Green Exchange

Climate & Finance #3: Investors & The Power To Solve Climate Change

This is the third episode of our series about Climate & Finance. Missed the two first chapters?  You may want to go there first: Episode 1 // Episode 2

In this episode, we review what key actions we need to take in the coming years to stay under the two degrees of global warming of the climate system. With a focus on government & investors’ role, we dig into strategies for driving portfolio decarbonisation and green infrastructure development. This episode features Swedish Minister for Financial Markets & Consumer Affairs Per Bolund, Sean Kidney (CEO at Climate Bonds Initiative), Eric Usher (UNEP FI, Portfolio Decarbonisation Coalition) & Julian Poulter (Asset Owners Disclosure Project).

You’ll also hear Leonardo DiCaprio’s climate speech at the Oscars, get tips on a great movie and hear an inspiring story from Kate Hammer, our stellar storyteller.

Produced by Camille Duran, special thanks to our guests and to Han Nguyen, Magnus Emfel, Amelia Johannsen & Gabriela Lemos Borba.
Transcribed by Oanh Nguyen



WWF’s mission is to stop the degradation of the planet’s natural environment and to build a future in which humans live in harmony with nature.

Music Credits: License by Ins. Green White Space.
Photo by Lip Kee Yap/CC-BY SA



Camille Duran (CD): Today I’d like to start with a story – the story of the humming bird. You know humming birds are those tiny birds that we see in American movies, they go from flower to flower with their wings flapping so fast that you can’t see them. It sounds like this.

[Sound of a humming bird]

00:29 Anyway, I asked the best story teller I know to tell us this story as an intro to the show. Her name is Kate Hammer. She’s a commercial story teller, and this is “the story of the humming bird”

Kate Hammer: One day a terrible fire broke out in a forest – a huge woodlands was suddenly engulfed by a raging wildfire. Frightened, all the animals fled their homes and ran out of the forest. As they came to the edge of a stream they stopped to watch the fire and they were feeling very discouraged and powerless. They were all bemoaning the destruction of their homes. Every one of them thought there was nothing they could do about the fire, except for one little hummingbird.

This particular hummingbird decided it would do something. It swooped into the stream and picked up a few drops of water and went into the forest and put them on the fire. Then it went back to the stream and did it again, and it kept going back, again and again and again. All the other animals watched in disbelief; some tried to discourage the hummingbird with comments like, “Don’t bother, it is too much, you are too little, your wings will burn, your beak is too tiny, it’s only a drop, you can’t put out this fire.”

And as the animals stood around disparaging the little bird’s efforts, the bird noticed how hopeless and forlorn they looked. Then one of the animals shouted out and challenged the hummingbird in a mocking voice, “What do you think you are doing?” And the hummingbird, without wasting time or losing a beat, looked back and said, “I am doing my share. What are you doing?”



CD: This episode is about doing your share / doing what you can. As an investor, as a policy maker, as an asset owner or manager – who ever you are, there is something you can do. It could be as simple as passing along this series about Climate & Finance or other resources we feature on the episode page. There is a good number of organisations working very hard all year long on those issues – we can help them. Like an army of humming birds.

03:31 Alright, let’s get into the show. And you’d better stay until the end because we’re also talking about the Oscars and a movie you should watch.

Oh! If you’re joining us just now – You may want to rewind a little bit. In episode 1, we’ve talked about the problem and how capital affects climate change. In episode 2, we reviewed what institutional investment should look like – and how the system can help.

Now is time to discuss – how to get there.

CD: This is The Green Exchange – episode 3 of our series on Climate & Finance: Investors & the Power to Solve Climate Change.

Let’s start by reviewing how much money we need to solve climate change. There is a great chart in the Global Climate Index 2015 produced by the organisation AODP. It says: “Yes, it’s going to be expensive, um, 10 Trillion Dollars, but the capital is there”.

Well, sovereign Wealth funds (those are the State-owned investment funds): 10 trillion dollars.
Insurance companies: 28 trillion dollars of assets.
Pension funds: that’s 37 trillion dollars of assets worldwide.
Then you have foundations & endowments that add a little bit more.

So, 10 trillions dollars needed, and roughly 76 trillions of investments are out there today. Good news!
But here comes the painful fact: only 2% of those assets are going to low-carbon investments today.

Come on guys let’s get serious, what are we waiting for? A cricket invasion?



Sean Kidney, Co-Founder & CEO of the Climate Bonds Initiative, an investor-focused not-for-profit organization based in London.

CD: Hi Sean, how are you?

Sean Kidney (SK): Hi Camille, how is the headset audio quality?

CD: It’s good enough, most important is what you’re about to tell us, right?

SK: (Laughs) Indeed!

CD: So we were saying that we have the capital to solve climate change.

SK: We know that we have the capital. We have a world awash in capital at the moment. We’re paying negative interest rates in multiple countries because there’s a lack of deal flow to give some yields for pension funds and insurance funds which are the ones that own most of the capital – or, manage, I should say, on our behalves – most of that capital. We also know that much of what has to be done, in fact by far the majority, can be characterized according to the National Energy Agency as infrastructure, energy, mobility, water, urban fabric.
These are things where we have plenty of models available to us to make them financially viable. In a way that they will successfully attract private capital.

CD: OK so we need to attract private capital – that’s the key here.

SK: In fact, to be frank, it’s all we’ve been doing for one hundred fifty years in western societies to build infrastructure, city’s urban fabric. These are things like guarantees, low price guarantees for toll ways. They might be twenty-year purchase agreements for energy which is what drove the growth with stable electricity market in the USA. They might be legislation.

We actually have a whole big toolkit or things that we’ve been successfully applying in the last hundred years in Europe, in the USA, in Japan for that matter, and in China more recently.

That’s where opportunities lie. All we simply need to do is shift those toolkits to refocus them on “green”. In other words it’s making choices about policy priority infrastructure required for countries, that’s essentially what it is about. And then using the same toolkits to drive down the cost of capital for those investments to make them more viable. When you’re building a hundred pieces of infrastructure, the cost of capital is way, way, way the biggest expenditure item.

CD: OK I pause for a second. What Sean is explaining here is that we must attract the private capital to finance this transition towards a green future, and to do so we have at our disposal a range of tools that we’ve been using for over a century. And that with these tools, we can drive down the cost of capital which is generally the main barrier to long term infrastructure development.

You’re following?

[VOICE]: That’s important because we’ll only meet this challenge if the private sector helps lead the way.

CD: Do you recognise this sweet voice?

That’s Barack Obama of course. He was addressing the American people on clean energy investments early February.

Barack Obama: The private sector creates more jobs faster, lower the cost of clean energy faster, and help clean, renewable power outcompete dirty fuels in every state.

CD: Dirty fuels, what is he talking about here?

Yeah OK. That’s a politician’s speech to the people. But this is music to our ears. And we’ve seen it earlier, governments & policy makers play a vital role in enabling this transition. That’s our first chapter for today – what are most important actions public sector needs to take in the coming years so we can stay under the 2 degrees global warming of the climate system.



Let’s go all the way to the top at the national level – in Sweden this time.

[VOICE]: I guess you’d like to speak to the Minister.

CD: Yes, please.

[VOICE]: Perfect. I’ll give the phone to him. Just a second.

CD: We’re going to play a few interesting pieces from my interview with Per Bolund. He is the Minister for Financial Markets and Consumer Affairs and also the Deputy Finance Minister of Sweden.
Sweden seems to be quite progressive on that front, let’s see what’s cooking.


Per Bolund (PB): The first thing we did was to have introduced new targets for the finance policy sector, so in the budget we have stated that the finance sector should contribute to sustainable development not least on the climate issue.

And this of course will guide the authorities working in this area within Sweden and they will know how to focus also on the climate and sustainability aspects of the financial sector.

CD: So setting targets for the financial sector contribution to sustainable development?

