Investing in technologies at an early stage and finding finance vehicles to support them is key to the success of the climate transition, Coimbatore Sundararajan Venkatakrishnan, chief executive of Barclays, said in an introductory interview at Bloomberg’s Sustainable Finance Forum 2024 in London.
Anna Edwards, TV news anchor at Bloomberg TV, opened the conference asking Venkatakrishnan about the dynamic between election cycles and transition goals, and how the upcoming UK election will impact how transition plans are delivered.
“There is not a large difference between Labour and Conservative, which speaks to the political and economic stability in the UK. This is great for the country’s economic growth. What we hope to get is stability in the government.
“That is, a government that lasts for five years, makes policies that push sustainable technologies, and provides support financing so that this change can occur at a grassroots level. Spreading technology across the company is very important, and there are even more important choices to be made about nuclear in the country.”
Further, he said that the climate transition will only be a success if “countries play to their strengths.” He explained: “We need to define ways to invest in technologies to the scaling point. This means finding investors for technologies at an early stage, and then deploying this investment on a mass scale. Public and private support mechanisms – which the World Bank in initiating – need to find their way to perfect financing vehicles where we get a reasonable return on capital.”
Edwards also asked how the one of the UK’s largest banks mobilises net-zero financed transitions.
“Barclays were the first bank to voluntarily do a climate stress test, which is named BlueTrack. It is a measurement system for how much emissions there are in our portfolio activities. We have the ambition to be a net-zero company in financed emissions and Scope 1, 2 and 3 by 2050. We are moving away from coal to oil, oil to gas, gas to clean energy.
“We are all subject to the politics of our land. For example, if there was a new oil well being drilled off the North Sea of the UK, and the UK Government wanted us to finance it, we would not as we don’t promote new drilling. We follow science based targets and standardised measurements that lay out our path according to IAEA standards. The bank must stick to its principles,” Venkatakrishnan said.
Delivering effective sustainable frameworks
A later panel, titled Catalysing the Global Policy Framework for Sustainable Finance, senior international leaders discussed how frameworks for sustainable finance can be delivered effectively. The panel was moderated by
The panellists were:
- Executive director, banking department II, Monetary Authority of Singapore, Goh Gek Choo
- Annemie Rombouts, deputy chair of FSMA
- Nicolaj Sebrell, director of investor relationships – EMEA, International Sustainability Standards Board (ISSB)
Moderating Cinzia Chiriac, head of ESG regulatory affairs at Bloomberg, asked the panellists where their future priorities are in the legislative space. Rombouts outlined three, with the first to leverage sustainable finance frameworks to boost the Capital Markets Union. “The latest OECD report shows the EU market is the most active at 48% of global issuances compared to traditional bonds or dissimilar issuances. It is ambitious but it is not out of reach,” she explained.
Second, Rombouts said she hopes the International Financial Reporting Standards (IFRS) will be integrated into national legislations as “these are part of the value chain and there remains lots of educational guidance to be to be done.”
Third, she added: “It would be nice if we saw the outcome of actual engagement of investors and asset managers. This will produce more data than ever before and raises the question of how this will orient decision making within companies.”
Meanwhile, Choo said that considering physical risks associated with the climate transition is important. “We are feeling the impact of physical changes. The finance community have been focusing their efforts on transition risks or mitigating actions, yet, physical risks are getting more real and the impact is intensifying. The ability to better manage physical risk will be important in managing the transition.”
Sebrell added two words come to mind: convergence and simplification when thinking about sustainable frameworks. “Although they may seem counterintuitive, investors and various stakeholders remain overwhelmed by acronyms for all the concepts we use. What they are looking for is information that makes it easy to reach decisions on sustainable sustainability, related risks and opportunities.”
He concluded: “For me, success is simplifying this alphabet soup. However, convergence allows these things to talk to each other and avoid that overwhelming feeling.”
