 Good afternoon to everyone for the second part of our inaugural conference. My name is Ulrich Hege, I'm a professor of finance here, and I'm also associated with the Center for Sustainable Finance, the finance center that we are inaugurating. And it's a huge honor to chair this panel in view of the distinguished panelists. Our panel, before I introduce them, what is the panel about? It's a panel on green investments. How can investors and capital flows directed towards socially responsible investments, energy efficiency and alternative energies? The challenge is faced by asset managers and regulators in the coming age of energy transition. So it's a heavy focus on energy transition, this is also, and everybody's mind, this is just the days of the COP 25, four years after Paris Accord, the COP 21. And it's a topic that of course is increasingly taking its right place in the public context. So we are talking about this topic from the point of view of the financial sector of capital markets and the role that private capital and capital markets play in this transition. Our distinguished panelists, let me introduce them, and this is a panel of the future, not only because the topic that we are discussing is the topic that decides on the future we will live in, but also because this is a panel of a very low carbon footprint because of an exogenous shock that we are doing today. And we also see that sort of like technology as this morning in the keynote lecture by Marie-Anne Bertrand is helping to overcome and to actually see how the future will be in a low carbon environment. So our panelists, to start with Diana Phillip, who is to my right, who is from Bailey Gifford Investment Manager based in Edinburgh, Scotland, is a partner and a valued partner of the Sustainable Finance Centre. I don't get a large asset manager, but Diana, I'm sure you will say more about what you're doing and especially what you're doing in the arena of sustainable finance because that's precisely also what's brought you in contact with TSE that you saw that here there is interesting work being done on that topic. Then we have Laurent Claire joining us with video conference and a special thanks to Laurent and also third person, Frédéric Chamama. Laurent actually made it to the airport yesterday in Orly only to learn there that he couldn't fly to Toulouse, so he's back in his office at the Bank de France. Laurent Claire is the Director for Research and Risk Analysis at the APCR, they are the French Prudential Supervision and Resolution Authority which is affiliated to the Bank de France. Before that he was the Director for Financial Stability at the Bank de France, also had stints at a number of other central banks, the ECB, the Bank of England. So Laurent will be there to talk to us also about the role of the regulators on the central banks which is much in discussion these days. And then we have Frédéric Chamama from Amundi. Frédéric is the Global Deputy Head of Institutional and Savarin Clients with Amundi. He is basically with first Credit Acricoll and then Amundi, but as you know Credit Acricoll is one of the founders, the two founders of Amundi for 20 years if I can say that. And Frédéric is also a thinker on the topic of green investments. He has published work with Patrick Bolton, with Joseph Stiglitz in this area on questions like how can you construct portfolios that reflect green investments, that de-emphasize energy intensive investments, what's the performance there, how can you minimize tracking, but I think Frédéric you will talk to us about this. So this is a very exciting panel. So we're down to three persons, but this is given the disturbance today is a very good achievement and we'll see how it goes. So definitely for any intervention from the floor, we need to have the micros so that Laurent Clair and Frédéric Chamama can understand what you're asking. And there's also the channels that we don't see everyone, each other. So we don't see Laurent and Frédéric. So given all that, so we would just then go to the first round of introductory statements. So it's about, of course, the role of private capital in energy transition, but let me say we are not wanting to limit it. There are many challenges, biodiversity, pollution of oceans and many others that are certainly as severe as climate change. It's just that climate change is right now in front of the agenda and that many actors in capital markets, private and public actors in capital markets take up the challenge of thinking about what to do, that what makes this a very interesting panel discussion today. And it's in the background that there has been going on a lot of private investment already, right? Sort of like many countries have increased the part of renewable energies in electricity production, like some of our neighboring countries from less to 10 to 30, 40% in the space of 15 years. France has a very, like a sustainable energy mix. But if you look at this in the global level, it's just all counting to very little, right? If you look at the World Energy Outlook of the International Energy Agency that came out a month before, that is just a very depressing reading because it says carbon emissions will on current trends only peak in 2040. And that includes that is the stated policy scenario, why they don't only take into account current trends, but sort of like the stated policy commitments of governments including those of the Paris Accords, still it would only peak in 2040. So we are not bound on a trajectory to 1.5, a climate change goal, but we are in a trajectory that would lead much higher than that. So that is the background of the urgency of the topic. And let me then just begin with Diana and Phillip. And so I think you're in a firm that is very much in this area and you're working with