PB: We also have a committee working at the moment to look into how we can improve information around climate aspects and sustainability aspects because we see that lots of investors and people saving for their retirement, for example, want to make an impact. They want to invest in a way that produces sustainable development. They don’t have the information and knowledge they need in order to really put that through.

CD: Back to disclosure and transparency across the whole investment decision chain, we’ve talked about this – Government can play a role in enabling this transparency.

PB: It’s easy for banks and financial institutions to just swamp you with information in such an amount that it is impossible to get access to, so you have to find indicators and measurements that you can actually access and understand.

CD: I also asked him about the way the government’s money is invested.

PB: A lot we can do there.
And of course the first thing that is important to us and we have to put our money where our mouth is, so if we are claiming to redirect Sweden into a sustainable society, we also have to invest our government’s money in the same manner.

So we’re working very hard with the pension funds that are public in Sweden and see that they are working with sustainable investments in decreasing their footprint. And we are working on a new agenda where we’re trying to raise the bar so that they have to do even more. That led the development and a very positive way but I think that this still more to be done.
For example the AP funds together have done carbon footprint analysis and they also have a common framework on how to disclose it, so that’s a very good start. Now they also have to move away from fossil-heavy investments and that’s the next step.

Then we’re also working on, for example, using green bonds within the national accounting system and what Sweden could be a driver for issuing green bonds from the government side, either through governmental companies or from the government directly.

CD: GREEN BONDS! Let’s talk about this.
Remember the toolkit that Sean Kidney was talking about earlier?

SK: The green bond market is what called a discovery tool…

CD: Before getting into detail, for those of you who are not clear with our green bonds work… well actually let’s start with regular bonds. B-O-N-D… spelled like James Bond.

You can think of it as loans, but you serve as the bank. When you purchase a bond, you loan your money to a company, to a city, or to the government – and they promise to pay you back in full, with regular interest payments during the lifetime of the bond. Say a city wants to build a bridge, well they may sell bonds to raise money for that bridge. So as an investor, by buying those bonds, you are contributing to the financing of the bridge. One important feature is that many corporate and government bonds are traded, either publicly on exchanges, or ‘over the counter’ as we say.

Climate bonds now, or green bonds, they are issued in order to raise finance for climate change solutions – climate change mitigation or adaptation related projects or programs.
Back to the green bond market.

SK: The green bonds market is what’s called the discovery tool. It makes it really easy for people to invest in a green bond without having to do too much due diligence if they want to invest. Luckily we have a lot of investors who want to invest some 43 trillion globally, who are interested in green investments and green bonds subject to lots of issues around risk and yield all those sorts of things. But if they can, on balance, switch from non-green to green, they will do it. And so the labelling just makes it quick and easy for them to do it.

CD: So Sean’s mission with the Climate Bond Initiative is to mobilise the 100 trillion dollars bond market for climate change solutions.

SK: We’ve also been getting governments excited about what they can do because this is clear evidence of investor demand, it is no longer abstract. Investors are buying the stuff and all these bonds are oversubscribed four times or thereabouts, so that makes it an interesting story to take to governments. I say this because in a rapid economic change scenario like the one we have to pursue to address climate change, you have to have governments who are willing to act in an aggressive fashion. And there’s no way that the green bond market, with its private companies involved, is going to shift economy in its own right. …But what it can do is help open up new avenues for governments to act when they’re otherwise stuck between a rock and a hard place.

CD: Yeah that’s interesting – hooking to that preview discussion about who should do what between government setting the road-maps and investors shifting their focus.

SK: Well it’s not so much that we need government to support the roadmap, we need government to get on the horses and start doing some infrastructure planning, specifically green infrastructure planning. There’s a sort of global shortage of deals. And most of the deals have been generated by governments because you know if you think about land appropriations, zoning, licenses…all of these things governments do. And then the process can build once there’s a frame in place.

CD: Yeah, OK.

SK: Back to that toolkit. So while there’s a toolkit to our financial instruments you can use, like credit enhancements and guarantees, the first toolkit is actually planning. Because if we are building the railway. Someone’s going to have sort of the land issues. Someone has to design the urban islands that will grow up around stations that you build the railway in. In fact someone has to figure out how to capture that land value increase to pay for the railway, because the railway is not frankly very viable. It’s a hundred-year asset that you have to be pay in twenty years. You can’t make the sums work out of passenger revenues. You have to have other models like MTR does in Hong Kong and Shenzhen, where they build skyscrapers around the station, and they are a property developer that also happens to build their subway. So in each of these areas we have look at the financial viability, we have to look how you structure it to ensure we get a return. And, you know, that we’re still managed broadly by the government and making sure that we have very, very ambitious in each of those sectors. I think that’s a challenge for Europe at the moment.

CD: Interesting, so an important starting point for raising finance for climate solutions is public sector planning. That’s another thing we can take away here.




CD: OK let’s close the chapter about Government’s role for now. We may add a few comments moving forward, but I want to get to the core of discussion about how we get institutional investors to shift towards climate-science based strategies, starting from disclosure & transparency.

Eric Usher (EU): While measuring is definitely not the end of the story, when you measure, the real question is, “What do you do with that information? Do you actually start to take action? And the PDC is the second step.

CD: You remember Eric Usher from the UNEP Finance Initiative? We talked to him in episode two.
The PDC he is talking about here is an initiative that he is hosting.
PDC means Portfolio Decarbonisation Coalition, and their mission is to mobilize a critical mass of institutional investors and have them gradually decarbonise their portfolios. The first step is generating the information, by measuring and disclosing the carbon intensity of their portfolios. And then…

EU: …The PDC is targeting the next step, which is what we term more as the leadership approach, so it’s not status quo in the industry, it’s really the investors who are taking the next step. And how they start to decarbonise is very open territory today. It’s very early days, and you notice that we say ‘decarbonise’ and not specifically divestment.

CD: Yes, let’s talk about divestment. Is that the kind of actions we are looking for?

EU: We’re absolutely agnostic on the issue of divestment. It’s great for those who are able to do it, but many in the mainstream investment community, for various structural and other reasons, it’s a bit hard for them to fully divest today, and it depends from what. I think certainly one of the turning points in 2015 was that divesting from coal no longer seems unreasonable for the mainstream. I think we hope that’s a big step forward, and there were a lot of announcements around Paris in that direction.

Divestment from other parts of the fossil…or other parts of the economy, it’s a bit more complicated and we realize that a lot more work to be done on different types of approaches.

CD: So this “action side” of decarbonization seems to captures a very broad set of activities, right?

EU: Precisely. It can consist of a full divestment from specific sectors, from other types of portfolio reconstruction, so you are juggling your portfolio in a way, for instance, of moving towards best-in-class within specific sectors. Or very importantly it can involve engagement. So rather than selling the stock and no longer having any influence over it, it means working with the company to try to have your leverage as an investor towards influencing a strategy which is more aligned with reducing emissions.

CD: That’s another key take away for us: decarbonizing your portfolio can consist of
· Full divestment from specific sectors – we don’t see this that often,
· Number 2, reconstructing your portfolio by moving towards best-in-class investments in specific sectors,
· And number three, engagement. In other words, how do you use your influence on the companies to help them shift their focus?

And again, you may be doing this because you are kumbaya, “Yeepee I am a tree hugger!” kind of investor, or maybe because it’s your duty?

Let’s learn a new word: Fiduciary duty. Well actually, let’s also learn how to announce it.

[Practices pronunciation].

A fiduciary duty is a legal duty to act solely in another party’s interests. Parties owing this duty are called fiduciaries.

Someone we didn’t manage to have on the phone is Nathan Fabian who is the director of policy and research at the well-known UN Principles of Responsible Investing (PRI). Since we couldn’t reach him in time, I am going to play a segment from a very interesting discussion that took place during the COP21, at the “Caring for Climate Business” Forum, in a panel where – by the way – there was 6 women and Nathan was the token man. It’s not often enough that we see that kind of mix.
This discussion is interesting because it talks about some of the legal aspects. I am sure they won’t mind if we listen to it all together.

