ESG matters are climbing the business agenda and investors are increasing their focus on companies that are seen as more sustainable, but is being just more sustainable good enough? Not according to Helena Lindahl, Fund Manager of SPP Green Bond fund, who has just come back from the Climate Bond Conference in London. “We need a much bigger leap forward, to truly support, the transition to a climate-resilient economy,” she says.
The IPCC report published last autumn effectively demonstrated the urgent need for rapid change in scalable sustainable solutions. Though, green bonds and climate bonds have become an important part of finance response on how to meet the transition, trillions of dollars of investments, are still needed to support a true movement towards a low carbon society.
The theme of this year’s Climate Bond Conference was therefore, according to Helena, both relevant and urgent bringing insights into the challenges facing green bonds, and identifying what is needed to scale up the green trillions.
“The market for green bonds is overall growing fast but still remains a relatively small part of credit issuance. There is an enormous gap between what is actually happening and what is truly needed. The global UN Goals were signed by states. Now we need to see their capex plan. That in itself will present an enormous pool of green assets,” she says.
“There is a growing frustration among investors. We are all wishing for what I usually refer to as the “ketchup effect”. We have a positive momentum, but green bonds are far from having reached its full potential. Green bonds are undoubtedly the strongest financial instrument we have at our disposal in creating fast and long-term change. We need a much bigger leap forward, to truly support, the transition to a climate-resilient economy.”
Helena Lindahls main takeaways from the conference:
- Head of strategy in every company should also be head of sustainability. The roles are inter connected. Being head of strategy requires that you can position your company in a sustainable context and explain how it is compliant with the Paris Agreement according to TCFD.
- There is a broad discussion that there is need for more policy to make the Green finance market grow.
- We need more focus on transition companies. The low hanging fruits have already been picked. We need to climb the ladder. There is a lot to achieve between the two extremes – brown and the green.
- The global UN Goals were signed by states. Now we need to see their capex plan. That in itself will present an enormous pool of green assets.
- Green finance is still a very European phenomena. We need to excel the work and find ways to move beyond.
Helena Lindahl is portfolio manager for SPP Green Bond Fund. With over 4,9 SEK billions 2018- 12-31 (3,5 SEK billion in 2017-12-31) in assets under management, SPP Green Bond Fund is one of the largest dedicated green UCITS bond funds in the world. The fund is fully invested (93%), in labelled green bonds, compliant with green bond principles, projects linked to businesses and projects that have a clear positive impact on the environment and society. The investments vary from renewable energy, waste management to water treatment and drinking water supply.
The Climate Bond Conference brings together asset owners, investment managers, infrastructure and debt specialists, issuers, underwriters, regulators and policymakers.
This article and the featured image (showing Sean Kidney speaking) were kindly supplied by SPP Funds.