clients that are very much, you know, into these topics. The first question is, you know, what about when you suggest green investments and what type of green investments to them? Is there a concern, a legitimate concern that you have to sacrifice some performance there? And are they willing to accept that? How is generally the issues that Ashton manages face when trying to invest into the energy transition? Great. Thank you very much, Uli. And first of all, may I just say that it is a real pleasure to be here today. I was last in Toulouse as a young teenager on an exchange program and I had the most wonderful two weeks, but I haven't been back since and I am really thrilled to be here in this beautiful town. I'd also like to say that we're incredibly honored to be part of this really exciting and important program. At Bailey Gifford, we really prioritise finding really strong relationships with academia. We think that we'll be better investors and we'll learn a lot more about enforcing partnerships with the likes of the Toulouse School of Economics than we will be from listening to the short-term noise of investment bank research. There's a few issues that I hope we'll be able to touch on today and a few messages that I hope I'll be able to convey this afternoon. The first is very much about the nature of fiduciary duty and how the task of investment is defined. We think this needs to change. The second is a little bit about how we invest at Bailey Gifford and the need for people to be actual informed investors in growth businesses with uncertain outcomes rather than just traders of bits of paper. And finally, a lot of this is new, but we are very much committed and we feel we must be committed as a large investor to being part of the discussion and learning from people who are experts. So in terms of these issues, we see this predominantly through the lens of being a large equity investor and we think that there's several issues to bear in mind when thinking about the transition to green energy. The first is very much that it is our task to generate good investment returns for our clients. There's increasingly a big and open question about whether or not mandates extend to thinking about societal outcomes in a broader way. But at the core of our task at Bailey Gifford, as it's defined today, is very much our need to generate financial returns for our clients and their beneficiaries. So being able to pay their pensions, etc. So the first issue that I'd cite with this is at least in the way that we tend to invest is that companies that are part of this energy transition really need to be able to earn attractive returns on capital. They need to have the potential to be good businesses. But then underlying that, there's a real debate that's needed and it's occurring about exactly what that fiduciary responsibility should actually mean. This then leads me on to my second point, which is about the regulatory regime. And this is the regulatory regime around the new energies. We think that this needs to be relatively stable and predictable. That's of course particularly true if you're thinking about fixed income and infrastructure investments. But it's much less true for us when we're investing in growth companies. There's also a flip side about a stable regulatory regime. And that's that we need to find a way of making traditional energy companies and their customers recognise the full cost of their products. That's not easy. And you'll feel this very acutely, particularly in France as you've seen with the protests of the likes of the Gilles Lejeune amongst others. But until we're properly recognising the cost of a hydrocarbon-based economy through carbon prices and any other measures, the playing field just isn't level. And then my fourth and final point on this is much more specific to how we invest at Bailey Gifford and the types of companies that we choose to invest in for our clients. We think that one of the tragedies of modern finance is that so-called investors now overwhelmingly see their task simply as buying and selling bits of paper on stock exchanges, rather than really investing in productive enterprises which may have uncertain outcomes. We think that the investment industry as a whole really needs to return to our roots. And we think that the energy transition is the foremost field for us to be able to do so. This means being courageous. It means being willing to invest in companies where the chances of success may be low, but the returns to that success, if it comes, could be very high. It means therefore backing management teams who will take risks and for us as investors to really support them along that trajectory. It also means really encouraging those companies to ignore the short-term noise of the market. And that's something that we feel as Bailey Gifford as a long-term investor, we can really offer as supportive long-term shareholders. Okay, thank you very much Diana for this introduction. And let me then pass on to Frederic Samama who is online and hope is listening. I can understand us. So the question is, look, there has been a change. Clearly there has been a change that investors are paying much more attention to whether their money is invested in the green assets or brown assets or something between olive assets as they've been called sometimes. So how would you explain that the recent investor mobilization on climate change and what kind of innovation in the financial sectors have helped to bring about a change and are shifting the market? And where are we going in this change in investor engagement with the energy transition? Thank you and I apologize not to be with you. Just by looking through the window, I can tell you that the weather is terrible in Paris and so I can tell you that it would have been much more