Nathan Fabian (NF): There are two duties that are relevant for investors, that of loyalty and that of prudence. When we are being loyal, we’re acting in the interest of our beneficiaries. And, as that happens, that’s all of you; through your pension funds and your individual investments. When we are acting with prudence, we’re acting with due care, skill and diligence. And through our research program, we found that because ESG – or environmental, social and corporate governance – can be material, there is in fact an obligation to prudently incorporate them into investment practice.

CD: What that means is that you must demonstrate due care, skill and diligence in the way you consider climate change.

NF: No longer it’s acceptable to get your information from popular newspapers. You might in fact get your information from expert, scientist’s opinion from properly performed economic analysis and informed financial analysts. You must stress test your portfolios to consider climate risks. You must require 2 degree or less than 2 degree of warming business plan from the company you’re investing in. And if you do not, you must ask how you will mitigate any risks that might arise from this company not making the transition to the economy with less than 2 degrees of warming.

CD: This is a landmark development in the understanding of fiduciary duties and a clear step forward from where we were 10 or 15 years ago.

David Pitt-Watson (DPW): So that all sounds fine, but I chair a small, by global standards, few hundred million pounds charity endowment…

CD: This is Mr. David Pitt-Watson, co-chair of UNEP FI. And he was moderating the panel.

DPW: We may be investing in 5000 companies – what’s my fiduciary duty?

NF: Your duty, if you use an external fund manager to invest for you, is to have a process for ensuring that they assess each of those five thousands companies.

DPW: And you would say that’s what the law says?

NF: The law will say that you must demonstrate due diligence and prudence in your process. Now that means understanding if the companies you’re investing have the high exposure either to the climate risk or to emissions. And so someone in your investment supply chain has to know the answer. It’s not good enough for you to say, “We’ve got five thousand companies and that’s too hard for us to know the answer”. That’s the difference.

DPW: OK so I need to do that because if I don’t…I destroy the planet? Or, I need to know that because if I destroy the planet, then my endowment is not going to be worth very much?

NF: The latter.

CD: And good transition here. I’m wondering: what is the level of awareness on this? Do investors realize that decarbonising is just proper risk management? Is there any material reasons to decarbonise your portfolio?

[Voice]: I dont know.

I asked Eric Usher

EU: Obviously, every investor has their own perspective. Certainly there are two sides. Is it a regulatory action which is going to impair your assets? Or, is it the actual climate risks that you might be running? And, as Mark Carney talked about, the transition risks, essentially, that certain industries will quite quickly become devalued as market sentiment turns against them.

CD: Then I asked Julian Poulter, from the Asset Owners Disclosure Project – we’ve talked to him in episode 2 as well. You remember, right?

Let’s make sure we’re focused here, all this is very important. We’re asking the question: Is there any material reasons to decarbonise your portfolio?

Julian Poulter (JP): The attributes of climate change as a financial risk are unique and here’s the reason why, and this is very important to understand: When investors look at the long-term -things like geopolitical risks and social economic risks, socio-economic risks and so forth – there’s a lot of vagueness and a lack of precision about how they can view such risks, because we’re not sure how technology is precisely going to impact our lives and whether or not you know we will be driving around enjoyable cars in five years or twenty-five. Where medicine will be at, how old we will be living, and all of those things, and where the big security risks are.

But when it comes to climate change, with almost 100% certainty, we know that it’s happening, we know that it’s going to be high impact, but it’s also going to be long term. And so we know with reasonable precision, even though not to a geographical accuracy, we know there’s going to be more extreme weather and the types of the impact that’s going to happen. So we’ve got these long-term high-impact high-certainty risks that make it very difficult for the short-term financial system to manage and understand.

CD: Yes it’s again this tricky balancing act between long-term impact & short term results. And as always with change management it’s about the processes we’re going to be able to deploy.

JP: And that requires not just the change in the way we think about the use of stock markets and so forth but it was also a great cultural change and human challenge within the financial system. Over the years typically pension funds and other asset owners outsource all of their management of these sources of risks, including long-term risks, to fund managers who invest in stock markets. Now, because of the way the financial system has been built up, we know that stock markets are incapable of pricing the risk of climate change accurately within the time frame that we need.

CD: I repeat this important point from Julian here: “We know that stock markets are incapable of pricing the risks of climate change and within the time frame that we need”.

JP: I think the subprime crisis of 2008 proved once and for all that actually the people who trade the stock market are prepared to take more risks than the pension funds as long-term investors should be comfortable with.
And so the same is true now. The fund managers are still investing, strangely enough, in oil and gas even though we happen to be in an oil price and coal price commodity crash at the moment. But they’re still maintaining the faith in some of these oil and gas companies way beyond where they should do for the type of long-term climate change represents. And that’s forcing these longer-term investors like pension funds and other asset owners to say, “Well actually we’ve got to lose faith a little bit in the way that stock market manage these sorts of risks, and we’re going to have to manage them in other ways.



CD: OK that’s a good segue to our movie section. I am sure you heard about the Oscars on Sunday night, and most importantly there is a movie this year that I think you should watch.


CD: It’s called “The Big Short”. Great casting, which is why most people who do not care about finance still went to see it – Ryan Gosling, Brad Pitt, Steve Carell, Christian Bale – looks great.

It’s about the housing market and the 2008 crisis of the sub-primes. It’s pretty nerdy but it’s very interesting and pretty well done, it’s a bit like a documentary.

So I’m at the movie theater – having a good time. And I look around me and most people look disappointed.

“Where is Brad Pitt? Oh…it’s him with the beard. Okay…he’s old!”
But I think most people are not so solid on how the US housing market works. They’ve heard of the sub-prime crisis, but if you don’t know what is a bond or a Triple-A, and you were focusing on the pop corn at the very moment they explained it, you’re basically screwed for the rest of the movie.

Anyway, the story in a few words: Four people in the world of high-finance predict the credit and housing bubble collapse of 2007-2008, and decide to take on the big banks for their greed and lack of foresight. Basically, those guys saw it coming.

Why are we talking about this movie?
Well – there is a disturbing parallel with climate finance. I had great discussion with Julian about this.

JP: I got into the climate change business in late 2006, which was perfect timing, and I made a study of the subprime crisis a hobby of mine. And I can tell you that it is a precise parallel: the build-up of carbon risk in the economy is in many ways of precise parallel to what “The Big Short” was trying to show. It’s an excellent movie and indeed actually there are people out there like Michael Burry and Steve Eisman who were there back in 2007, who were already shorting in the high carbon economy.

CD: Shorting is basically a strategy used when you want to profit from the decrease of the price of a stock.

JP: It’s just it hasn’t yet happened at such a scale that’s made the sort of impact that we need, but in terms of the way that, for example, ratings agencies have failed to re-price high-carbon debt, in the same way they fail to price the risks of collateral debt obligations and credit-default swaps. And these are systemic failures, and if any of your listeners have got a few hours to read, go back to the Financial Crisis Inquiry Commission reports and you’ll see a precise series of concerns that are being repeated over climate change.

CD: Well I hope that this is enough to take you to see the movie. Remember that our primary mission at The Green Exchange is to fish for international knowledge & inspiration so we can contextualize and advance our green agenda here in the region.

Thank you to WWF for making this series on Climate & Finance possible. It’s because of their support that this special edition is accessible to everyone, and not only to subscribers. You know it – The Green Exchange ‘Plus’ makes your life easier as a sustainability professional and will help you make the right decisions this year, so check how it works on our webpage We’re preparing a number of exciting new features.

Don’t forget to follow us on twitter @greenXoresund, Facebook at The Green Exchange.



