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Insights 17 Jan 2017

What I Have Learnt

By Richard Burrett

Richard Burrett is a Partner at Earth Capital Partners LLP, a sustainability focused investment group. He has spent over 30 years working in international finance and at ABN AMRO played a key role in developing the Equator Principles. He is a Fellow at the Cambridge Institute for Sustainability Leadership.

For our finance edition of Radar Magazine we interviewed him to find out what he has learnt.

I’m relatively optimistic about the future of green finance. In the finance sector people are starting to think how can they have positive impact. The UNEP FI Positive Impact initiative is looking at how investors can contribute to the Sustainable Development Goals.

It is only in last few years that we’ve seen real discussions emerging on the threat to financial security of, for example, climate and inequality. The issues that we were talking about a few years ago are now part of the mainstream discussion. It is encouraging that the Carbon Tracker Initiative and others are thinking through systemic risk of climate change. The fact that climate risk is on the Financial Security Stability board is important.

I think Paris Agreement was remarkable. As evidence mounts about danger of extreme weather events happening it will become more and more difficult for decision makers to ignore it. Acting on climate is not a political choice, it is the underlying reality.

I would advise CEOs to look at these issues through your enterprise risk management lens. Look at macro drivers that will impact your business over time. These are real issues with economic consequence.

Mark Carney (Governor of the Bank of England) has been very smart at accepting the Carbon Tracker stranded assets thesis and adopting it in his own rhetoric. It is critical that we start to talk about these issues as systemic risk issues.

Big global problems need global action. So, Brexit was the wrong thing to do and not helpful for resolving issues like climate change and migration.

The media rhetoric is very opinion based and lacking evidence, which worries me. NASA can put a man on the moon but when they tell us global climate is changing people ignore it, which is scary.

I would like to see economies that work for society and provide longer- term value and inclusive approach. I have tried to move the compass in the financial sector to take a more responsible approach to better understand finance in society and the broader economy.

On many indicators it is getting worse like income inequality These are issues that should be addressed by business sector and government. The finance sector has to understand and be a steward ensuring that finance goes to activities that have more positive social outcomes.

Some big corporations are still only worried about their performance over the next one or two years. They are not thinking about how they will preserve value for the future. It also angers me that governments are so self-serving and not in the long-term interests of the society they represent.

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