Gérard Mestrallet: “Climate Finance Day will help to demonstrate the substantial level of involvement from the finance sector”
In an interview conducted on Climate Finance Day, hosted at UNESCO Headquarters in Paris by Paris Europlace, ENGIE Chairman & CEO Gérard Mestrallet speaks about the challenges of this unprecedented event involving the world of finance in the run-up to COP21. Amongst other issues, he discusses practical solutions for the effective leveraging of private finance to contain climate change.
Interview with ENGIE Chairman & CEO Gérard Mestrallet in Climate Finance Day
How can finance help to counter climate change?
Involving the private finance sector is essential if we are to raise capital on a very large scale and achieve the target of limiting global warming to just 2 degrees. As things stand today, private finance is not sufficiently focused on 'low carbon' assets, and the financing of projects that emit less carbon often runs up against obstacles.
The finance sector, led by the French financial industry which employs 1.2 million people, suggests a need to action three priority levers, beginning with the setting of a price for carbon as a key climate indicator, and organizing an efficient global carbon trading market. Next comes reducing the carbon footprint imposed by the portfolios of major investors: insurers, pension funds and asset managers. Some international investment funds are already doing that. Lastly, developing and proposing new channels and vehicles for financing the energy transition in response to the imperative need to boost long-term savings. Green Bonds are a good example of such a vehicle: the market for them has exploded, growing by a factor of ten in a single year! And I'm delighted to see that on Climate Finance Day, finance industry stakeholders led by Paris Europlace are publishing a guide to demonstrate their leadership and expertise in the Green bond market.
What will be the central topics addressed at this one-day event?
Climate Finance Day has two central goals: the first is to highlight the pioneering initiatives in place for environmental protection. For example, in the context of reducing the carbon content of portfolios, there is an initiative from a Norwegian fund to exclude from its portfolio 22 companies involved in highly polluting industries. We're also seeing a proliferation of environment-focused investment funds from finance banks and management companies associated with major corporates. The second is to encourage every part of the finance sector to learn the lessons of these experiments and develop the most effective of them so that this sector gradually acquires all the most appropriate tools and standards.
This event will also try to answer four key questions:
- How can institutional investors guide the management of their portfolios to minimize climate change?
- What banking and financial tools can be used to enable the funding of green projects?
- How can the finance and insurance industries take on board climate-related risks in such a way as to prevent them and adapt to them?
- What innovative financial policies are already in place around the world with the potential to create a financial system tailored to the needs to control climate change?
Climate Finance Day will help to demonstrate the substantial level of involvement from the finance sector, which wants to play its part in the international commitment to limit climate change.
Climate Finance Day was held at UNESCO Headquarters in Paris on May 22, the day after the Business and Climate Summit. It was hosted by Paris Europlace in partnership with Caisse des Dépôts and the European Investment Bank.
The event facilitated a constructive, long-term dialog between the financial community, companies, governments and international institutions, and, for the first time, marked the commitment of the international financial community to combat climate change ahead of the COP21 United Nations Climate Change Conference.