CD: Before we finish with the Oscars, a quick recap of the key take away for this episode:
· There is enough capital out there to finance the transition to a climate friendly society.
· A lot of this capital is private and in order to harness it, governments need to act as enablers of this transition, so this capital can be directed towards sustainable development. By setting targets, by driving ambitious planning, by clarifying how to carbon footprint, etc.
· Transparency of the portfolios is an important first step so we can access information, but asset owners need to take significant actions to decarbonise them, either by divesting from specific sectors, by reallocating assets or via engagement strategies.
· It’s your duty as an asset owner. There are recent interpretations of the law that could make this a driver as well.
· The carbon pricing issue, even if we are still waiting for a direct price on carbon, as an investor – don’t wait to shadow carbon price your assets so your company valuations are more accurate. You’ll be in a much better shape when the storm will come, and it will come.

So it’s not about waiting for the tools, or for the others to do something. We have all we need. It’s about looking at the evidence, looking at the benefits & being responsible, doing the right thing
It’s also about having the hummingbird mindset, as always.

We are going to start publishing bonus materials on social media with pieces of interviews we could not include in the talk show. So you’d better click that ‘Like’ button if you don’t want to miss out.

And I invite you to check our complementary resources section where you can find the Global Climate Index 2015 produced by AODP, resources around the Portfolio Decarbonisation Coalition as well. And we invite you all to share with us cases & stories because we are going to keep spreading the word about successful efforts via our Facebook and Twitter.

I would like to give a big thank you to all the people who supported the Climate & Finance series, you know who you are. It’s been a very interesting journey and it’s definitely not over, we’ll be following up and praising the efforts of all the humming birds out there.

One Humming Bird who is definitely doing his share is Mr. DiCaprio, a big advocate of sustainable development. And I wanted to end this episode with the speech he gave after finally winning the Oscar for best actor. It was quite moving and I’m sure you’ll agree with him.

Thanks for listening, we’ll see you soon for more green knowledge & inspiration, we have a lot to cover this year. Keep up the good work in the meantime.

[Clip of Leonardo DiCaprio’s thank you speech at the Oscars].

Leonardo DiCaprio: And lastly, I just want to say this, making The Revenant was about man’s relationship to the natural world, the world that we collectively felt in 2015 as the hottest year in recorded history. Our production had to move to the southern tip of this planet just to be able to find snow. Climate change is real, it is happening right now, it is the most urgent threat facing our entire species, and we need to work collectively together and stop procrastinating.

We need to support leaders around the world who do not speak for the big polluters or the big corporations, but who speak for all of humanity, for the indigenous peoples of the world, for the billions and billions of underprivileged people who will be most affected by this, for our children’s children, and for those people out there whose voices have been drowned out by the politics of greed. I thank you all for this amazing award tonight. Let us not take this planet for granted; I do not take tonight for granted.



Climate & Finance #2: The System We Need

This is the second episode of our series about Climate & Finance. Missed the first chapter? You may want to go there first: Episode 1

In this episode, we take a trip to the year 2050 to look at how the financial system should look like, in a scenario where we managed to stay below 2-degree warming of the climate system compared to pre-industrial levels. We review the pre-requisites for institutional investment to align with climate science, guided by insights from our world-class experts. This episode features views from Eric Usher (UNEP FI, Portfolio Decarbonisation Coalition) & Julian Poulter (Asset Owners Disclosure Project).

In the next episode of our series, we will go through a backcasting exercise and discuss the roadmap to reach our 2050 targets. Change management at its best!

Produced by Camille Duran, special thanks to Han Nguyen, Magnus Emfel, Amelia Johannsen & Gabriela Lemos Borba.
Transcribed by Oanh Nguyen


  • The Asset Owners Disclosure Project website
  • The UNEP Inquiry:The Financial System We Need (Policy Summary, PDF)
  • The Montreal Carbon Pledge (PDF flyer to share with your investment manager or asset owner clients)
  • The UN PRI ‘Principles for Responsible Investments’ (Website)
  • Guidance for calculation of Scope 3 emissions – The GreenHouse Gas Protocol (Website)
  • The 2-Degree Investing Initiative working paper –  Assessing the alignment of portfolios with climate goals (PDF)
  • The World Energy Outlook (PDF)


WWF’s mission is to stop the degradation of the planet’s natural environment and to build a future in which humans live in harmony with nature.

Music Credits: License by Ins. Green White Space.
Photo by Serendigity/CC BY



CAMILLE DURAN (CD): Our Planet is suffering global warming, and although science is telling us what to do, we are yet to rectify our trajectory. Today we stop for a second… and dream.

Because something is wrong.

Chances are that if you knew how your money is used on global markets via the investments you make, via your pension funds or your insurances. You would disagree.

Today we stop for a second… and dream.

We talked about the problem in detail in the previous episode. You may want to have a listen before going any further – link is on the page.

Because today we are going to paint the picture of the system we need – the system we need.

And as usual, we have very special guests for you.

Julian Poulter (JP): People don’t understand the links between short-term stock markets and other financial markets, and these longer-term investment problems.

Eric Usher (EU): …Or company like the car manufacturer, take Volvo, Are you responsible for your only the emissions from your factory? Or could you be responsible partly for the emissions from the cars you manufacture?

Per Bolund (PB): My name is Per Bolund. I’m the Minister for Financial Markets and Consumer Affairs and also the Deputy Finance Minister of Sweden.

Sean Kidney (SK): We actually have a whole big toolkit or things that we’ve been successfully applying in the last hundred years in Europe.



CD: You’re listening to The Green Exchange, special edition about climate and finance, episode 2 of our series. What is the system we need?

So what we’ve learned so far: The main challenges in the investment decision process are:
· That there are powerful interests at stake.
· People or entities who own the capital often lack of knowledge and ask too little about the impact of their investments on climate change.
· Asset owners apply limitation to their responsibility on the markets and ignore the reality of climate change.
· Short-term financial return is by default prioritized over long-term responsibility.
· The narrow definition of risk doesn’t connect investments and climate change.
· The fund managers lack incentive to include climate change data in their investment decisions. They also lack education on the issue and of course it would be much easier if they had a mandate to develop climate friendly investment strategies.

This is where most media channels would stop, right? Pointing fingers, a couple of headlines and we’re good to go! No sir, this is a special edition of The Green Exchange, we’re not tired. We’re going to go to the bottom of this.

Now it’s time to use our imagination. Let’s do like Neil Degrasse Tyson in the Netflix series, ‘Cosmos’ which I strongly recommend to all human beings on the Planet.


CD: We love you Neil. Let’s use the shape of the human imagination.

We land in 2050, and you’re there too! You wake up, put your clothes on, ask your robot to prepare breakfast for you. Then you google the latest news report about climate change.

Guess what? Guess what? We made it. We stayed well below 2 degrees of warming of the climate system. We made it.
Yes there are 9 billion people to feed, mega cities all over the globe and energy consumption doubled, but we finally reached the targets that the ‘old’ Paris agreement had set for us.

I know it’s crazy. So how does the system look now? What is the new face of institutional investment now that it aligns with climate science?

So just to clarify when we talk about institutional investment, we are talking about a kind of investment, which is done by an organization that provides financial services, such as an insurance company, a bank, a hedge fund, a retirement fund or a mutual fund. So I think the term of institutional investment basically covers most of the scenarios we are studying here.

I’m like you. There are words that I just need to google. No problem with that.

OK so we’re in 2050, we stayed under 2 degrees. What framework did we used to drive proper action until today?

If we managed to stay under the 2 degrees, it basically means that we’ve been able to focus capital on the long term. That the financial system has helped us operate this transition, instead of being in the way.
But what does this mean, in practice?

Well first, it probably means that we were able to put in place transparency, visibility on what investments are made where and by who. Where’s the money going? Where’s the money?

How much transparency do we actually need? How does this work?

To try to answer this question, we’re going to London to talk to Julian Poulter, Founder and Chief Executive Officer of the Asset Owners Disclosure Project.

Julian Poulter (JP): Well, how are you doing?

CD: Hey I’m good. Thanks. How are you?

CD: Julian is also a stakeholder council member of the Global Reporting Initiative. So his focus is global.