enjoyable to be introduced with you. That said, we can say clearly that we observe around the planet a major shift among the asset owners and that's a kind of revolution. And that's a very recent one because if we take one step back, we can say that climate change has been on the radar screen of governments and NGOs since the beginning. It means four decades. But investors were not part of that picture. And over the past three to five years, so a very short period of time compared to the fact that the topic has been on the table for decades. So very simply, asset owners have decided to jump in. And if we take a step back and we ask ourselves why, we can see many different reasons. The first one is that over the past three to five years, the deniers have disappeared. They were still around five years ago, now they are not. Another point that has changed the entire landscape is the COP 21. We have to remind ourselves that the hope of a success at the COP 21 or at any COP was very low. France was the only country to raise its hand to ask for the COP 21. And until the very last minute, there was a big risk of failure. The third reason is that we thought three to five years ago that China would ever block. Now China is leading. Three to five years ago, there was almost no regulation on climate change. Now it's booming everywhere. We have now a cap and trade mechanism in China. Now the ETS program in Europe is working. It was lagging at three to five euros, and now it has been fixed. And it's about 25 euros per town, and the European Commission wants to bring it to the next level, to 45, 55. Three to five years ago, the cost of human energy was very high. Now it's becoming much more competitive, especially compared to coal in many countries. Three to five years ago, it was a topic only for some economists. Now you can see the level of involvement of populations all over the planet, especially with millennials who are not going to school due to climate change. Three to five years ago, only a few investors were paying attention to it. And now, to illustrate my point, we have 330 investors representing 33 trillion dollars, 33 trillion dollars, having decided to engage with the 100 most polluting companies. So what I'm trying to say here is that suddenly the investors are part of that total shift of situation where none of these single forces will be enough to get a change, but when they are all aligned, then you have a tipping point, and that's really what we observe. Without mentioning the roles of central banks, but I'm sure that Laurent will speak about that, but that the final touch that we have observed around the past six months. So really investors are part of that shift, and the amounts of money at work are massive. My second point is to say that some new technologies are being developed. I could refer to two of them, a nice deal, and I will start and stop there, maybe with the low-carbon indexes. Here you have an example of an innovation, a financial innovation that has helped investors align their portfolios with the low-carbon economy. Back in 2011, one of them, AP4, challenged Amundi to find a scalable, low-cost, easy to implement solution. And we really looked around and we didn't find anything that was working. The green ETFs, they had underperformed massively. The private equity funds, they were not specially cheap, not scalable as well. So we brainstormed and we said, okay, we have to develop a new technology. And then when we looked at what the investor had in his portfolios, we understood that AP4 had a lot of passive products, like all of its peers around the planet. And then we came to the conclusion that what we could do is to analyze the constituents of the index. We could say, let's say MSCI, we could analyze each of the single constituents in terms of carbon footprint and exposure to strongly assets. And what we could do is that sector per sector, we could extract some of the most polluting companies and replace them with some of the peers that are better positioned. We take the auto car maker industry, we compare Renault, Peugeot, Toyota, Volkswagen, and so on. And we take out the most exposed companies and replace with the peers that are better positioned. But the key of the technology is that we could do that with a low trucking error. Meaning that we could reduce the risks without changing the market exposure. It's slightly like Diet Coke. You take the sugar out, you replace it with aspartime, and at the end, you have the same taste for Coke. And so mostly what you could have is that if you have the parent index, you can switch to the low carbon version. It's built in a way that it will track the parent index for years until polluting companies are getting penalized. And then eventually, if you have excluded some of them, you will outperform. Basically, it creates a free option on the mispriced asset. And also we were ready to lose some money because it was a prototype. But it was not supposed to work immediately. We were okay to try, test, and adapt. Very surprisingly, we observed that this technology on MSCI, which works everywhere, generated about 30 basis points of outperformance per year since 2010. To put this figure of 30 basis points in perspective, my passive team, when they generate two or three bips, they think that they're the world leaders. So here we talk about 30 basis points of two or three bips that usually a passive team can generate. That's massive. So we show here that the belief of being green is actually sacrificing returns is wrong. That the other way around. And the rationale behind is pretty clear. We had a risk that was not priced. You know, five years ago, you were an auto car maker, a utility company, or another company. The risk associated with your activities was just not priced by kept short-term