This speech highlights that the building blocks for a transition to a low-carbon economy are being put in place and discuss progress and prospects in three critical areas: reporting, risk and return.
He concludes that:
“recent progress in disclosure, risk management and return optimisation is creating a path to a New Horizon. A virtuous circle is becoming possible where companies disclose more information, investors make better informed decisions, and sustainable investment goes mainstream. But the speed with which this market develops will be heavily influenced by the coherence and credibility of climate policies. Finance will complement – and potentially amplify – but never substitute for climate policy action.
The policy frameworks with the greatest impact will be:
- time consistent (not arbitrarily changed);
- transparent (with clear targets, pricing and costing); and
- committed (through treaties, nationally determined contributions (NDCs), domestic legislation and consensus).
As countries build their track records and their credibility grows, the market will allocate capital to deliver the necessary innovation and growth and pull forward the adjustment to a low carbon future.
The more prolific the reporting, the more robust the risk assessment and the more widespread the return optimisation, the more rapidly this transition will happen, breaking the Tragedy of the Horizon.”