CD: The reason why the Asset Owners Disclosure Project was set up is that they found that there was no information at all…

JP: …about how the institutions at the very top of investment chain are managing the risks of climate change.

CD (aside): The Asset Owners Disclosure Project is a not for profit working with pension funds, insurance companies, sovereign wealth funds, foundations and universities to improve the level of disclosure and industry best practice. They work towards realigning the investment chain to ensure long-term investment practices.

JP: The fact that matters is the investment chain is quite complex. Essentially there are three levels. Asset owners at the very top. They tend to outsource their investments to asset managers, and asset managers investing companies. This is increasing the good level of data for a company level. In fact, some of bigger oil and gas companies and mining companies are some of the best disclosures in the world. But there is a dearth of information at the fund manager and at the asset owner level. We took the strategic view back in 2008 that whilst fund management community was very important, they were more interested in short term returns and perhaps trading more than they were long term investing.

CD: Okay so fund manager’s focus is short term, disclosure efforts should be prioritized on the players with a longer-term interest. It has types of professional asset owners you mentioned.

JP: Yes. And the asset owners all around the world that are the pension funds, insurance companies, sovereign wealth funds, foundations and endowments were the real long term investers. And so, it’s those institutions which you want to capture data about and hold to account.


CD: I would like to introduce another guest who has a few points for us on this disclosure elements.

CD: Hi Eric, welcome to the show.

Eric Usher (EU): Hi Camille.

CD: How are you?

EU: Fine.

CD: Would you mind introducing yourself for the record?

EU: Sure. I am Eric Usher. I’m the Head of the UNEP Finance Initiative, which is the long standing organization that’s a partnership between United Nations and a group of 250 of the larger banks, insurers and asset managers global.

CD: Great to have you with us, you have a few points about disclosure.

EU: Sure. So in terms of the very simple ‘what can investors do?’, well obviously the first step comes towards disclosure and assessment, and figuring out what the risks and impacts are with their portfolios, so, essentially, simplistically put the carbon footprint. So the first step is to start to footprint your portfolio.

As we know the majority of large-cap corporates today do report their carbon impacts, but there’s only a very, very small number of investors who want that information but actually don’t report themselves. So there’s definitely an imbalance and a need for investors to also start stepping up, to assess their carbon footprints and to start also making that publicly available to the users of such information. Then there is something called the Montreal pledge which is launched by the Principles for Responsible Investment a year and a half ago, to get investors to sign up…to commit to measuring footprint.

CD: How about we’re going to Montreal pledge very quick to check it out.


CD: “By signing the Montreal Carbon Pledge, investors commit to measuring and publicly disclosing the carbon footprint of their investment portfolios on an annual basis”. This is supported by the Principles for Responsible Investment (PRI) and the United Nations Environment Program Finance Initiative (UNEP FI).

There is a flyer that you can share with your investment manager, or asset owner clients. It also includes all the signatories who made the move. Signatories, thank you, this song is for you, in honor of your forward thinking.


CD: Now, there are some question marks around carbon foot-printing.

EU: Carbon foot-printing is not yet an exact science. It’s an approximate measure and part of the problem is that a snapshot of your current emissions do not say much about where you’re going. In other words whether your business strategy is already phasing down carbon intensive activities. That’s one problem.

The second, more complicated problem is what’s called Scope 3 Emissions or some call them financed emissions. Basically is not your direct carbon emissions from how you consume energy or other activities; it’s the impact up and down the value chain of your business. For instance, for a bank it means if they provide a loan to a factory, they are responsible for part of the emissions from that factory because they partly finance it. If they invest in that factory so they actually own part of factory and once again they are responsible for a share of emissions.

EU: Excuse me, Camille. Let’s me take the call for a moment.

CD: Yes, sure.

CD: In the meantime, let’s go and google Scope 3 Emissions and see what we find….

108 million results, the 3 first links are from the GHG Protocol, (Green House Gas) Protocol website.
“The GHG protocol is the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions.” That’s probably where you spend most of your time if you like protocols, and if you like green house gas at the same time…


EU: Sorry, Camille.

CD: Yeah sure, no problem.

EU: So the other example is for a company like a car manufacturer, take Volvo. Are you responsible for only the emissions from your factory, or could you be responsible partly for the emissions from the cars you manufacture, which starts to be complicated.

So all told, the disclosure assessment is still very young and a lot of work would need to be done there, in terms of perfecting. And certainly governments play a role there eventually in starting to provide or to regulate the standards of disclosure.

CD: OK so that’s a good conclusion for now.

Disclosure & transparency are necessary components of our dream system, but the way we measure and account for carbon foot-printing needs to be coordinated & regulated by governments. A first thing we can take home.

Now, one very important component of our dream system is a definition of what sustainability means for our investment.

In other words,

– How is “staying well below two degrees translated into portfolios?
– How much is invested? In what, and by what date?

If we are under the two degrees in 2050, it’s that we were able to align financial flows with science and with international agreements.

There is a reference report that came out just before the COP21, in October if I remember, called the UNEP Inquiry: Design of a Sustainable Financial System. They said that in a developed version of 21st century financial system, we should be investing only in assets that improve social environmental outcomes, in home country and internationally.

One point that I have heard several times in my discussions is that we need to move away from the current approach which consists of measuring ‘relative performance’ – by that we mean the performance relative to others, or to ‘Business As Usual’ scenarios. Basically we need to develop and apply sustainability targets.



Another group who is doing very good work on the subject matter is the 2 Degree Investing Initiative. They have a working paper called ‘Assessing the Alignment of Portfolios with Climate Goals’ – you can find it on our episode page.

Basically, they make the case for a two degree benchmark – like a framework that informs policy makers and investors on how far – or how close we are to the policy targets. Of course, they also talk about disclosure and the role of policy but let’s stop for a second on the key elements of the methodology they advise to keep in line with the 2-degree benchmark.

Here is a good illustration of how things could work:

Let’s take Energy technology exposure for instance. I try to make it simple, the idea here is to look at granular data – plant by plant for instance. Take car production per model per country, say we take all the Volvo V70 produced in Goteborg, in Sweden.

And we look at the production forecast. From this forecast we can assess the future exposure to energy technologies. What is the exposure to coal, to oil, to gas, to renewable power, etc.

Now we’re going to compare the exposure of our Volvo factory to those various energy and technologies, to the exposure of the 2 degree benchmark.

Then we just need to extrapolate this approach to all the Volvo models, all the car brands, all the automotive sectors, then do the same for all the other sectors, well actually for all listed companies & equity portfolios on the planet….et voila!

For your information, here are people who do that kind of work for a living anyway; for instance, every year, the International Energy Agency publishes a pretty solid PDF called the World Energy Outlook. Perfect read when the kids are in bed.

The table of contents is 12 pages, the Introduction & Scope consists of 23 pages.
In other words, you’d better keep listening to the Green Exchange instead, because that’s what we do, we digest that kind of stuff so you don’t have to.

We’ll get back to this working paper later on
For now, we just want to know ‘what the system should look like to keep things under control. We’ll see how to get there a bit later.



CD: We’ve talked about disclosure, measuring carbon footprints, about the need to define how portfolios should look like to align with climate science. Now it may sound like a stupid question but:

There is a price on gold – it’s currently around 39$ per gram. There is a price on water – it’s usually between 40 cents per 1000 litres to 6 Euros per 1000 liters.
Should we put a price on carbon?

Yes, we should, of course, but how?

EU: Absolutely I mean it’s very simple to say governments should put a price on carbon…

CD: That’s Eric Usher again, from the UNEP Finance Initiative

EU (continued): And many investors going into Paris were wondering “Are we going to get a price on carbon?”, and then they realized and are understanding that there is not going to be a price on carbon, but if all goes well we’ll have the framework for what will be probably many prices on carbon. Essentially, that carbon will start to be priced, but whether it is done through taxes or carbon trading or other types of approaches, that will vary and the structure behind Paris, which is in the shift of the climate negotiations since Copenhagen six years prior, was that you need governments in the lead to establish the enabling environment essentially from the bottom up, rather than having a multilateral agreements or organizations, such as my own in the UN, expected to design instruments top down.