oriented market. So at this risk, I know, spreading in terms of understanding, they change the asset valuations and we benefit from that. Just to conclude, from the policymaker's perspective, the beauty of this technology is that we don't extract the companies forever. We reassess the situation year after year. It means that if a company has been excluded because it was bad compared to its peers, but if they have made some efforts, change their policies, they can be back within the group of sedative stocks. So it means that we are creating a form of competition within each sector to accelerate the transition towards a low carbon economy. And really to conclude, this technology has now spread around the planet. As mentioned by the Harvard Business Review of May, June of this year, they refer to one of the papers that we published with Patrick Bolton and Matt Sanderson, the CEO of AP4. And they made the point that now this technology developed in Europe between Sweden and France is now being adopted by CalSTRS, New York Commodaltime and Funds, GPIF, New Zealand Superannuation Fund, and it's a 50 billion dollar technology. So Europe should be very proud of having put on the table a technology that first works and second is being adopted all around the planet. Okay, thank you, Frédéric. Thank you, since I didn't don't see you, I took the pause at the end. Anyway, there's time. Thank you for this, you know, also upbeat statement of what asset managers can do and how they can succeed. And we also have been managed from Diana before. This is where the point of views of two people involved in long time with private asset managers. And let's turn now to our third panelist, Laurent Claire, but we thought we would have introduced her Flores here as well, but she couldn't come in the end, so it would have been another asset managers. So let's then turn to Laurent Claire with Pond de France and the regulator. Laurent is also at the forefront of the thinking at the Pond de France and other central banks about what they should do. They've created a club and perhaps you're talking about the club, the NGFS, there have been quite a few developments in recent weeks that at least made it clear that central banks can no longer just sit aside and say this doesn't concern them, even if there are some dissenters like the Bundesbank who would say we're not convinced, but just a few headlines from recent weeks, the Bank of Sweden who has decided to disinvest. They decided they took a very cautious approach. They decided to disinvest bonds from Alberta, the Canadian province and from Western Australia, the Kohl province where those provinces identified a very dirty extraction of sand, oils and of coal to make a statement. So this might happen that central banks would actually disinvest very brown assets. We have the European investment banks that is just making noises and probably adopting it in natural gas networks or anything in natural gas giving this an energy based on hydrocarbons. And there's the EU commission and that's very close to home Laurent for you saying that they are thinking about differentiating capital standards basically in concluding some green supporting factor for green investments that would basically make financing easier for banks and some reactions from the banking industry which are very important. So just to set the stage Laurent I'm sure you have a lot to say about the question what's the role of governments of supervisors of financial regulators and central banks of course in that context should have public institutions the central banks with the huge asset base but also public investment banks like the Cassidipo and others or any other banks. Yes yes we hear you very well. Okay so thanks a lot for having me on your panel today even though I'm still in Paris so you refer to the NGFS which stands for network for bringing the financial system so it's a group of central bank and regulators that was launched a couple of years ago. This group was initiated by the Bank of France and NGFS like more than 50 central bank and regulators so the focus of this group is threefold there is a group working on regulatory issues another one on macro financial linkages and the last one on the central bank policy to refer to the beginning of the discussion I think that the starting point of this group was the fact that for us climate change risk was not adequately and pricing financial asset prices and for that reason there was a form of misallocation of capital and eventually when you refer to the point of whether investors were sacrificing performance it is fair that from the standpoint that the risk is mispriced then there is a misallocation of capital with risk respect so we are still thinking that this is still the case regarding the slow developments in the financial industry so I take Frederic and then that there have been an increasing focus on that I think there is a shift in demand I agree with Frederic especially from customers and investors which are looking for more sustainable and responsible investment and there is also a shift and more pressure from regulators and supervisors so far the issue is we are dealing with with respect to how to integrate this kind of risk so there are different avenues the first is to improve the governance of risk within financial institutions the idea is also to try to develop stress testing approaches to take into account financial risk another one is also to improve the governance of risk so we are working currently on these different issues and with respect to governance there is also this idea of incentives so Frederic you refer to this idea put forward by the industry and now taken on board by the European Commission to introduce a green supporting factor within the world of central bank and supervisors there