How can the investment community support real-world decarbonisation and a net-zero transition that leaves no one behind? Explore this critical issue with leaders in finance and Ninety One’s CEO Hendrik du Toit.
Oct 21, 2021
1 hour
Hendrik du Toit
Dr Ma Jun
Bill Winters
Fast view
In conversation with Hendrik du Toit: facing the transition
Ninety One’s CEO Hendrik du Toit outlines some key principles and actions for investors wanting to put their money behind the transition to a net-zero economy:
If we want to achieve net zero for the world, we have to be inclusive. Decarbonising our portfolios individually won’t help anyone. The emerging world in particular must be included in our collective net-zero strategy.
An investment approach based on exclusions and divestment will not achieve the transition. We need to engage with the companies we own, and with the countries whose debt we hold. Engaged investors can help ensure assets don’t end up in the hands of private owners who may care nothing about the planet.
What has changed today from five years ago is that the mainstream is now behind the net-zero transition. When that happens, you can let market forces loose, with appropriate regulation and direction from the top.
It’s now a question of execution. Let’s put the rhetoric away and deal with real-world solutions. Because if all we do is tick boxes as far as net-zero investing is concerned, our children and grandchildren will never forgive us.
Without the market, governments will take too long to make progress towards net zero. As the savers of the world, we have to create the solutions and encourage governments to come with us, rather than wait for them.
All investments carry the risk of capital loss.
In conversation with Hendrik du Toit
Fast view
In conversation with Hendrik du Toit: facing the transition
Ninety One’s CEO Hendrik du Toit outlines some key principles and actions for investors wanting to put their money behind the transition to a net-zero economy:
If we want to achieve net zero for the world, we have to be inclusive. Decarbonising our portfolios individually won’t help anyone. The emerging world in particular must be included in our collective net-zero strategy.
An investment approach based on exclusions and divestment will not achieve the transition. We need to engage with the companies we own, and with the countries whose debt we hold. Engaged investors can help ensure assets don’t end up in the hands of private owners who may care nothing about the planet.
What has changed today from five years ago is that the mainstream is now behind the net-zero transition. When that happens, you can let market forces loose, with appropriate regulation and direction from the top.
It’s now a question of execution. Let’s put the rhetoric away and deal with real-world solutions. Because if all we do is tick boxes as far as net-zero investing is concerned, our children and grandchildren will never forgive us.
Without the market, governments will take too long to make progress towards net zero. As the savers of the world, we have to create the solutions and encourage governments to come with us, rather than wait for them.
All investments carry the risk of capital loss.
In conversation with Bill Winters
Fast view
In conversation with Bill Winters: the stars are aligning on financing the transition
Bill Winters, CEO of Standard Chartered, offered examples of progress towards a more sustainable economy, and discussed what will drive the transition in the developing world.
The stars are aligning. Stakeholders including employees, shareholders, credit holders, regulators and in some cases customers all want us to act on climate change.
Where Europe has central regulation driving action on climate, that won’t happen in Africa, Asia and the Americas. Pressure to act will come instead from the finance sector and customers.
Financial sector climate rules mean banks will not be able to do business with emerging market companies as they used to, because the banks will not be able to hit their own climate targets. That will force action.
About five years ago, Standard Chartered stopped financing coal. Some clients and sovereigns questioned that decision. Standard Chartered continued to work with them, and ultimately every one of the coal projects was cancelled and replaced with something more economic.
According to Mr Winters, the “bet we are making is that while [the net-zero transition] will be disruptive and costly, for our clients and us to some extent, it’s an opportunity that will ultimately offset the cost”.
Please see full interview between Hendrik du Toit and Bill Winters here
All investments carry the risk of capital loss.
In conversation with Dr Ma Jun
Fast view
In conversation with Dr Ma Jun: solving climate finance together
According to Dr Ma Jun, Co-Chair of the G20 Sustainable Finance Working Group, much better global co-operation is needed to finance the net-zero transition. He suggests some crucial steps to improve co-ordination in the financial system.
Three key areas where the financial sector needs to co-ordinate better:
Agree on a single taxonomy for classifying climate-aligned economic activities. There are currently over 200!
Standardise ESG rating methodologies. At present, ESG ratings aren’t comparable.
Co-ordinate reporting standards for sustainability-related information, replacing today’s confusing mix of standards.
More broadly, the world needs to build a framework for transition finance in order to encourage more financial resources towards supporting the net-zero transition.
Such a framework is essential for helping high-carbon companies transform into low-carbon companies. For example, many investors are currently unwilling to finance a coal-fired power generation company’s transition to a renewable business, which must happen to decarbonise.
In short, we need to stop dividing assets and activities between ‘brown’ and ‘green’. To get to net zero, we need to focus on turning ‘brown’ into ‘green’.
Transition pathways must be established for different sectors, such as steel, aluminium, cement, aluminium, paper and coal. Based on these pathways, we can then revise the taxonomy to allow transition activities to be included in recognised transition finance. That way, financial institutions will not be fearful of participating in it.
Please see full interview between Hendrik du Toit and Dr Ma Jun here
All investments carry the risk of capital loss.
Authored by
Hendrik du Toit
Chief Executive Officer
Dr Ma Jun
Co-Chair, G20
Bill Winters
CEO, Standard Chartered
Important information
This communication is provided for general information only should not be construed as advice.
All the information in is believed to be reliable but may be inaccurate or incomplete. The views are those of the contributor at the time of publication and do not necessary reflect those of Ninety One.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.