And yes we know the first experience with carbon trading results have been mixed. Partially maybe criticizing the instrument but more likely probably criticizing the way in which it was implemented in terms of the government involvement.

CD: I pause here for a second to mention that we you will find two links on our episode page. One is to explain in detail how the Carbon Trading Scheme we have in Europe is structured. And another resource that explains the challenges around Carbon Trading Schemes in general, and why they don’t work. back to the interview

Back to the interview.

EU: And so just a good example would be if you’re aiming to, for example, decarbonize the cement industry in India, who is best to figure out how to do that? The reality is it’s going to be Indian industry and Indian government. And a framework multilaterally, which is from since the Paris agreement can provide a broad agreement, but the reality is that it’s going to be governments and local actors, industries and civil society who figure out how to do it.

And I think that’s the beauty of the Paris agreement. It’s bottom up, and in terms of roles of government it’s essential to get the pricing right in terms of the regulatory environment, the pricing of externalities, and to ensure the other factors that allow economic development in ways that are not impacting on environmental and social factors.

CD: OK so basically, in a sustainable world, carbon needs to be priced. This is a little utopic for now. In practice, we’ve seen that it’s quite difficult to harmonize and implement. Government play a vital role on that front – we’ll get back to that in a minute. But there is one very important point we should make here.

Yes, a carbon tax is really a good instrument IN THEORY.

And we sometimes hear investors justify their unsustainable practices with arguments like:
“Yeah but there is no price on carbon…” pointing fingers to policy makers.
You know this is an excuse, my friend! If you are a responsible investor, you need to include an internal carbon price in your forecast. We also call it shadow carbon pricing.

JP: Asset owners and other long term investors…

CD: This is Julian Pouter again, from the Asset Owners Disclosure Project.

JP: (continued): …essentially can run the carbon price across their own portfolio. And they do this because there are so many uncertainties around climate risks and this carbon price put on their portfolio is a way of managing the risk in the same way that governments are concerned with managing the physical risks of climate change by putting price on carbon across the economy.

EU: Now of course there is a growing number of investors taking that perspective…

CD: Bouncing between Julian and Eric here, but you recognize the voices…

EU: (continued) Others were taking other perspectives. Certainly there are two sides of this. Is it a regulatory action which is going to impair your assets, or is it the actual climate risks that you might be running? As Mark Carney talked about the transition risks, essentially, that certain industries will quite quickly become devalued as market sentiment turns against them.

CD: So it’s basically a good planning tool to help identify revenue opportunities, risks, and as an incentive to drive maximum energy efficiency to reduce costs and guide capital investment decisions. It gives you a more correct valuation of your company in that long term perspective.
So why not start doing it now, since we don’t have that global price on carbon yet?


Another element we need for our 2050 dream system, probably obvious, but very important:

Governments need to play an active role in directing and enabling investment in line with climate science, via policy initiatives, incentives, by issuing green bonds….

We’re also going to dig into this.

And, talking about Sweden, we wanted to get a sense for what’s going on at the moment with government efforts to green up institutional investment.

[Voice] But I guess you would like to speak to the Minister?

CD: Yes please.

[Voice]: Perfect. I’ll give the phone to him. Just a second.

CD: Yes, sure.

CD: That’s for next episode. An exclusive interview with Per Bolund, Swedish Minister for Financial Markets & Consumer Affairs.


CD: So is that all we need in our dream system? Do we have all ingredients by now?

Well, one last point actually: everyone involved in the investment decision process needs to be well educated on sustainable investment and on how to stay aligned with climate science.
As we’ve seen in episode one, we cannot really expect people in the street to know everything about the system they are putting their money into. But all asset managers, asset owners, and any professional working with institutional investment need to know what they are doing, and receive actual mandates to do the right thing, not only because it’s good for the planet, but also because we’re looking at long term financial stability and returns.

Thank you to WWF for making this series on Climate & Finance possible. It’s because of their support that this special edition is accessible to everyone, and not only to our subscribers. You know that The Green Exchange ‘Plus’ makes your life much easier as a sustainability professional with, even briefings, all special editions and the community as well.
It still helps you to make the right decisions this year, so check how it works on our webpage

Don’t forget to follow us on twitter @greenXoresund, Facebook at The Green Exchange. The family is growing.

Today we were in 2050, well below the two degrees, looking at a sustainable system for institutional investment. It may be time to do some back-casting and discuss ‘how to get there’ don’t you think?

That’s for our next episode. I’ll get in my time machine again, and see you soon, back in the year 2016. Keep up the good work, in the meantime.



Climate & Finance #1: How Your Savings Impact Climate Change

In most countries in the Western world—and definitely in the Nordics—much of the money that is sitting at the bank, in other words “our savings,” is used every day to invest in global financial markets. Most people ignore what is really happening backstage with their investments, life insurance, pension scheme, etc. In this episode, we analyse the connection between finance & climate change, conclude on the Paris COP21 and talk to Magnus Emfel, Senior Advisor Sustainable Economy at WWF Sweden to decrypt these issues and answer one question: Who makes the decisions that lead us to investing in the problem?

Produced by Camille Duran, special thanks to Han Nguyen, Stefan Henningsson & Magnus Emfel

Transcribed by Oanh Nguyen




WWF’s mission is to stop the degradation of the planet’s natural environment and to build a future in which humans live in harmony with nature.

Music Credits: License by Ins. Green White Space.
Photo by Rafael Matsunaga/CC BY



CAMILLE DURAN (CD): Today we talk about climate change under a little bit of a different angle than usually.



CD: Hello This is Camille Duran. I’m calling from Malmö.
VOICE 1: Yes hello hello. I was talking to my colleague and she was saying that you need the help with some funds or something like that with your saving? Is that correct?
CD: Yes I have a few questions.
VOICE 1: Yes.
CD: I am currently evaluating alternatives for investing a couple of millions in a fund but I’m very concerned with the carbon footprints created by my investments, if you see what I mean. And I would like to find an investment option that takes this in consideration. So I’m wondering if you provide investment opportunities specifically in energy efficiency or renewable energies, and if you track these estimated carbon footprints of the investment in anyway?
VOICE 1: Well, I think I’m not right person to handle it.

VOICE 2: “No, I don’t do that.”
VOICE: 3 “I’m not sure who I’m going to talk about them, I going to call this person to talk about this… because it’s important… of course but I can not discuss these questions.”

CD: Most people ignore what is really happening backstage with their investments, life insurance, pension scheme, etc. Today we’re answering those questions.

You’re listening to The Green Exchange. It’s 2016, best wishes to you and your loved ones, may this year be resourceful and inspiring for you and your team.


Savings, capital, banking, insurance, pension schemes, financial markets,
Why are we talking about this on The Green Exchange? Well… because we are all ‘shareholders’ in activities that contribute to climate change, because of the way our money is used.
Yep, that’s right. We will find out today that chances are that your savings at the bank create MORE carbon emissions per year than your lifestyle – counting the footprint of your food, transportation, housing, etc.

Now imagine what it means for businesses, for municipalities and other organisations with substantial active investments? How big is the ‘invisible’ carbon footprint in your organization?

There is one place where we talked a lot about carbon footprint lately.

We were in Paris for the COP 21 in December so I wanted to start by touching on a few conclusions from the negotiations that are going to help us with today’s topic.

[Voice] “The eyes of the World are on Paris for unprecedented global summit aimed at tackling climate change.”

[Voice] “This is the 21st meeting of the UN framework convention on climate change, a meeting known to most as COP 21.”

2 main texts were adopted, they have different legal status and we won’t get into details here but the first one – what people refer to as ‘the Paris agreement’ is quite something.


