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Post 29 Sep 07
Putting Asean at the heart of sustainable finance
The global financial services sector is, once again, under the spotlight for all of the wrong reasons. The worldwide credit crunch and the volatility of rocking markets has found its way onto the main street from Bangkok to Bogota and from Manila to Munich.
In short, the brilliant minds of high finance are in the dock _ just as they were after the 1997 Asian financial crisis, the dot.com collapse at the turn of the century, and a host of other scandals in recent decades.
The question on the table: "Is the sector just plain greedy and are these intermittent crises an unavoidable part of capitalism's colourful cycle?"
In Melbourne, Australia, on Oct 24-25, financial service executives from the five continents will gather for all of the right reasons that will provide a distinct counter-balance to the negative pall that hovers over the financial sector after the latest crisis.
The involvement of bankers, insurers and asset managers from Asia-Pacific, and notably from the dynamic economies of Asean, will be critical to a gathering of some 500 people who will explore the latest global developments in sustainable finance and responsible investment.
At the heart of this Global Roundtable is a sentiment expressed by Georg Kell, the executive secretary of the United Nations Global Compact: "The world of finance and investment has a pivotal role to play in the realisation of sustainable development. Capital markets also will have a fundamental influence on investment for the ideas, technologies and companies of the future that will drive solutions to many of our common environmental and social challenges."
Whether you probe the investment, banking, or insurance fields, the period 2003-07 has witnessed a staggering range of new initiatives as institutions, individually and collectively, have focused on their role in responsible investment and sustainable finance.
At the Melbourne meeting, financial practitioners will probe how they can "make good and do good" in areas ranging from new technologies, water investment, funding for waste management projects, finance for ecosystem services and biodiversity protection, and how capital markets and finance can make money out of the global warming challenge.
The great megacities of Southeast Asia, Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Manila, Seoul, Singapore, and on and on, with their economic vibrancy and ecological as well as urban industrial challenges, are a fascinating laboratory for how sustainable finance will play out in future decades.
Those Asean and international financiers who are ahead of the curve in terms of creating innovative structures and investment vehicles to turn sustainability challenges into bankable opportunities, without doubt, will be early leaders in the markets of the future.
The Melbourne gathering, co-hosted by the United Nations Environment Programme Finance Initiative (UNEP FI) and the Environmental Protection Authority of the State Government of Australia, will update participants on a phenomenon that has spread like wildfire through mainstream finance and investment in recent years.
Since 2004, the initials ESG _ environmental, social and governance _ have rooted themselves in the lexicon of the financial services community. Some of the largest finance and investment companies have begun to grapple with the complex business of mainstreaming ESG values within their core business activities.
The UNEP FI Global Roundtable will trace a number of the key developments that have accelerated the evaluation of ESG issues within mainstream finance, investment and the capital markets.
As with any evolving area of activity, sustainable finance and responsible investment has created its own community.
This community has developed initiatives, institutions, language, including an inevitable growth of acronyms, and a way of operating and interacting.
When you combine these developments with the unfathomable mystery that, for many people, surrounds the world of high finance, then it is easy to understand why non -specialist audiences can often be left behind.
Part of the purpose of the meeting in Australia, therefore, is to provide a straightforward explanation of the developments that have contributed to the growth in sustainable finance and responsible investment activity and where financiers can make new business.
In Melbourne, a group of the world's leading thinkers and practitioners in this field will, over two days: - explain the major developments in a manner that enables the broader community to understand what has happened in the fields of sustainable finance and responsible investment; - highlight the drivers for this change within the financial services sector and investment communities and explore whether the activities underway are driving real change in the marketplace; and - draw on the experience and insight of global thought leaders in the area to provide comment on what is working, what is not, and what should come next.
The potential of sustainable finance and responsible investment is confirmed by an initiative that former UN secretary-general Kofi Annan backed.
In April 2006, the then UNSG launched the Principles for Responsible Investment (PRI) , a voluntary code developed by the heads of twenty plus of the world's largest investors _ pension funds, special government reserves and foundations. The Thai Government Pension Fund was the Asean representative.
A year after the launch ceremony at the New York Stock Exchange, 230 of the world's largest investors, representing more than US$10 trillion in assets, now back the principles. The figure equates to nearly 20% of global capital market value that stands at $50 trillion and is one-fifteenth of the total of $150 trillion of global financial assets.
The change has profound implications for the way capital markets work, for the financial service organisations that compete in those markets and for the companies that raise capital on those markets.
The financial community in Asean should be at the forefront of this coming revolution in the way finance and investment works. A visit to Melbourne in late October will ensure the region's banks, insurers and asset managers are at the forefront of this global movement.
Paul Clements-Hunt is the head of the United Nations Environment Programme (UNEP) Finance Initiative (FI). UNEP FI, based in Geneva, is the largest partnership between the United Nations and the financial services sector counting more than 170 banks, insurers and asset managers as members.
UNEP Finance Initiative website
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