When one of the world’s most powerful central bankers gives a speech at an insurance industry event on climate change, you know there has been a sea-change in the attitudes of the financial sector.
Mark Carney, Governor of the Bank of England and previously Canada’s central banker, is now calling climate change the “tragedy of the horizon” and urging the financial sector to do better for their clients and the planet, to “build a virtuous circle of better understanding of tomorrow’s risks, better pricing for investors, better decisions by policymakers, and a smoother transition to a lower-carbon economy.”
According to a report by Arabella Advisors, 436 institutions and 2,040 individuals across 43 countries and representing $2.6 trillion in assets have committed to divest from fossil fuel companies, an increase of five times since last year.
The Montreal Pledge championed by the UN’s Principles for Responsible Investing has 96 signatories. The Portfolio Decarbonization Coalition (PDC), an initiative of the UN Finance Initiative and Carbon Disclosure Project, now has 21 members representing $62 Billion in assets under management. PDC is releasing an update on October 13, including a case study about Toronto Atmospheric Fund’s impact investing leadership.
TAF is proud to be one of these signatories. Despite our relatively small asset, we punch above our weight, with 80% of our asset invested in alignment with our low-carbon mandate. To date, TAF has invested our endowment three times over in innovative projects that demonstrate and de-risk urban solutions to climate change. TAF investments have helped the City corporation shave more than $55 million off its energy bills and reduce City-wide greenhouse gas emissions by 15% below 1990 levels. TAF’s endowment has been invested carefully – and with a positive return – in listed equities, bonds, direct Investments (private debt and other financing) and private equities that support its mandate. The earnings are used to provide grants to projects of non-profit organizations and to undertake strategic initiatives focused on low-carbon solutions.
It is encouraging that senior financial leaders are recognizing climate change as an economic liability. As more financial industry heavy-weights call for change, what we need to see is mainstream adoption of low-carbon investing as a way to earn returns.
Read Mark Carney’s full speech here.
Image credit: CreditDominic Lipinski/Agence France-Presse — Getty Images