CD: It’s the first time that the 195 member States signed an agreement on climate change, it’s also the first time that all countries on Earth set goals on climate change, and showed up at the conference actually prepared – which was not the case how it happened in Copenhagen as I am sure you remember…

Let me tell you, if this agreement translates into actions, it means that we let go off fossil fuels by 2050, this means – that we need to rapidly shift our energy production and consumption systems. We have 35 years. Even more because now – and I don’t know what they had been drinking in Paris – but we are not targeting 2 degrees anymore.

We are seeking to, and I quote, “Hold the increase in the global average temperature to well below 2°C above pre-industrial levels AND pursuing efforts to limit the temperature increase to 1.5 °C.”

Pursuing efforts to limit the temperature increase to 1.5 °C? Finally something a little bit ambitious.

So yes, it’s true that what we take home is an agreement on principles and a vision which is the starting point for coordinated and reinforced actions from all 195 states, and we should not underestimate how hard it was to pull off in today’s context.

Now, if you were there or followed the negotiations from a little bit closer, you may have heard things like…

[Voice] “The success of the agreement depends entirely on political will, and each country is setting its own goals and even deciding whether to sign up to a five year check-up on what progress is making”.

[Voice] “It’s just worthless words. There is no action, just promises as long as fossil fuel is prepared to be the cheapest out there, there continues to be burned.”

[Voice] “The political will is here but there are still hundreds of legal decisions that have to be translated into across six languages and they have to do with some of the most contentious issues on Earth. Those still need to be resolved.”

CD: No one is saying how we are going to do it, no constraints.

We are seriously lacking the mechanisms that are going to make the dream come true, practical steps, what are the actual constraints to all member states legally?

Also, the agreement doesn’t exclude the ‘fake solutions to climate change’, the ‘scams’, the green washing – like nuclear energy, carbon sequestration yet capital intensive activities, carbon trading.

The debate stays open on the main points like: the financing of all this, how is the money going to be allocated, where will it come from, how much do we actually need?

Long story short, let’s say that we have a frame, but we don’t have an action plan. This agreement that will come into effect in 2020 sets an ambition, but it doesn’t say how we are going to achieve it.

What I am asking you to keep in mind for today’s chapter is this 1.5 Celsius degrees target.
Because when it comes to the policies governments have in place today, we are heading to a warming of 3.6 Celsius degrees which is like…chaos.

We’ll feature a few resources on the episode page so you can check this for yourself.
Part of this is the way we do finance in 2016, it’s also leading to chaos and your own money is in the game, right now, while we’re talking.

CD: Martin & Jenny live in Sweden. They believe in the green lifestyle. They both go to work by biking, their car is a hybrid, they buy organic food as much as possible and try to stay informed on ways they can reduce their carbon footprint. They just got their first child and since they have bit of money to invest, they want to start planning for the future.
So they take a meeting at the bank to learn about various investment options – After spending some time with an adviser, they settle for a life insurance, and selected a couple of low-risk funds that were recommended to them.

It’s at that point that their money starts moving to…the dark side of the force!

So let me explain:
9% of the total Swedish investment capital is in the energy sector. That’s around 50,000 Swedish kronor per Swede (roughly 5,400 euros). Now, if we break down investments in energy markets, we find out that:

· The far majority of those investments goes to funding fossil fuel industries
· Then, some goes to distribution and only 15% are invested in renewable energy.

So that’s in Sweden, but it’s not too different in other Nordic countries.

There is one number that is going to blow your mind, and it may change the way you look at your money forever – Well, we hope at least. Umm…okay, let’s take it easy.

If you live in Sweden – but again it’s not too different in Denmark or in the rest of Scandinavia – you basically put 11 tons of carbon into the atmosphere, just by moving around, eating, wearing clothes and having a place where to sleep at night. 11 tons per person per year.

Now if we add up the amount of coal, oil and gas production coming from Swedish investments on the world’s stock markets, you can add 8 tons per year to the 11 you had initially. That’s what is actually produced every year with Swedish money.

It’s not over! Because if we want to be fair, we need to count our shares from future emissions coming from fossil fuel reserve. Because you and I own those shares today, via our investments, via the national pension fund, etc. That’s another 12 tons per year per active person – calculated from the average age you start working in Sweden and the average life span.

So roughly, 8+12 tons per year, that makes 20 tons of CO2 per year coming just from my private savings and pension deposits made by my employer. So, each one of us owns around 20 tons of C02 emissions without knowing it. Almost twice the yearly carbon footprint of our lifestyle.

How come no one told us? How come no one told Martin & Jenny?

Because even when you ask for clean investments, it’s hard to get an answer.


VOICE 1: Well, I think I’m not right person to handle it.

VOICE 2: “No, I don’t do that.”

VOICE 3: “I’m not sure who I’m going to talk about them, I going to call…I can not discuss these questions.”

CD: But there is someone who is seriously spreading the word. It’s WWF. You know their logo with the cute black and white panda kindly asking you to stop messing the planet? Well, WWF commissioned a report to PWC in 2014 called “Own-It”, which details the numbers that we are talking about today. We’ll link it up on the episode page. And they are ALSO making this episode possible. Thank you guys for the support.



CD: This episode is what we call a ‘briefing’ – it means that it is designed to give you an update, to raise awareness and to inspire. But we’re going to dig much deeper than this in this topic- with The Green Exchange ‘special edition’ – because we want to advance the discussion, to debate, talk to experts and outline an action plan. So stay tuned, there will be 2 more episodes coming on this topic.

Okay, back to the show.

We want to understand: Who makes the decisions that lead us to investing in the problem?

MAGNUS EMFEL (ME): Hi Camille,

CD: Hi Magnus, how are you?

ME: I’m all right!

CD: We’re talking to Magnus Emfel – Senior Adviser for Green Finance at WWF International.

CD: Good to have you on the show, Magnus, you and your team have produced great materials on this topic. Thank you so much for opening our eyes on this very important issue. Let’s zoom in together for a minute.

So, it’s pretty clear that people are not aware, and many cases not even interested, in how their money is invested on the markets. If you actually ask for details, what kind of answer do you think we get, say, at a general bank, fund or insurance company?

ME: Well, if you ask for taking an environmental concern, sustainability or social responsibility, you would probably be getting responses about references to a policy that the banks or the funds have signed up to different kinds of principals or declarations that they’re following this. That would be from the person who you are confronted with or meeting at the bank office or when you call them up who are at the front line of providing services or advice. They have quite limited information, or limited ability to describe rather how the capital is used and how my savings are actually distributed and used when it comes to these issues around to the sustainability.

CD: Well, that’s exactly what happened to us. Well done.

CD: Most often, banks, funds, insurance companies will refer to the “ownership policy”, which states: the company’s obligations, according to the external rules, owner’s vision and ethical principles. They don’t really like to compromise on returns and when you look at it in detail, what is presented as a normal, progressive policy still includes grey areas. Very grey areas.

We listen…


VOICE: Because it talks like this: Funds that are covered by [bleeped] policy of responsible investment so the funds are also subject to specific ethical criteria which are international norms and guidelines for environmental, social and governmental factors into account in investment policy. Fund managers further avoid investing in companies in which more than five percent of company’s sale are focused on production or salves of goods and services in the category of weapons, tobacco, alcohol gambling and pornography.

CD: Wait, What? 5%.


CD: How about those 5%? Is that okay?!

VOICE: And also that’s something…the source of our website.

CD: Well, I could not believe it so I went and checked on the website and yeah…we won’t name the bank but it’s one of the ones you know very well.

Long story short, even if there are efforts under way, the fact is we lose control. We are the asset owners but really, we are not. The minute you put the money in this fund, or life insurance or pension scheme, it changes hands and it’s on financial markets.

What we now call the asset owner is the bank or the insurance company or the organizations that they explain with money on the market.

Back to our interview.

CD: So, Magnus, how much can we expect from the asset manager this time?

