• Oslo, Norway — 2 May 2016 — 8:15 am – 11:15 am
• At the Nobel Peace Center (by invitation)
• Moderated discussion and stakeholders’ stocktake
• Convened under the Chatham House Rule
• Participants will receive thematic brief, invitation and details

This dialogue is fourth in the series: Accelerating Progress, Advancing Innovation. The first dialogue was held on Day 2 of the Minneapolis 2015 conference and produced the strategy document “A Convenient Opportunity“. The second dialogue was held during the COP21 climate negotiations in Paris. Two ideas emerged from the Paris dialogue as useful and necessary tools for achieving an optimal energy transition: 1) high-efficiency business model innovation as common practice, and 2) a detailed understanding of the carbon pricing value chain.

The third dialogue was convened in Washington, DC, in April 2016, alongside the Spring Meetings of the World Bank and the International Monetary Fund, and in support of the first High-Level Assembly of the Carbon Pricing Leadership Coalition. Collaborative information-sharing was identified as necessary for mapping the carbon pricing value chain generally. A matrix of best practices were called for as a means of adapting overall CPVC analysis to individual institutions, enterprises, economies, and municipalities.

All of this work points us toward the focus in Oslo.

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Evolving a Climate-Smart Financial Sector

The central challenge we put to ourselves in this dialogue was to envision a global financial sector that actively benefits from averting the degradation of climate resilience. Participants were asked to bring their own questions, experience, insights and innovations, and to focus in on the following structural and practical challenges:

1. Ending dependence on externalization
2. Breaking path dependency
3. Valuing future climate resilience
4. Assessing macrocriticality—how the global math affects our access to future value

Last May in Paris, Christiana Figueres put this challenge to finance ministers, central bank governors, and financial sector leaders: to re-engineer the global financial sector so that no part of it generates climate damage. The Paris Agreement has brought 195 nations into the project of achieving this, as a matter of policy direction, but the details of day to day practice will emerge over time.

The aim in this dialogue was to redefine success and develop concrete strategies for the necessary financial sector transition that will accompany the energy and design transition inherent in decarbonizing the global economy.

Participants approached those four areas of inquiry from these starting points: Long-term business resilience depends on the ability to carry hidden costs. The climate system has revealed in geophysical dynamics that we are connected to one another’s actions. It makes metaphysical ethical concerns into a hard physical reality, and this has implications for the value of any investment. Internalizing carbon costs builds efficiency for the overall economy and makes human security easier to achieve.

It was business leaders who said we can learn from this that internalizing the costs of other kinds of waste would be beneficial—building efficiency, making businesses more agile and competitive—specifically suggesting: water, toxic pollutants, and other social costs. If we count both negative and positive externalities, we get more complete information about value. Mutual thriving is becoming a global security imperative. The costs of not getting there are now visibly too high.

One deep-rooted challenge which could now become a high-leverage mechanism for change is to shift investment management priorities from short-term to long-term thinking. Development of a long-term business resilience index, to help inform decisions about financial sector priorities, would be useful to redefining investment value, and directing capital to projects and institutions that don’t depend on externalizing costs.

Perhaps most significant was the insight that business leaders need to commit to ongoing inquiry and rethinking of priorities.

Innovation, discovery, and the building of new efficiencies, need to be operational and catalytic for building new value for people, not disruptive of day to day operations or degrading to the people who make an enterprise or an economy function. Evolving a financial sector that routinely generates climate value starts with a commitment to ongoing questioning of old ideas. Valuing that process of inquiry and reinvention in day to day operations adds business value, and should be a priority for investment managers.

Ultimately, the gap between value dependent on externalization and value not dependent on externalization is so vast it outstrips any compounded gain that can be generated by short-term flipping of financial assets.

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A full brief, highlighting a menu of actions and priorities for leading this process of change, will be released after sharing of meeting notes with participants.

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Program for 2 May

• 8:15 am: Coffee and mingling for participants.
• 8:30 am – 9:45 am: First half of moderated conference-table dialogue among participants.
• 9:45 am – 10:00 am: Short coffee break.
• 10:00 am – 11:15 am: Second half of moderated conference-table dialogue among participants.
• 11:30 am: Joint lunch with participants in UN Global Compact meetings.

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Co-cordinated and hosted by:

 

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The Dialogue Series

1. October 2015, Minneapolis — The Climate Action Opportunity
2. December 2015, Paris — The Carbon Delta & Business Model Change
3. April 2016, Washington — Assessing the Carbon Pricing Value Chain
4. May 2016, Oslo — Evolving a Climate-Smart Financial Sector
5. June 2016, Minneapolis — Achieving Macro-Critical Climate Resilience
6. Sept 2016, New York — Climate, Peace & Security in the SDGs
7. Oct 2016, Washington — During World Bank / IMF Annual Meetings
8. Nov 2016, Marrakech — During the COP22 Climate Negotiations

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