PRI IN PERSON 2024 - Key Takeaways

The wave of Net Zero commitments from 74 countries in COP 26 was followed by similar commitments by companies, however the pace of change is not adequate.

Today we’re at the tipping point where the window to be Paris-aligned is closing. It’s crucial for climate ambition to translate into tangible actions that demonstrate real-world emission reduction Stakeholders in the race to Net Zero need to run the distance of a marathon in the speed required to win a sprint.
Time for action is NOW!

As the world grapples with climate challenges, the just transition has emerged as a key pillar for climate action, with the acknowledgement that the scale and speed of the economic transformation must consider the social dimension in investments at the get-go and not as an afterthought.

For this end, holistic approaches were put forward to guide investors in cases where a company’s behaviour might drive good financial performance in the short-term while contributing to inequality and driving-up aggregate risk in the system over the long-term.

With carbon lock-in becoming a key challenge for transition finance around the world, especially in emerging markets, public and private players need to exponentially increase their investments towards solutions that finance clean energy projects.

As the world moves from fuel-intensive systems to more material-intensive systems, robust and resilient clean energy supply chains are essential, especially for critical minerals in emerging markets.

Institutional investors must continue to actively engage with companies, to accompany all sectors in their transition.

They should also build an active dialogue with sovereign issuers as this is critical to have a better understanding of the real-word effects of public schemes. This can also be a powerful complementary tool to take stock of the proliferation of transition plans and ensure that ambitions meet actions.

Companies are often asked to do a lot in terms of sustainability disclosures and actions, with little visibility on the tangible benefits of the lower cost of capital in doing so.

This leaves room for regulators to find ways to reward companies that are proactively managing sustainability risks and impacts – some ways of doing are through linking sustainability performance to the cost of capital, such as through differentiated capital requirements or other financial incentives that are pivotal for private players to harness the opportunities and manage associated risks.

Navigating the patchwork of the growing number of sustainable finance taxonomies, standards, and reporting requirements globally can be complex for investors and companies, in addition to increasing the administrative burden and costs for organizations operating internationally.

Greater collaboration across regulatory bodies to harmonize various frameworks and establishing common principles and metrics is hence essential – one way of achieving this is through mapping existing sustainable finance frameworks and adopting common reporting templates and disclosure requirements.

Chrystia Freeland, Deputy Prime Minister of Canada announced next steps for its long-awaited green taxonomy to advance reporting requirements and sustainable finance labeling.

The move is welcomed, as new regulation is needed in Canada, especially as the country was listed as a “low regulation jurisdiction” on sustainable finance by the UN.

The conference commenced with the powerful message from Ogimaa-kwe Claire Sault, Chief, Mississaugas of the Credit First Nation, that recognized the traditional land rights of First Nations.

Moving forward, in light of Freeland’s announcement, the government will need to deliver on promises of prominent representation for civil society climate experts as well as Indigenous rights holders, as the initial process for Canada’s green taxonomy, three-years ago, missed these essential perspectives.