Bloomberg

Wall Street calls on political A-Listers for $ 30 trillion green boom

(Bloomberg) – Mark Carney at Brookfield Asset Management. Nigel Farage, Brexit architect, at the DGB group. One of Obama’s main contributors to BlackRock Inc. High-level hires have arrived over the past few months, and in each case, they’ve been given a version of the same mandate: to help their new employers protect and grow their green finance booming. The sudden rush to embrace political insiders is a powerful sign of how far responsible investing has come from the eccentric fringes of finance. While business has long been a path to politics and back again, joining a company that plants trees to offset emissions was once a risky career change. Yet so much money – over $ 30 trillion by some charges – is now tied to green finance that the industry is successfully wooing an illustrious list of household names and politicians to keep London lawmakers, Brussels and Washington for their part and the good times roll. Other recruits include Chuka Umunna, Farage’s former Brexit opponent, and Luciana Berger, another former British parliamentarian. influence policy, both their relationships with people in government and their knowledge of how to play with the system, ”said Simon Youel, policy manager at Positive Money, which campaigns to reform the banking system . “This revolving door allows large institutional investors and large corporations to have a disproportionate impact on policymaking.” While climate change angst helped build this cash cow, it is politics that will determine whether the industry’s next decade will see it ossify or earn trillions of extra dollars. From the United States to China, governments are designing rubrics, developing standards and creating regulations to define what is considered “green,” reshaping the landscape for the banks and fund managers who rule this world and want without surprise influence the result. Already aware of the signs that companies are exaggerating or distorting their environmental chops when selling debt, a practice known as greenwashing. Questions are also growing around the impact of carbon credits, adopted by companies to reduce their environmental footprint. And the financial services industry itself has come under fire for financing fossil fuel producers. With traditional banks now recruiting well-known faces to promote their green finance brand, the industry’s welfare veneer could crack. “Because of the effectiveness of the green finance program, it tends to have more supporters than critics,” said Adrienne Buller, senior researcher at the Common Wealth think tank, which focuses on building an economy. lasting and has former UK Labor Party leader Ed Miliband as a trustee. “There are a few people who speak out against examples of greenwashing, but the answer tends to be ‘we need to eliminate greenwashing so that green finance can do its job’ rather than taking a hard look at green finance as a whole. . ” ESG – as adhering to environmental, social and governance principles is known – is a ‘gold rush’ that is leading policymakers to speed up corporate disclosure requirements, said Adeline Diab, ESG manager for EMEA at Bloomberg Intelligence. It is therefore in the interests of banks and asset managers to exercise a bit of politics in their recruitment, even with the increased scrutiny applied to such relationships as a result of lobbying by former Prime Minister David Cameron for the collapse of lender Greensill Capital. this hiring frenzy over legislation is fraught with pitfalls, the influence of finance and business on green policy is already worrying. “We’re seeing a lot more sustainability legislation going into financial regulation today and of course some people are trying to take that out. Said Fiona Reynolds, Managing Director of the United Nations-backed investor group, Principles for Responsible Investment. The change is still underway, but “there must be strict rules and transparency,” she said. consider conflicts of interest when appointing BlackRock to advise on new sustainable funding requirements for banks. The separation by the company of its advisory arm from its investment unit was not enough to prevent staff from being influenced by the general strategic interests of the company, wrote an ombudsman; BlackRock oversees billions of dollars in green funds as the world’s largest asset manager. The EC underlined the technical quality of the company’s speech to support its choice, and in the UK, the government is preparing to issue the country’s first sovereign green bond after a parliamentary push led by Gareth Davies, the former head of responsible investing at Columbia. Threadneedle Investments, who is now a member of Parliament for the ruling Conservative Party. In 2019, the same year Davies was elected, Columbia Threadneedle wrote a letter urging the UK government to issue green gilts. Davies said in an interview. “We recognize the power of the financial sector to solve some of the problems the government is trying to solve. It is not because we are trying to gain more leverage for the financial services industry. The most prominent green finance hire to date is Mark Carney, the former Governor of the Bank of England and longtime advocate for sustainable investing. He joined Brookfield last year as head of ESG, with CEO Bruce Flatt saying at the time that he would be instrumental in the expansion of the company’s ESG group due to his close relationship. with sovereign wealth funds and its commercial experience. including Morgan Stanley and Citigroup Inc., to sign an emissions reduction plan, and its work straddles the private and public sectors. He is currently financial advisor to British Prime Minister Boris Johnson for the COP26 meeting to be held in Glasgow in November, making him an important voice in the United Nations climate negotiations. And on top of that, he’s a leader of the Scaling Voluntary Carbon Markets Task Force, an effort to build global trade in carbon offsets for the private sector. Unlikely is Nigel Farage, a climate change skeptic while leading the UK Independence Party, which recently joined a Dutch company involved in carbon offsetting. Its role is “to facilitate presentations to politicians and business leaders in the UK and around the world,” according to a press release from the company. “From a public relations perspective, he’s making headlines,” said Selwyn Duijvestijn, managing director of DGB Group, Farage’s new venture. “The Texas oil workers, they’re not listening to Greta Thunberg, but they have to realize that we have to do something,” he said in an interview, referring to the teenage climate activist. “They prefer to listen to Nigel Farage rather than Greta Thunberg.” On the other side of the political spectrum, Chuka Umunna, Farage’s former sparring partner during the UK’s prolonged withdrawal from the EU, became the JPMorgan Chase & Co. ESG head for the EMEA zone earlier this year. Umunna arrived after a brief stint as head of Edelman’s ESG board after nearly a decade in parliament. A bank note at the time said it would help clients “successfully navigate the evolving ESG landscape.” Meanwhile, Umunna’s former colleague Luciana Berger is the new chair of the ESG committee of used car dealer Cazoo. Cazoo declined to comment beyond a previous statement. It is not just a European phenomenon. BlackRock recently replaced one insider leaving the White House with another. Paul Bodnar, an Obama-era climate policy assistant, is now the company’s head of sustainable investing, succeeding Brian Deese, who returned to politics as chairman of the National Economic Council from President Joe Biden . The firm has hired more than a dozen Obama administration alumni over the years. itself as an agent of change, crucial in the transition to a more low-carbon economy. This has allowed politicians, especially those with more progressive or center-left positions, to join their ranks. There will be plenty of opportunities in the years to come. ESG assets are expected to nearly double to $ 53 trillion by 2025, according to Bloomberg Intelligence. And while banks still earn more by lending to fossil fuel companies than by marketing sustainable bonds, going green has other benefits, including reassuring activist shareholders, regulators, and lobbying tax collectors. on the financial sector so that it consolidates its action. for large banks or other investment institutions to support ESG, this is very welcome in the financial sector, ”said Kenneth Haar, researcher at the Corporate Europe Observatory, a Brussels-based public interest group. “More than anything, they need to be seen as institutions that take climate change seriously, and they need a friendly face to sell this idea.” (Added comment from Bloomberg Intelligence.) 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