People need to think through the implications. The only one who has come close is the Carbon Tracker Initiative, and the numbers are mindboggling. It says that replacing oil would cost between £30trn and £40trn. This is just one sector. This number does not even include what is required for mining. This is something people should keep in mind when going through the energy transition. When directing capital, some hard choices will have to be made. Where? How? Why? Is it cost effective? Should Sellafield be a hub for nuclear or wind farms? Frith: Politicians are catching up with the financial markets. Previously, there was government rhetoric and environment campaign groups, whereas now money is following opportuni- ties. The financial community has achieved in the last two years, arguably, a lot more than the political rhetoric has in the past 30 to 40 years. Sumpster: It has and it hasn’t. There has been significant green- washing over the past five or six years. There is a question over the flexibility of definitions for green bonds and whether the funds are really used for green purposes. The financial community has a loud voice to help influence and change companies’ behaviour. For example, taking a strong stance around coal use in the UK.


Is it necessary for the UK to have coal-fired plants? Possibly in


peak periods in the short term, but why isn’t the consumer changing their behaviour as well, by running washing machines in non-peak periods or swapping halogen lights for LCD, for example. Behaviour is changing through consumers, government policy and emission zones in cities. Financial institutions will avoid investing in or vote against corporates who are not transitioning their behaviour to address climate change. We have a voice, and we intend to make a difference. We are focused on sustainable investing and make sure ESG is front and centre of our investment strategy. We accept that we are going through an energy transition where, ideally, we make increasingly more impact investments, but as we manage a large portfolio on behalf of pensioners, we must be responsible around the economics of going straight to impact. We have sympathy for coal mines in Africa, which bring an energy source to local communities where there is no alterna- tive, but less sympathy in the UK where there is a developed renewables and energy market. Halfon: The changes in the financial sector have gone a lot deeper than anyone expected. In May, Shell lost a court case over their emissions, while Exxon and Chevron lost votes at their general assemblies. These are big behavioural changes, which were enabled by investors.


We have created an environment where what we need to invest in is


unfashionable. Stuart Trow, European Bank for Reconstruction & Development


10 Dec-Jan 2022 portfolio institutional roundtable: Build Back Better


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