Regulators and markets need to collaborate to achieve climate goals

'There is a need to respond with as much global collaboration as we can have'

There is a need for a set of common standards across the financial services sector in Europe and beyond in order to achieve a successful transition to a low-carbon economy, according to industry experts.

Speaking at a panel during the City Week 2020 event earlier this week, for which ESG Clarity is media partner, senior figures in the financial space have called for “real collaboration across the sector” in fighting climate change.

Alison Rose, CEO of NatWest Group, said climate change is set to be “one of the defining challenges” of our generation and it is important for businesses to set a key agenda for a low-carbon transition.

“We have put it firmly at the heart of our strategy and have set some bold ambitions,” she said.

See also: – ‘Immediate boardroom action’ needed to tackle climate change risks

This includes halving the climate impact of the business’s financial activity by the end of the decade and putting an end to lending to major coal and gas producers, unless they have a clearly set out a plan to align with the Paris Agreement in place by 2021.

Rose said: “We’ve doubled our commitment of financing climate and sustainable financing, supporting our mortgage customers to be more energy efficient. Those targets are important because they are quantifiable.

 “But we [also] need to work together to create a common set of standards.”

David Schwimmer, chief executive at the London Stock Exchange Group, agreed that the financial services have been “at the heart of the transition”, adding that the sector has to “continue to build on the progress made so far”.

In addition, he said it is the job of the regulators and policymakers to work “hand in hand with market standards”, while also being globally consistent.

“The regulators and markets need to partner and work together,” he said. “Many countries are already using TCFD standards, for example.

“The global nature of these challenges means it is best to respond to these with as much global collaboration as we can have.”

The LSE has been doing its own work in this area, including the creation of a global group of exchanges to develop climate guidance that will be consistent across the globe, expected to launch next year, he added.

“Exchanges are gateways to capital markets,” he said. “If there is consistency and coherence [here], it’s a good example for how we can have global collaboration.”

See also: – The uncomfortable truth about climate change and investment returns

Rose added that a common set of measurements would “give visibility to investors and markets and allow the flow of capital [into ESG products]”.

“We should all be trying to work together,” she said.

“It is about setting very clear targets and clear expectations and working with your clients to help them do that. Simply withdrawing capital [and doing nothing else] would be harmful to the transition that we need.”


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...