“You would expect the level of engagement to be high and I don’t think anyone should apologize for having ongoing discussions about that,” Davies said in an interview. “We recognize the power of the finance sector to solve some of the problems the government is trying to fix. It’s not because we’re trying to get more influence for the financial-services sector.”
Green finance’s highest-profile hire to date is Mark Carney, the former Bank of England governor and long-time advocate for sustainable investing. He joined Brookfield last year as head of ESG, with CEO Bruce Flatt saying at the time he would be instrumental in expanding the firm’s ESG group because of his strong relationships with sovereign wealth funds and his range of business experience.
Carney has since persuaded banks, including Morgan Stanley and Citigroup Inc., to sign a plan to cut emissions, and his work straddles the private and public sectors. He currently serves as U.K. Prime Minister Boris Johnson’s finance adviser for the COP26 meeting to be held in Glasgow in November, making him an important voice at the United Nations climate talks. And on top of that, he’s a leader of the Taskforce on Scaling Voluntary Carbon Markets, an effort to set up a global trade in carbon offsets for the private sector.
A more unlikely convert is Nigel Farage, a skeptic on climate change when leader of the UK Independence Party, who recently joined a Dutch firm involved in carbon offsetting. His role is “to facilitate introductions to politicians and business leaders in the U.K. and around the world,” according to a company press release.
“From a PR point of view, he’s a headline machine,” said Selwyn Duijvestijn, chief executive of DGB Group, Farage’s new firm. “Texas oil workers, they don’t listen to Greta Thunberg, but they do need to become aware that we need to do something,” he said in an interview, referring to the teenaged climate activist. “They would rather listen to Nigel Farage than Greta Thunberg.”
On the other side of the political spectrum, Chuka Umunna, Farage’s one-time sparring partner during the U.K.’s prolonged withdrawal from the EU, became JPMorgan Chase & Co.’s head of ESG for EMEA earlier this year. Umunna arrived after a short stint co-heading Edelman’s ESG consultancy following almost a decade in Parliament. A bank memo at the time said he would help clients “successfully navigate the evolving ESG landscape.” Meanwhile, Umunna’s former colleague Luciana Berger is the incoming chair of used-car seller Cazoo’s ESG committee. Cazoo declined to comment beyond an earlier statement.
It’s not just a European phenomenon. BlackRock recently replaced one departing White House insider with another. Paul Bodnar, an Obama-era climate-policy aide, is now the firm’s sustainable investing head, taking over from Brian Deese, who returned to politics as President Joe Biden’s National Economic Council chair. The firm has hired more than a dozen alumni from the Obama administration over the years.
Where once it was electorally advantageous to take a tough line against bankers, such as in the wake of the 2008 financial crisis, the finance industry has worked hard to rebrand itself as an agent of change, crucial in the transition to a lower carbon economy. That’s made it easier for politicians, particularly those with more progressive or center-left positions, to join their ranks.
There will be no shortage of opportunities in years to come. ESG assets are on track to almost double to $53 trillion by 2025, according to Bloomberg Intelligence. And while banks still earn more from lending to fossil-fuel companies than marketing sustainable bonds, going green has other benefits, not least sating the activist shareholders, regulators and tax collectors pressuring the finance industry to clean up its act.
“When policy makers leave for big banks or other investment institutions to take care of ESG, that’s very welcome to the financial sector,” said Kenneth Haar, a researcher at the Corporate Europe Observatory, a Brussels-based public-interest group. “More than anything they need to be seen as institutions which take climate change seriously, and they need a friendly face to sell that idea.”
This article was provided by Bloomberg News.