A mid-week round-up from Building Bridges Geneva

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A mid-week round-up from Building Bridges Geneva

As Building Bridges Week approaches the halfway point in Geneva, we report on some of the key moments of the conference so far.

As recognition grows around the need for countries and businesses to make substantive net-zero pledges, the financial sector is facing increasing pressure to fund the real economy with a net-zero mind-set. The goal of the Building Bridges Summit and week of events is to build the inter-sector partnerships between the finance community, the United Nations, international organisations, NGOs, academia, and local, cantonal & national authorities we need to effectively fund the transition to a more sustainable economy. Building Bridges 2021 is focusing on three areas: impact and transparency, supply–demand mismatch, and fintech for Sustainable Development goals (SDGs).

As recognition grows around the need for countries and businesses to make substantive net-zero pledges, the financial sector is facing increasing pressure to fund the real economy with a net-zero mind-set

Day one: the Building Bridges Summit

The week of events began on Monday with the Building Bridges Summit, which initiated the process of breaking down inter-sector barriers to make way for productive partnerships that can deliver impact and transparency around net zero.

In his opening remarks, Patrick Odier, Senior Managing Partner at Lombard Odier and President of Building Bridges, said, “Finance is now at the heart of the net-zero mission. However, the financial sector can't do it alone. In particular, governments will have to create the right policy frameworks and incentives, while corporations and consumers will also need to change business models and behaviours, respectively.”

Odier also emphasised the pivotal role of Switzerland in bringing sectors together around net zero. “Switzerland is an increasingly important global convener of sustainable capital,” Odier explained. “But we still have much work to do. I call on the Swiss financial sector to commit to achieving net zero by 2050 by joining one of the leading net-zero initiatives, and to publish clear and transparent interim targets before COP27.”

Finance is now at the heart of the net-zero mission. However, the financial sector can't do it alone

The financial sector must also adopt robust methodologies around sustainable investment if it is to meet its net-zero obligations. “The Implied Temperature Rise [ITR] metric provides an intuitive, science-based way to assess an investment's alignment with the Paris Agreement,” Odier continued. “My second call is for the Swiss financial sector to systematically adopt ITR metrics by the end of 2022.”

In closing, Odier urged a more serious engagement with nature that recognises its foundational role in the transition. “Nature represents anywhere between 30 and 60% of the answer to solving the climate crisis,” said Odier. “And yet, it only receives 3% of climate finance. As such, we have a once-in-a-generation opportunity to mainstream investment into nature as we transition to a net-zero, nature-positive economy.”

Nature represents anywhere between 30 and 60% of the answer to solving the climate crisis…and yet, it only receives 3% of climate finance. As such, we have a once-in-a-generation opportunity to mainstream investment into nature as we transition to a net-zero, nature-positive economy

Another of the Summit's key speakers was Amina J. Mohammed, Deputy Secretary-General of the United Nations, who focused on the need to develop a common language that would enable different sectors to work together effectively. “The 2030 Agenda requires a holistic, integrated approach to the economic, social, and environmental dimensions of sustainable development,” said Mohammed. “This will give businesses a benchmark, and investors a scorecard, for sustainability.”

Also on Monday morning, Ueli Maurer, Federal Councillor and Head of the Federal Department of Finance, announced that Switzerland would be introducing a 'climate score' that will enable the tracking of finance companies on their adherence to the Paris Agreement.

After lunch, delegates attended a series of workshops designed to facilitate the creation of productive inter-sector partnerships. In addition, several startups and fintechs gave presentations on some of the tools and platforms they're developing to deliver more of the impact and measurement around sustainability we need to fund the transition to net zero.

 

Technology, research and metrics: day two of Building Bridges Week

The spotlight turned to innovation on day two of Building Bridges Week, with Tuesday's sessions focusing on the technology, research and metrics we need to achieve net zero.

In a session centred on the role of the private sector in transition financing, Jörg Gasser, CEO of the Swiss Bankers Association (SBA), discussed a joint study by the SBA and the Boston Consulting Group. The research found that, while the Swiss economy would require CHF 400 bn of investment to achieve net zero, the financial sector could meet that requirement through lending and capital markets. Nathan Fabian, Chief Responsible Investment Officer at Principles for Responsible Investment and Chairperson at the European Platform on Sustainable Finance, hailed the research as “the most achievable finance plan that I've seen globally.”

We are convinced that sustainability will alter the investment landscape and that it will be a key driver of future returns

One of Tuesday's key moments was the unveiling of 'Predictors of Success in a Greening World', a new report by Lombard Odier and the University of Oxford that examines the international trade in complex green technologies and whether countries are delivering on their commitments to 'build back greener'. The report includes two new frameworks that measure countries' actual and potential capitalisation on the green transition through complex green products: the Green Complexity Index (GCI) and Green Complexity Potential (GCP). Together, these frameworks can highlight opportunities for investors to tap into the shift to more sustainable energy and production systems.

Speaking at the launch of the new research, Hubert Keller, Senior Managing Partner at Lombard Odier, said, “We are convinced that sustainability will alter the investment landscape and that it will be a key driver of future returns. Working with our partners at the University of Oxford, our research will contribute to the transition by helping investors understand the extent to which their portfolios are truly sustainable.”

Working with our partners at the University of Oxford, our research will contribute to the transition by helping investors understand the extent to which their portfolios are truly sustainable

Other sessions on day two of Building Bridges Week included a showcase of entrepreneurial solutions to achieving the SDGs, a review of some of the research presented at the Geneva Summit on Sustainable Finance, a discussion of the importance of maintaining a focus on inclusion and gender equality throughout the transition, and a conversation on the need for 'BigFintech' to align their governance models with the needs of the sustainability revolution.

Look out for more reporting from Geneva as Building Bridges Week continues.

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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