is still a debate since some of us are convinced the others are not with respect to the role that it should play there is I think two concern the first is that green is not necessarily well defined at this stage so there have been a lot of efforts in particular in Europe who develop a green taxonomy so it remains to be put on action I would say and second there is still the case is not made that green assets are less risky than brown assets so this is something that we are investigating in the context of our work last point is referring to central bank policy so here again there is a lot of debates the NGFS published in October a report which is based on the portfolio management of central banks and it is referring to what you said about the Swedish central banks I think that central banks like the bank of France now are more concerned about their the investment of their own funds so they are also applying the principle for responsible investment and there are still a lot of debate as to whether monetary policy should take green assets into account the position of the French governor is to say that there is a scope in particular to factor in this consideration with respect to the collateral policy that is the kind of asset that you take on board when you are lending money to banks and these are the main avenues and I will stop there and I will continue to talk about this and I will continue to answer that Okay, thank you Laurent, thank you to everyone for this insightful opening statements and I mean there is many questions and I'm sure people from the floor want to react I see already hands that are going up so the middle over to the left and of course our panelists will probably also discuss again on issues that have been brought up or to new questions that we haven't brought up yet please. Okay, so I think everybody is pretty much aligned on what the goals are the United Nations has 17 sustainable development goals and everybody has agreed on that the question is how is this going to be financed there is a number yet on if you want to succeed it's going to cost this much investment every year for the next 10 years or something if anybody knows that number please let me know let's suppose it was a trillion a year how much can private investors take of that and how much should be in the remit of central banks the European Central Bank managed to produce 4.5 trillion in three years probably do the whole thing if it wanted to so I don't know does anybody have any numbers and what responsibility relative for private investment and public money the question is not directed to anyone specifically who wants to answer what to react so maybe I can this is Laurent there have been a lot of estimates about the need for transition my recollection there are different numbers but it's really in terms of thousands of billions of euros for ensuring the transition so about something like 100 billion euro per year to reach that and perhaps even more so quite a lot of money whether investment can make it yes sure so Frédéric alluded to new investment tools there have been also a huge increase in the issuance of green bonds so that is something that is ongoing public institutions like you mentioned I think the European Bank of investment are also providing a lot of financing with respect to that so I think we are on the way even if there is still a lot to do whether central bank can finance transition is also a matter of debate I think we are not yet there so perhaps it's too early to say that there will be a green QE but at least there is something going on with respect to financial markets and to follow up on what Laurent just said I would like to share with you an experiment that we did two years ago with IFC so the World Bank's subsidiary they were looking for a partner to tackle a very well known challenge the financing of green infrastructures in emerging markets we all know that we will win the battle of climate change if all countries are getting the right financing not only the developed countries we know as well that we are facing allocation of capital we have massive pools of assets in developed markets facing the low or even negative yield environment and we know that we have these needs of green infrastructures financing in emerging markets and we know that we don't have a bridge that is costly for both parties the developed markets don't have the returns associated with the developing markets and the developing markets don't have access to the pools of assets in developed markets so it's a lose-lose situation and so two years ago IFC decided to tackle this problem and so looked for a partner for that and after a search among 17 asset managers the leading European one was selected and it says about the leadership of green finance in Europe and now in order to tackle the problem actually we analyzed very precisely in a very pragmatic, low-key approach the obstacles that the investors were still facing why is that not working and there were two clear conclusions the first one is that even it sounds surprising but for many investors in developed markets they consider that to invest into developing markets is too risky you know the guidelines have been established years ago and it's too risky to invest in Mexico and so on and the second problem is the lack of knowledge on infrastructures truth is that almost all investors are investing into equities, fixed income and so on but almost none of them are investing into infrastructures because they don't know they don't know locally it doesn't make any sense to ask them to invest into Mexico, Turkey or Korea so based on these two problems we designed with IFC a new solution we said what we can do is to create a fund that actually will benefit from a risk sharing mechanism meaning it will be a tranched fund