Scaling up sustainable investing in a post-pandemic world

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Scaling up sustainable investing in a post-pandemic world

Patrick Odier - Senior Managing Partner

Patrick Odier

Senior Managing Partner

The 3rd edition of the Abu Dhabi Sustainable Finance Forum (ADSFF) just closed its virtual doors after notable speakers and thought leaders discussed “Financing sustainable recovery and future resilience” and the sustainable investing landscape.­­­

“Despite the economic downturn, 2020 was a record year for ethical investment, climate pledges and sustainable commitments,” announced His Excellency Dr Abdullah bin Mohammed Belhaif Al Nuaimi, UAE Minister of Climate Change and Environment, in his welcoming address. “The UAE’s dedication to driving climate change at home and globally has been steadfast,” he added.

Our Senior Managing Partner, Patrick Odier, participated in a panel discussion on the Covid-19 impact on ESG investing to discuss whether the pandemic marked a make or break moment for sustainable finance. Where should investors and regulators focus their efforts to reframe financial markets? The Covid-19 crisis has urged governments and regulators around the world to scale up their sustainable recovery plans while investors are increasingly looking to embrace how environmental, social and corporate governance (ESG) factors influence decisions.

The Covid-19 crisis has urged governments and regulators around the world to scale up their sustainable recovery plans…

At Lombard Odier, we believe that sustainability will be at the core of this recovery and globally we should transition towards a Circular, Lean, Inclusive and Clean (CLIC™) economic model.

Find below some key points from the Forum:


2020 – A key juncture for sustainable finance

Maria Lombardo, Head of ESG Client Strategies for EMEA at Invesco, kicked off the panel by highlighting how “the pandemic has made us rethink our relationship with nature.” For Patrick Odier, “the climate crisis looks similar to the crisis created by the pandemic but in slower motion. Yet it poses a similar and equal threat to the planet.”

As the world starts to emerge from the pandemic and reset, building back for the better, it is vital that ESG values are standardised and that the financial sector helps investors understand how to use this data.

…the climate crisis looks similar to the crisis created by the pandemic but in slower motion. Yet it poses a similar and equal threat to the planet

Dr. Frank Rijsberman, Director General of the Global Green Growth Institute, shared to the audience that Covid-19 has pushed countries to take on new green deals, commit to net-zero, and that 2020 saw an increase in companies committing to ESG. “Emerging markets are still emerging on that front, but we hope to see a shift in the coming years,” he said.

For Maria Lombardo, “We’ve seen super performance in companies that had included ESG and sustainable models already in their strategies. So, to some extent, ESG has won.”

At Lombard Odier, investors who embrace ESG are supported through our core belief that sustainable investment is a key driver of risk and return.

"If all this is true, it means that the scenery for future investments, looking ahead, will considerably evolve and probably faster than we think," said Patrick Odier.

At Lombard Odier, investors who embrace ESG are supported through our core belief that sustainable investment is a key driver of risk and return

“We’ve seen an upsurge in sustainable investing in 2020,” shared Daniel Hanna, Global Head of Sustainable Finance at Standard Chartered Bank. “It was definitely one of the silver linings in what was for sure a challenging year for all of us.” For Hanna, there are three themes to focus on. “We need to catalyse more, we need to standardise and we need to democratise the access to sustainable finance.” “The reality is that we need to mobilise 3.8 trillion USD dollars a year in order to hit these goals,” he added. “While we’re seeing good momentum, it is not enough.”

…we need to democratise the access to sustainable finance

Fresh perspectives

For Patrick Odier there needs to be "a thousand shades of green" in finance and the success of green bonds needs to extend to other sectors. “We have a duty as professionals to come up with a force of proposals to make sure that capital is rightfully allocated and not constrained in a way that is either ideologically or politically driven,” he added. And “more than risk and return we must look at outcomes,” explained Anastasia Guha, the Director of Northern Europe, Middle East and Africa, at Principles of Responsible Investment. “People want a world they can retire in.”

We need to look not only at the how but at the what. “What are companies doing to have an impact? What is the company going to change in its business processes and how does it impact its business model?” examined Patrick Odier.

We have a duty as professionals to come up with a force of proposals to make sure that capital is rightfully allocated and not constrained in a way that is either ideologically or politically driven

Most of the professional investors have understood the importance of getting to the thrust of the matter and try to analyse through correct methodology and data. And it is important that we use the scientific community to set the right targets when using this data, stressed Patrick Odier.

Lombard Odier has developed a robust, science-based method called the LO Portfolio Temperature Alignment Tool (LOPTA) to align portfolios with the companies best positioned to capitalise on the climate transition opportunity.

"We have developed this methodology that really looks at impact, and also looks at materiality. We need to know the most material impact that has an influence on a company."

Lombard Odier has developed a robust, science-based method called the LO Portfolio Temperature Alignment Tool (LOPTA) to align portfolios with the companies best positioned to capitalise on the climate transition opportunity

“There’s a 10 trillion USD investment opportunity aligned with the SDGs over the next 10 years. There’s a need to educate and then provide that knowledge to catalyse capital and then move it where it can have an impact,” added Daniel Hanna.


The way forward

“We’re in the early commitments,” said Dr.Rijsberman. “In the past 12-18 months, there’s been a lot of net-zero announcements. I think we’ll see these targets fleshed out and clearer actions from governments which will, in turn, encourage companies to act.”

For Daniel Hanna, “there’s an opportunity for the private industry to create a transparent carbon market with clear regulations.” “We hope to see carbon market created at COP 26 in Glasgow,” said Dr.Rijsberman.

For Anastasia Guha, taxonomy is fundamental. “There’s no more greenwashing. A company is neither good nor bad. It’s a transition. It’s about what can you improve to move towards transitioning. It’s not about whether you’re green now but about if you can prove you’re aligned with the taxonomy.”

Many actions are being taken and solutions to transition towards a CLIC™ economy are in motion.

"I think that purposefully allocating capital is one of the most interesting challenges. And it will need to be tackled in the coming months and perhaps years,” concluded Patrick Odier.

Wichtige Hinweise.

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