By Fiona Reynolds (@fireynolds), CEO, PRI
This time last year, I didn’t expect to be hosting another virtual conference for PRI signatories. However, with thousands of delegates in attendance and 102 expert speakers across 19 sessions, not being in-person certainly didn’t dim the discussions around the most vital topics for responsible investors at last week’s PRI Digital Conference.
It was clear to me from all the sessions that there is strong and growing collective ambition amongst PRI signatories to work together to truly build a just and equitable world for future generations. The twin crises of climate change and the COVID-19 pandemic have clearly demonstrated what happens when sustainability is not taken into account.
Now, with COP26 just days away, the conference’s theme of building a sustainable future couldn’t be more relevant.
The recent report from the IPCC has made it abundantly clear that strong action on climate is needed—now. While net zero ambition may be gaining traction, panelists at the conference agreed that governments and investors need to step up both their commitments and accountability to get us back on track for a 1.5-degree world, affirming that global cooperation is key.
“We’re committed to coming together to put our collective shoulders to the wheel” to move towards net zero, commented Nili Gilbert of the David Rockefeller Fund.
Panelists discussed the move from net zero target setting to implementation. Günther Thallinger, Chair of the UN-convened Asset Owner Alliance, highlighted the importance of interim target setting, saying how out of the more than US$9trn in AUM represented by the Alliance, half had already published 2025 interim targets.
Despite this progress, a key message that came out of all the climate sessions was to “act now”. This urgency for governments to act was highlighted in the findings of the latest Inevitable Policy Response report, launched at the conference, which warned that a dramatic acceleration of climate policy around energy and land use is needed to keep a 1.5 degree world within reach. This is a clear sign to investors that they must focus on the transition, 2030 and net zero pathways.
A sustainable and inclusive recovery
Just like the climate emergency, it’s also vital to ensure that the recovery from the COVID pandemic enables a more just and fair society. As UN Secretary, António Guterres, remarked last year, “people—and their rights—must be front and centre” in our response.
Panellists on a session about how to build back better agreed that investors have a major part to play, working with governments and other stakeholders to support the design of policies that are transparent, effective and aligned with sustainability goals. This includes strong net zero targets, near-term policy accountability from governments and policy frameworks that deliver on these targets.
We simply can’t emerge from the pandemic to find that we’ve built a less fair society, not on track for 1.5 degrees. With only one percent of the six billion vaccine doses so far having gone to low-income countries, discussion focused on the need to look beyond slogans and into the reality of whether we really are building back better.
As Sharan Burrow of the International Trade Union Confederation commented, “We need to all be part of the critical ambition to reach the stability point for our planet for the climate emergency. It’s the biggest transition we will see in our lifetimes.”
Speakers reinforced the need for decisive actions and solidarity to build resilience, ensuring that investors contribute to a sustainable, inclusive and resilient recovery in a way that is effective and fair. Panellists noted that for G20 countries specifically, fulfilling the pledge of US$100 billion in climate finance is critical in affecting equitable and inclusive global climate solutions and building resilience.
Sustainable finance policy developments
For finance to effectively support the economic transition to a sustainable, inclusive, net zero world, sustainable financial policy matters more than ever.
While the session on this topic boasted diverse perspectives from the US, EU, Japan and the UK, a clear direction of travel from policymakers on sustainability emerged; in 2021, it is no longer a “nice-to-have” – it’s a must have. For systemic issues such as the climate crisis to be tackled, there was broad agreement that action must be taken not just at the domestic level, but at the global level.
As EU Commissioner Mairead McGuiness commented, “This is the last chance to do the right thing for future generations by tackling the challenges of climate, biodiversity loss and environmental degradation.”
"One thing is certain: the EU cannot tackle the climate crisis by acting alone. Because #climatechange is a global problem...action must be taken at a global level," says Mairead McGuinness, @EU_Commission at the #PRIDigitalConf #EUTaxonomy pic.twitter.com/qGGMCgEgmL— The PRI (@PRI_News) October 18, 2021
Ashley Alder of the International Organisation of Securities Commissions also commented on the need for a global climate reporting standard, highlighting the requirement to hardwire sustainability into financial regulation on a broad scale.
In a session dedicated to human rights and big tech, panelists reflected on data privacy and freedom of speech, as well as the role investors have to play on human rights more broadly.
Daniëlle Essink of Robeco mentioned that they are “aiming for companies to implement the UN Guiding Principles (UNGPs), to identify, address and mitigate salient human rights risks, and to show investors, as well as society and stakeholders, they’re showing how human rights risks are being accounted for…dialogue and transparency are key on this issue.”
Importantly, at the PRI we are running a five-year programme on human rights and we hope that by the time it concludes, investors build consideration for human rights into their decision making in the same way they do for climate.
Linked to human rights is the notion of tax fairness; I’ve always believed that we’ll never be able to tackle inequality, and crises such as climate change, if we don’t address and tackle tax.
“My advice to investors: they really need to understand that the world has changed. They need to adapt,” says @PSaintAmans, @OECDtax, as he discusses tax at #PRIDigitalConference in keynote interview with @Fireynolds pic.twitter.com/d06AGZR1oM— The PRI (@PRI_News) October 19, 2021
There was agreement from panellists on a session about tax fairness that global cooperation and support of policymakers is needed to move to a fairer international tax system.
When asked how investors can do this practically, panelists pointed to the suite of PRI materials on tax, blending materials into existing programmes and engagement on tax, and making sure the conversation gets going between investors and companies. They also encouraged companies to think of the long-term benefits of a fairer international tax system.
As Faith Ward of Brunel Pension Partnership commented, “This underpins every other responsible investment objective you have. If you can’t do this, you can’t support delivery of any other SDG—this is paramount.”
During my time as CEO of the PRI, I’ve seen the shift in responsible investment from a niche to mainstream activity, with the COVID-19 pandemic and climate crisis both fueling this momentum. I believe the world has woken up and is finally beginning to understand the importance of sustainability—because at the core of a healthy economy, there must be a healthy planet and healthy people.
Yet while we’ve come so far, there is still so much more to be done and time is running out. With the leadership of PRI signatories, initiatives such as the UN-convened Net Zero Asset Owner Alliance, governments and civil society, we can and must drive responsible investment forwards to help create a future that is green and just for all.
The time is now to truly build back better, for good—let’s work together to do just that.
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