and the most part of the fund will go into the hands of IFC that will get remunerated for that but so we will lower the risk of investors or we will have a kind of treatment enhancement mechanism so problem one tackled then we still have a problem two the lack of knowledge on infrastructures and here and IFC deserve the credit for that they had a moment of genius they said what about having local banks in Mexico, Turkey, China and so on issue some green bonds we use the investors you know about banks you are comfortable with that and if banks are issuing green bonds they will take the commitments to channel the money towards some green infrastructure projects so we are decoupling the risks that the investors are taking from the channeling of the money towards the green infrastructure projects and suddenly with one deal we were able to transfer and to deploy two billion dollars from European pension funds towards green infrastructure projects in the emerging market and this deal is even we received a lot of recognition we have already received six awards for that and even President Macron referred to it in one of his speeches and with Xavier Musca so the former chief of staff of Nicolas Sarkozy and former head of the French Treasury we wrote a paper and a report presented to the G20 why? because this deal is even more than a deal it's a new business model developing banks for the kids developing banks were using their balance sheets to finance some projects and they were issuing some bonds to finance it and as they want to keep that triple A actually they were financing only very safe projects and we know that this business model is reaching its limits but here suddenly you have a developing bank that says no I will use my resources not to finance a project but I will use my resources to unlock the investors capabilities by assessing the missing of the gaps and filling the gaps and then suddenly the investors will do the jobs that otherwise I would have done so it's really a kind of revolution among the developing banks and we have announced recently that we have closed a very similar deal with AIB so we are financing some of the real green economy in Europe we are investing into green ABS, green loans and green ideal and very similarly as well we announced a 500 million deal with AIB the Asian Infrastructure Investment Bank that on a very similar business model wants that some investors are financing the green champions in Asia to conclude on my point it's another example of green financial innovation here it's about the financing of the green infrastructures and very similar to the point one is by analyzing the real obstacles and using different financial tools that we can develop a solution that suddenly reallocates the capital differently for the benefit of the investors and society Diana you want to I was just going to make a quick point on the SDG because our experience is more linked to how we use the SDGs to help so it's sustainable with the development goals of the UN in French so it's more linked to how we use them as a framework to help measure the impact of the investments that we're making for our clients and these very helpful because it's providing some sort of framework to measure this at Bailey Gifford we've been around for over 100 years we know how to measure financial returns but we and like many others are now learning how to measure the impact of our investments and the SDGs are very helpful in that regard one comment I would make about them is that when we're analyzing the SDGs we have to be very careful particularly about the disclosures that companies are making we have seen evidence of some companies for example a very well known tobacco company now measuring themselves to the SDGs in particularly the SDG about healthcare and quality of life simply because they are reducing the amount of tobacco sales that they have whilst increasing the number of vapes that they sell we're not quite sure that that really applies to that SDG so they are very helpful for us as a tool and a framework but I would say that we use them with a level of caution thank you I'm looking for more questions from the audience this is not the case let me then jump in with one reaction to what Fredrik was saying you're talking about developing countries and what is there but you're also referring to developing banks like public banks which play a large role there but I saw some numbers that about half of the energy transition these days are actually done by public banks of one way or another so does this say something about the role of the private partners is actually limited and that brings me back to what Laurent was saying the mobilisation of private capital that we have seen was always conditioned on public policies we had this huge investment in renewables because it was basically supported by feed-in tariffs for solar and wind power can this be done without that and what is the public policies that US asset managers for example would see are most important that you find the investment as capital so to what extent is the private sector here dependent on public policies, public guidance for example when we look at developing countries where much of the investment is really done with the help of public development banks like the IFC that you mentioned as a multinational but also local development banks is that the question for me also Diana and also Laurent I think there is before and after there are many ways to answer your question I think in general are the asset owners and asset managers asking for something or are they already taking action without a request in general and then you have a question about financing some infrastructures I think there are two different topics here let's say I can share with you an anecdote in 2014 Mr. Bankimoun