a question of going around within a neighbourhood and complaining to local authority we can reach a much bigger audience I think citizens we need to think of ourselves as citizens when we think about nature and as citizens for collective security we need to do something and I would like to end with a plea two things one that the citizens ought to get together directly and indirectly to put pressure on all consent and including pressure on ourselves in our personal behaviour it's not just other people's problems we ourselves are tarnishing we have to take selfie no matter where we go we have to do that and the other thing we make a plea for in the review is education we have to internalise our concerns because no institution can protect nature against the assault that we are capable of because of the three properties I mentioned at the end of the day we have to be judge and jury ourselves of our own behaviour not of others obviously and that can only happen in my judgement if you have some basic understanding of this infinitely beautiful object we call nature the processes that are taking place absolutely mysterious and amazingly beautiful if you just try and understand it a little bit you don't have to be a deep ecologist and if we are educated in nature studies from the earliest of our years and it doesn't disappear then there is a chance that we will come to have an affection for nature let alone all and I think at the end of the day that will be the force that will be required because institutions can't do it all on their own we have to support the institutions by our own behaviour Partha, Professor Partha Desgupta thank you very much indeed for those insights we are looking forward hugely to the response to the review which will come out shortly and I think we are at the very beginning I hope, I do believe we are at the beginning of a revolution where we are thinking too about nature and how we use nature and how we value nature and I am convinced that the review that you have been responsible for will be a key part in that discussion thank you very much indeed for your insights and thank you very much indeed for this session thank you very much Roger thank you very much indeed it's a pleasure as always to have a conversation with you thank you it's an honour to speak to you at the green horizon summit 2020 has been a very challenging year COVID-19 has resulted in the most severe global economic crisis since the Great Depression across the world hundreds of millions of people have lost their jobs and Australia's economy has not been immune it has been hit hard in response our government has focused on skills and training, tax relief and infrastructure to support job creation we have focused on the economic recovery from the impact of the pandemic but also on building a stronger more resilient country by tackling climate change and paving the way to a lower emissions future I'd like to thank the Lord Mayor William Russell a great friend of Australia for inviting me to speak and share Australia's experiences on tackling climate change as part of building a stronger economy and in particular through sustainable financing Mark Carney and others have done a tremendous job in highlighting the importance of mobilising private sector finance to support the transition already underway across the globe climate change is a truly international issue requiring coordination and strong collaboration between the public and private sectors to unlock investment opportunities we know that advancing the next generation of low emission technologies is crucial to achieving the goals of the Paris Agreement and realising these goals will require widespread cooperation including active engagement with the private sector Australia is playing its part by investing in innovative energy infrastructure solutions domestically and by joining our global partners to ensure that climate finance is mobilised across the world the Australian Government is backing new technologies that will create jobs strengthen our economy and reduce emissions and as we recover from COVID Australia's technology-led approach will reduce the cost of new and emerging low emission technologies Australia's technology investment roadmap will accelerate the development and reduce the price of clean hydrogen energy storage low emission steel and aluminium production CO2 compression hub transport and storage of CO2 as well as soil carbon getting these technologies right will open up new export opportunities and deliver jobs across the country while reducing our emissions to support the Morrison Government's technology investment roadmap we have provided $1.4 billion to the Australian Renewable Energy Agency Arena as it's known seeks to improve the competitiveness of renewable energy technologies and increase the supply of renewable energy through innovation that benefits Australian consumers and businesses since 2012 arena has supported 566 projects with a $1.6 billion in grant funding unlocking a total investment of almost $6.7 billion in Australia's renewable energy industry once low or zero emissions technologies get close to cost parity with existing alternatives we know as we've seen with rooftop solar that households and businesses will rapidly adopt those technologies of course it's one thing to have the scientific and engineering expertise to build the technologies of the future but it's another to finance their development working with the private sector to drive down the costs of key technologies is an important part of Australia's transition towards a lower emissions future Australia is proud to be home to the world's largest publicly funded renewable financing entity the Clean Energy Finance Corporation or the CEEFC as it is otherwise known the CEEFC has made investment companies CEEFC has made investment commitments of more than $8 billion in new and emerging technologies through more than $160 different transactions and a further 13 co-financing arrangements leading to investments in projects worth over $28 billion the CEEFC is a great example of what it means to mobilise private sector investment in opportunities that are economic and yet easily bankable for every dollar the CEEFC invests it mobilises more than $2 from other investors Australia's success at being on the front line of renewable energy adoption has been a collaborative endeavour between government, the private sector and most importantly the Australian public since 2017 Australia has invested more than $30 billion in renewable energy becoming the world leader in per capita deployment of solar and wind 1 in 4 Australian households now have solar panels and in 2019 alone the share of wind and solar in Australia's electricity grid was more than double the global average and is projected to rise even more rapidly in coming years Australia is deploying new renewable energy 10 times faster per capita and Australia has a history of meeting and beating our international climate emissions targets we beat Kyoto by 128 million tonnes and we have also clearly mapped out how we will meet our 2030 Paris target we recognise that building resilience in the face of climate change is important in responding to natural disasters and the bushfires we experienced in Australia early this year were devastating we established a royal commission into national natural disaster arrangements and to ensure that we can improve our resilience and adapt to changing climatic conditions we've invested over $15 billion in natural resource management water infrastructure, drought and disaster resilience and our overall recovery which has included $325 billion in further climate science and adaptation research and services Australia has also focused on investing in climate finance to support countries in our region we are a steadfast partner in building climate and disaster resilience particularly in the Pacific where climate change impacts livelihood, security and the community's wellbeing we will exceed our 2015 commitment of around $1 billion in five years by 2020 on climate development assistance and pledged an additional $500 million over five years from 2020 for renewable energy, climate and disaster resilience in the Pacific this includes $140 million for the Australian Mobilisation Climate Fund which will mobilise investments in lower missions, climate resilience solutions for the Pacific and Southeast Asia thank you very much for your time and the invitation to joining with you today this has been a very important summer and it's a privilege to be part of it