Opening Remarks by Angel Gurría
Paris, France, 11 December 2017
(As prepared for delivery)
Ladies and Gentlemen,
On behalf of the OECD and our co-host, the Institutional Investors Group on Climate Change, welcome!
One focus of tomorrow’s One Planet Summit, organised by President Macron, is “to determine how those working in public and private finance can innovate to support and accelerate our common efforts to fight climate change.”
That focus is both timely and vital, since, as I noted in my third climate lecture on November 1st, there is a serious shortfall in the aggregate level of pledged emissions reductions to meet the “well below 2 degrees” goal in the Paris Agreement, and that goal is anyway likely to be insufficient to avoid major climate impacts. Moreover, because only a handful of far-sighted countries have formulated strategies for 2050, there is a risk that some Nationally Determined Contributions may encourage investments that lock in high levels of future emissions.
More ambition will therefore be needed from all of us – governments, international organisations, businesses, investors and citizens. This is why last year we launched the OECD Centre on Green Finance and Investment, which brings together key actors to accelerate the flow of private investment to support the Paris Agreement goals.
The good news is that the extra ambition that is required need not hinder economic growth. Our recent report Investing in Climate, Investing in Growth, produced for the German G20 Presidency, emphasises that countries can achieve strong and inclusive economic growth while reorienting their economies towards low emissions and high resilience to the effects of climate change.
We also have a fairly good idea of who needs to do what.
Clearly, much of it falls to governments. They need to focus on core climate policies – including carbon pricing and fossil fuel subsidy reform – as well as on broader investment conditions. They must adopt a whole-of-government approach to low-emission growth, as set out in the OECD publication Aligning Policies for a Low-carbon Economy.
Governments should also work with financial regulators and central banks to strengthen the management of climate risks and opportunities created by the low-carbon transition by encouraging climate-related disclosures and climate-risk stress testing. The OECD will examine institutional investment and the integration of climate factors with many of you in 2018.
There is also an important role for IFIs and other international organisations to support governments’ efforts to boost investment in low-emission infrastructure, not least in developing economies.
IFIs can partner with institutional investors to channel their investment in low-carbon infrastructure assets. Public development finance must be used catalytically to de-risk projects in developing economies. The OECD's new Blended Finance Principles are helping to support better public-private collaboration and will increase the mobilisation of private investment.
International organisations can also help to bridge data gaps on infrastructure projects; to this end, an Infrastructure Data Initiative has been launched by the OECD, the EIB and the G20 Global Infrastructure Hub.
Last but not least, more ambition is also needed from institutional investors and the financial sector more broadly. You have the means and the ingenuity to bring about the scaling-up of green infrastructure investment that will be needed. This is your chance to prove that your horizons extend beyond the short term and that you can make a crucial contribution to the low-carbon transition that is so desperately needed.
There are already encouraging signs. Green bond issuance has surpassed USD 100 billion in 2017, breaking the record set in 2016. But it’s not enough. As discussed in our report on Mobilising Bond Markets for a Low-Carbon Transition, by 2035 up to 720 billion dollars-worth of bonds could be issued annually to finance renewable energy, energy efficiency and low-emission vehicles in China, Europe, Japan and the US. And our most recent survey found that only 1% of large OECD pension fund assets invested directly in infrastructure, let alone green infrastructure.
Ladies and gentlemen,
Today is an occasion for all of us to share what we are doing to bring about the low-carbon transition, and to say what is needed from other actors to ensure that sufficient progress is made. We are under Chatham House rules, so please be candid and bold! Thank you.