was hosting a major conference in New York in order to prepare the COP 21 in order to help the French government and then there was a call for projects among the asset managers and and there were two competing deals offers one led by BlackRock and one led by us the one led by BlackRock was we the asset managers will move when there will be a price on carbon and they had many signatories so they were clearly on the camp in the camp of if governments are serious then we will take action and actually with before again and CDP and UNEPFI we were putting another project on the table where we were seeing some investors on the planet actually anticipating the fact that some regulation will come one way or the other one and by anticipating they are already okay to shift their portfolios and that coalition won the deal and we had to come to the COP 21 with commitments from investors for 100 billion dollars of shifts of portfolios that was huge and the project was then selected by Laurent Fabius on his team at the action at the action day during the COP 21 that was the window for the private sector and that day we announced that we didn't reach the goal of 100 billion we reached 600 billion dollars before the COP 21 so it was meaning that investors were actually anticipating values forms of regulations or pressure from consumers and so on and they were already taking action and and I think it was and Laurent Fabius was very happy to promote this project because it was a very important signal given to the tend to the negotiators he could say to the negotiators you know what the private sector in a certain sense is anticipating your success and then we have a virtuous circle because we send that signal very little but it helped and by being successful the COP 21 it validated the anticipation of success of the policy makers so what I'm saying here is that very often we think in terms of phase 1, phase 2, phase 3 but actually by anticipating that the job of investors we can have the process and then it's good for society for the infrastructure it's slightly different because here you need to have very clear rules of the games and very often the governments are changing the rules and so it creates some instability for the investments into infrastructures and doesn't help the overall market, that's one of the obstacles clearly did I answer your question? yeah, yeah, perfectly, thank you any reactions from the floor there's some Milo hi so a question based on this anecdote and also on the first example you have talked about which speaks to the role of a large asset manager into being leader both towards regulation and towards the industry and yet you have the sense of finding solutions which are scalable so maybe you and other have a sense of what happens if many people follow you on this route for example if the new index which you are developing is adopted by many other or if in general the financial innovation you are proposing are adopted by many other so which type of reaction should we expect both from the market viewpoint and from firms viewpoint I'm not sure I heard if it's a question for me it's a question for you and in general also for regulators and asset manager what can we expect if the innovation you propose are adopted in a large scale the new index that you are proposing for example if it becomes the new reference index can you expect changes in the financial market for example now you have a premium can this premium still be there or can you expect some reaction from the firm viewpoint if capital is targeted that way well I hear many questions if I'm correct the first one is here at Amundi on the passive side so the index is now 60% 60% for clients requests are integrating a new energy factor so that's really a revolution because you know index was index point and now we have a merge between the passive world and the energy world and as passive representing massive amounts of money that's clearly a pressure from on corporates the second part of the answer is a very interesting case with GPIF you know it's the largest investor on earth it's 1.6 trillion dollars Japanese pensions sorry Japanese pensions Japanese public pensions absolutely and the CIO Mr Hiro Mizuno is shifting the entire market there is a very interesting case study written by Rebecca Henderson at Harvard on his leadership and this gentleman has a very interesting point he says we are GPIF by only 1.6 trillion dollars we are a universal owner and we do that through passive products and he says point one point two my team has been working very hard for years to capture a fraction of preferences you know when I get two or three bips I'm very good blah blah blah there is a financial crisis and then it's two or three bips that I have accumulated year after year it's nothing compared to losing 30% so actually I'm very badly allocating my resources so what I should do for the benefit of my pensioners the Japanese citizens is to have capital markets being more resilient and so what he says now is that when he has he requests from a firm that makes a bid on his passive products to engage with corporates so he now says for 30% of the results on the tender offer it will be about engagement of firms offering passive products with a corporate so what's fascinating is that firms like or that I've always said we don't want to know what the firms are doing we are almost a middle of his firm our job is to plug a request to execution and now all of these firms are facing the challenge to answer the question on how they engage with the corporates so they are recruiting like crazy to assess or to make the dialogue with the corporates and so suddenly you have one asset owner that is shifting the entire industry of passive products with an enhanced dialogue with the corporates and making the capital