Remarks by Angel Gurría,
Paris, 28 October 2016
(As prepared for delivery)
Minister, Ladies and Gentlemen,
Thank you very much for joining us at this first-ever International Award on Investor Climate-Related Disclosures. Congratulations to all the nominees.
We are all brought together by the collective global project to transform our economies, still hard-wired around fossil fuels, into green, low-emissions and climate-resilient economies. This is a huge challenge. It requires massive leadership, and well-aligned policies across government, as well as the scaling up of green finance. An estimated USD 93 trillion will be needed in transport, energy and water investment by 2030, to build the global infrastructure we need for a successful low-carbon transition. Given the scale of this investment, the role of finance is critical. This is why the financial sector rightly occupied such a prominent place at COP21.
The good news is that there is no global shortage of available capital. Many of the world’s biggest investors recognise that it is good investment practice to consider climate risks. They also recognise that the transition to a low-carbon economy brings great investment opportunities. But for risks and opportunities to be understood, investors need to have adequate information. This is where disclosure comes in.
Improved disclosure can tell us, for instance, whether the savings of millions of people are being invested in the transition to a green economy – or whether they are further locking us into the carbon economy we’re trying so hard to leave behind.
Governments working in partnership with organisations such as the OECD have a clear role to play in ensuring that disclosure is part of the policy package to build a low carbon, climate resilient economy. Our 2015 report on climate change disclosure in G20 countries showed that many governments do request that companies provide climate change-related information. However, the requested information is limited, not comparable across countries, and often insufficient to help investors make decisions.
The OECD is working on multiple fronts to support climate-related disclosure. Several OECD instruments highlight the importance of disclosure, including the G20/OECD Principles of Corporate Governance and the OECD Guidelines for Multinational Enterprises. The G20/OECD Principles on Corporate Governance specifically include environmental risks among foreseeable risk factors and the 2011 update of the OECD Guidelines introduced a reference to reporting of direct and indirect greenhouse gas emissions.
We welcomed the creation of the Task Force on Climate-related Financial Disclosure last year. And I am also pleased to highlight the launch, two weeks ago, of the OECD’s new Centre on Green Finance and Investment. The new Centre will support the development of effective policies, institutions and instruments for green finance and investment, catalysing the transition to a green global economy.
These initiatives build on the study we released last year on Aligning Policies for the Low-Carbon Economy, which includes recommendations to scale up low-carbon investment by enhancing climate risk disclosure.
But we need to do much more to support the implementation of policy reforms. Improved climate-related disclosure is vital to help green the financial sector, which is in turn vital to achieve the necessary structural changes required to meet the goals of the Paris Agreement and the Sustainable Development Goals.
A global challenge demands global leadership. France is providing it. I want to take this opportunity to congratulate Minister Royal for France’s international leadership on green finance and investment, and in particular their effort to address challenges related to the mobilisation of investment by institutional investors. At the request of the French COP21 Presidency, the OECD has been working on institutional investment governance and the integration of Environmental Social and Governance (ESG) factors. This aims to understand better how governance standards may be affecting investor choices and what obstacles might be preventing the allocation of institutional capital in support of the Paris goals.
France has also taken action domestically, with the adoption in July 2016 of the Law for the Energy Transition and Green Growth. Though this law France became the first country in the world to make it obligatory for investors to publish information on their contribution to climate objectives, and the associated financial risks. It’s a pioneering instrument to harness the leverage that investors have to accelerate the low-carbon transition. This sets an example for others to follow.
Minister Royal, Ladies and Gentlemen, working with countries and stakeholders across the world, the OECD can be a platform for sharing best practices and lessons learned. We can help ensure investment remains aligned with climate goals, we can help all countries deliver on their commitments made here in Paris last year.
I would like to thank Minister Royal for hosting today’s 1st edition of the Awards and will now pass her the floor.
Minister Royal, we look forward to hearing your insights.