Implications on Financial Flows after Cop26 – A Board Perspective

The results of COP26 present a mixed bag of opportunities and challenges for Boards worldwide. Boards Impact Forum hosted a webinar on this key topic with four global leaders in sustainability and finance.

The recording from the webinar can be found here (Youtube.

Speakers Laura M Cha (Chairman, Hong Kong Exchanges and Clearing), Werner Schnappauf (Chair, German Council for Sustainable Development), Severine Neervoort (Senior Analyst, Norges Bank Investment Management) and Magnus Billing (CEO at Alecta, the 5th largest pension fund in Europe) shared their insights with moderator Liselotte Engstam, Boards Impact Forum Chair.

Key takeaways from COP26 – progress in some areas only

Climate neutrality is at the top of the political agenda and time is the scarcest resource. We urgently need a decade of transformative action.

  • Significant and positive outcomes include the finalization of the rulebook, important commitments by countries and companies to reach net zero, financing the transition, standard setting and working together.
  • However, commitments are far from the target of maximum 1.5 degrees temperature increase, and credible actions and plans on how to deliver on commitments are still lacking, to a large extent.
  • Collaboration is key – all key stakeholders in society today need a sense of togetherness to achieve the synergies needed for new climate initiatives. Innovation and the transformation of societies and businesses are key success factors and finance is a key facilitator. 
  • There is a strong momentum within the financial industry to reach the net-zero goal.
  • Integrating climate data, as well as other sustainability data, into the financial reporting will be an important tool for the proper allocation of capital.
  • Governments and regulators set the ground rules, investors and financiers allocate capital but corporates make it happen.
  • There is a strong momentum and the direction is clear. Boards have an important role to play. This is the time for action.

Recommendations to boards

  • Encourage innovation – The first movers will benefit.
  • Lead by example, take action – The board is absolutely essential in creating and supporting the ESG agenda.
  • Sustainability is a strategic issue that needs to be addressed. Even when customers are not clearly expressing a demand, it is important that the board discusses how will climate impact our business model and what demands will customers have tomorrow?. 
  • Take bold strategic initiatives on how to transform the current business model into one that is future proof – while continuing to deliver shareholder value – in a net-zero society. 
  • See opportunities and proper risk management as the key drivers, as a means to deliver value.
  • Establish a transition plan on how you are going to achieve your commitments. Long term Investors (and financiers) want to see clear and credible commitments and transition plans, what is the journey they are on, how will it play out and what are the milestones?
  • Likely that, in the not too distant future, the cost of capital will increase for those that do not have a believable plan for a sustainable business. 
  • Many companies are doing great things and investors are willing to support them.
  • Engage in dialogue with your investors and creditors – they want you to succeed long term!

To learn more and join Boards Impact Forum 

The full presentation from the event can be found here

Upcoming webinars at Boards Impact Forum Our Events – Boards Impact Forum

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Blogpost written with support of Annachiara Torciano, Prime Weber Shandwick

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