ME: You may be able to find asset manager who would say “I can not do more than I’m mandated to do by that donor, so I have my restrictions for what I can and I can not do. And that could be an excuse, but it can also be partly an actual fact. Because once you come down to it, the asset managers have their assignments and their mandate, and they have a bulk of money to manage. Then, it is sort of the rules are set for what they can and should do.

There are nothing stopping them from over-performing when it comes to sustainability, but if they don’t have knowledge and if it takes extra work, it’s very unlikely that they will over-perform in that way. So they more try to be efficient and do the job as good as possible but within the guidance or direction which are set. That’s why it’s quite important. What is asset in their ownership policy? What is set and expected by their asset owners?

CD: So who is involved in defining the ownership policy and setting the framework for asset managers?

ME: So, in the private sector, it would be that you have a board which are representing the actual owners. If it is in a bank or in a fund, it could be people representing owners of capital which are big owners, who have a lot of money. But it can also be people from a labour union or who is representing a large number of asset owners, or beneficiaries you could call them in that context.

So it will be different people who are representing the asset owners. But it would also, as in any board, it would also recruit people who are professional with a high competence in a field which are said to be managing with the board. So it will be people who have financial expertise who don’t represent a particular asset owner or a particular capital owner but they will be experts. And they will then have the job to give the instructions and the target the overarching target and what risks that the asset management organisation is allowed to take, and not…high or low or, and so on. So they will be setting these kinds of strategic decisions to the guidelines, which then are carried out by the operational organization which includes the CEO and below.

CD: Okay, interesting, yes. And my personal comment is that those people up the food chain, they may – I don’t know – but they may be subject to sophisticated lobbying by the oil and gas industry…just a thought….

Now we talk a lot about the responsibility from individuals like you and me, but imagine now investments made by businesses and organisations because they invest money too!

And I want to make a quick comment about local governments because a good part of our audience works at a municipality with climate strategy or sustainability projects.
Most municipalities in the region are doing a good job with sustainable purchasing and investing into green infrastructure, in funding strategies for transition within the city.
But we haven’t seen much discussion about how municipalities manage their funds.

ME: It’s quite a similar kind of question because it might not have been apparent to the financial director of the municipality that their funds have an impact when they’re sitting in the bank, or sitting in an account somewhere. But those who are active in developing climate smart cities have also started to realize that they can not only do this by investing in their own city but keep their funds being invested in somewhere else, which is completely contradictory to what they’re trying to achieve. So they try to make these two ends meet and align both their own city plans with their own investment policies.

CD: So I am asking you all who work for local authorities, go find the financial director at the coffee break and kindly ask:
“Do we have an investment policy that is in line with our green agenda?”, or:
“Are we indirectly investing public money in fossil fuels without knowing it?”

If he or she feels confused or uncomfortable – just smile and share the link to the episode.
It would be interesting to check if most ambitious municipalities in the region took into account the carbon footprint from their investments into their carbon emission reduction targets. We will be following up on this.


CD: In this episode we talk about the problem, we are not pointing fingers. No, we are just investigating who owns this problem, who is responsible. But in episode two we will talk about what our investments and financing markets should look like if we want to stay under 2-degree global warming.

And in episode 3, we’ll do some back-casting and discuss how do we get there.

But let’s finish this episode with a big party!


{Interview continued]
CD: So Magnus, if I wanted to solve this problem and I had a big house where I can invite all the decision makers or strategic players that I want, the one we should influence. And we throw a big party with good wine and good music – but then of course we would lock the doors and not let anyone out before we have a strategy that keeps us well under two degrees. Who should we invite?

ME: It would be interesting in that house of yours to discuss with a number of people sitting on the boards of banks, pension funds or insurance companies who are representing you and me – because we are the actual asset owners because it is our money – but then we hand it over and assign an account in a bank or a fund where we hand it over to someone who is acting as the asset owner for you and me. And primarily those who are responsible for that asset management would be the board members, the actual owners of the company, and to understand what their competences are, and how well they have understood the relationship between sustainability and the well-being also for society as a markets and financial kind of the financial sector.

CD: OK, interesting, yes.

ME: I mean this house where we all meet, it would be good for also have people from both from governments and ministries who are setting the rules, or supposedly, set the rules for the markets, and also related organizations, the SCC of Sweden for instance, or those who are looking into financial stability and security and the rules of the financial markets. Because often from financial sector it is said that the climate or sustainability is a policy issue; it’s a matter for the politicians and the governments to set the rules and make sure that the rules for the market are the same for everyone, and that if there is a risk in for environment or something, then the government should include that sort of price or a tax or something which makes that risk be priced correctly.

And thereby, both private both companies but also private financial institutions tend to sort of separate their responsibility from the policy makers’ responsibility. And there it seems like the risk, which is a risk for us all, but also a risk for the financial sector themselves, is, sort of, left between the chairs – is that what you say in English?

CD: Interesting, yes.

ME: They’re pointing to each other because policymakers also might want banks and investors to take more responsibility and to be more transparent about what they do, and they should sign up to this kind of declarations, or so on. But it seems like they have different views of who should do what and who should do more than the other.


CD: Yes, we haven’t talked about national pension funds which account for 21% of Swedish invested capital. Who is regulating the way this money is used and invested?

ME: That’s a very interesting relationship as well because the national pension funds, the AP funds, they are quite independent currently, so they are governed by law and the Minister of Finance, which is the minister of the current government. They don’t have the full power to do anything they want to with the AP funds because it’s actually the Parliament who is responsible, who have the power to set new rules or decide what the funds should do or not do. The government or the Minister of Finance always have to have the support in the parliament if they would do something.

So in that house in the meeting, I would also like to have a couple of people from the Parliament because when we discuss the financial sector as a whole, but in particular when it comes to the AP funds, it’s very much the discussion around how the government pension funds should provide pension benefits to us so that the money will be enough for all of us when we retire. So it’s more about a return question, more about social security question. High return is often and still seems like the number one key driver or key priority. It’s not a contradiction to have a long term sustainability and financial return, rather it’s a prerequisite. If you want to have long term sustainability, and longer term return from your pension funds, you need to make these investments more sustainable and climate smart and so on. But it’s often discussed as if you need to sacrifice the return if we do more sustainability in the pension funds.

CD: Yeah. Okay so at this big come-together in my big house, we would like to invite the board members and owners of the banks, insurance companies and various funds out there who are responsible for the ownership policies, capital allocation and investment strategies. We want to have also a few people from the government and ministries who are setting the rules for the market. And also the related authorities who ensure financial stability of the markets.

We said a few people from the Parliament. And should we involve all the people, the actual asset owners like you and me? What are your thoughts on this? Am I responsible for tracking my footprints, or getting transparency? what are the actual levers that I can use as a consumer or as an asset owner?

ME: It’s difficult to expect the individual client to have a full overview of the impacts of my funds as they travel along the financial value chain, and the different options I could take, and different impacts or the consequences I might take if I save in this fund or that fund or in this region or that region. It’s obvious that it’s too complex to expect that financial decision making could be something which is guided by consumer people-power; that people all of a sudden go up and demand that their funds should be directed differently, and then the financial flows over the world will be looking and going differently.

CD: I understand.



CD: So in conclusion, the Paris agreement tells us that in 2050 we should have 80% of the fossil fuel reserves kept in the ground. And as of today our finance is going the opposite direction and much of the investment money comes from your savings. So keep asking, keep being interested in where your money is going.

CD: Magnus, thank you so much for contributing all those insights to the show. we’ll see you soon and we have more work together.

ME: Thanks. It’s my pleasure.

CD: We have a new website, and we’re also launching a Facebook profile and that links to the Twitter that you already know. So make sure you check it out. You will find all the details about our new subscription plans 2016. You’ll see that we are keeping all our briefings free to access to everyone and that our special editions are moved to a ‘subscriber only’ space, so get your access, our Team is here to help you.

We’ll be back very soon with episode two and three of this series about Climate & Finance, keep up the good work, in the meantime!