markets more resilient so what I'm trying to say here is that we have both more and more ESG factors integrating into passive products and we have as well some asset owners changing the rules of the games for the passive industry so it's it's it's very serious Thank you I want to go back with one question also to Laurent and to Diana but I see more from I just managed to find the answer to my question because Morgan Stanley an analyst recently published a report saying it would cost 50 trillion dollars between now and 2050 to solve the problem when I said a trillion a year I wasn't that far off bit more say 1.5 trillion and so the question now if all the private investment companies were to remove everything from fossil fuels and all the rest of it and divert everything into to solving that problem would that be enough in other words how much is left over for central banks and other methods so it's 1.5 trillion a year is the number Thank you perhaps in relationship with this question it is rational for investors to well to minimize the overall risk and you all were talking about risk the green risk and the brown risk even mispriced so what I think is that it will be always rational to keep investments in brown risk because the overall portfolio will have lower risk so is there any solution any thoughts about how to overcome this dilemma That was the question that I wanted to ask to both Lerner and Laurent too what about these assets are you using risky because of the energy transition that we also refer to as stranded assets Laurent you were saying that one of the observations that you had as regulators that some climate risks are underestimated and they're linked to that so what is your experience with that what is the real role of asset managers in basically also disengaging or basically changing the policies of really energy intensive industries and also the question like if you have 1.5 trillion a year to invest if you can find that where can this money be put in can this be productively invested in the energy transition I think from Bailey Giffords perspective would probably agree with Bill Gates he talked about divestment actually not having any impact at all on reducing emissions when we invest however we're thinking about companies that can offer long term sustainable growth so for us we're very unlikely to invest in the types of brown or olive types of companies that you see today I think though that all investors whether or not you divest or you do invest everybody has a role to engage with companies engage with them on that transition engage with them to invest to become cleaner engage with them to take a long term and responsible approach to how they manage their business so that's very much how we see our role at Bailey Giffords we don't tend to divest but those sorts of companies on the browner end of the scale don't necessarily meet the growth levels that we need as growth investors thank you Laurent you want to react yes so with respect to some of the risk which are embedded in financial products or even in the portfolio of the financial institution part of our work is precisely to raise the awareness of the banks and insurance companies about the risk they are facing so you mentioned stranded assets so they are full of assets which are exposed to this kind of risk and that's part of the work that we have been doing with French banks and insurance bank I think it's very important because you realize when you do that that there is at this stage an imperfect measurement of climate change risk and therefore that's the reason for why we stress this risk you stress also the role of public institution and regulation I think that for instance in the case of France there was this low on energy transition and one article which is one article 173 which forced also financial institution to better disclose their exposure with climate change risk and this is also helping investors to make their choice about different funding alternatives thank you I'm looking at the audience so that there isn't Marie you have a question can you wait for the microphone a quick question for Laurent you were referring to the debates between central banks in the use of green collateral so could you elaborate a little bit on that and explain what are the main arguments who is foreign, who is against and what are the main arguments in this debate I think it's very interesting so I'm not going to name central banks but some central banks are willing really to take a step forward so I can name one because it's public for instance the people drunk of China is already using a form of green supporting factor if you wish in the form of lower for banks which are financing green projects so this is not directly collateral policy it's really a subsidy when you are providing refinancing to these banks the alternative would be to consider when you are providing liquidity to banks favoring those which have an apparel which is greener to some extent with respect to those who have some form of collateral which is brown to some extent because I say to some extent because at this stage we don't know precisely to define the color but these are the kind of issues that are discussed in the context of central banks thank you I'm looking but there is another contribution time is up so it would have to be really important so then I would like to conclude and thank everyone especially our three panelists for joining us thank you Frederic Samemar, thank you and thank you and Phillip for joining us for this panel on green investment shows that there is engagement both from the private asset managers and from the public regulators on this topic and a question to the organizers is there coffee waiting for us or is there coffee outside in the room where we had lunch so thank you everyone