Bank of England Governor - and Chair of the Financial Stability Board - Mark Carney, gave a lecture below in Berlin on 22 September that was full of useful quotes relevant to the work Climate Bonds Initiative does.
The full text of the speech is available in a PDF version, including slides.
Here’s the short version:
“.... green finance is a major opportunity. By ensuring that capital flows finance long-term projects in countries where growth is most carbon intensive, financial stability can be promoted.”
“By absorbing excess global saving, equilibrium interest rates can be raised and macroeconomic stability enhanced. And by allocating capital to green technologies, the prospects for an environmentally sustainable recovery in global growth will increase.”
Relevant to us: emerging market green placed with developed country investors will help stabilize the world economy.
“.... the more we invest with foresight; the less we will regret in hindsight. Financial stability risks will be minimised if the transition begins early and follows a predictable path, thereby helping the market anticipate the transition to a two-degree world.”
This means: we need a fast, but managed and smooth transition to a low-carbon world.
“The development of this new global asset class (green bonds) is an opportunity to advance a low carbon future while raising global investment and spurring growth.”
“..... The shift to the capital markets from banks will also free up limited bank balance sheet capacity for early-stage project financing and other important infrastructure lending.”
“To reach escape velocity, (green bond) market participants and public authorities will need to coordinate to deliver common green bond frameworks and definitions, and other necessary supporting infrastructure, to build local and cross-border markets.”
Specific measures could include:
- Developing a ‘term sheet' of internationally recognised standardised terms and conditions for a green bond. ..... This should significantly improve the ease and efficiency of green bond issuance and simplify investor access to green bond markets in multiple currencies, thereby moving them into the mainstream of finance.
- Creating voluntary definitional frameworks, certification and validation to give certainty to issuers and investors that the project being financed is ‘green'.
- Developing green bond indices to unlock the potential investment power of passively managed investments.
- Assessing the scope for standardisation and harmonisation of principles for green bond listings to promote efficient trading and adequate liquidity.
“By managing what gets measured, and building a mainstream green bond market, we can help resolve the Tragedy of the Horizon.”
This is, of course, our Climate Bonds mission.
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