Global Investors Lead the Charge on Climate Crisis with Creation of New Investments in Transformation

Thinking & Analysis

The guest blog this month is from our sister project Deep Transitions Futures and focuses on the launch of their Global Investors Panel. TIPC addresses public sector investment and action on sustainability and a just transition, while Deep Transitions Futures project is examining and creating private Transformative Investment for climate action. 


A True Turning Point in History

Currently, leaders from around the world are galvanising towards the 26th Community of Parties (COP) conference on international climate action. There have been twenty-five previous COPs, but this one is crucial. It is the absolute tipping point for the world.  As governments, policymakers, activists and businesses jostle and joust through debate and negotiations on targets, the Deep Transitions Global Investors Panel argues that transformative investments and bold leadership must light the way.

The launch of the Global Investors Panel – part of the Deep Transitions Futures research project run by the Science Policy Research Unit (SPRU) at the University of Sussex’s Business School and the Utrecht University Centre for Global Challenges – strives to prompt this radical transformation of the investment sector.

At the digital launch event, featuring project founder Professor Johan Schot, funder James Anderson of Baillie Gifford and three representative members of the panel, what emerged was the overarching need to face and interrogate the current investment eco-system of public and private finance to surrender the old guard and incarnate new solutions that focus on the path to sustainability.  As Professor Schot stated at the Launch, referencing initial conversations between him and Anderson in forming the project, both agreed:

“Simply. we live at a turning point in history.”

To steer towards new norms and approaches to investment, it is vital that empowering, creative questions are asked. This, on behalf of the world, is what the investment sector must deliver. As panel member, Drew von Glahn of Collaborative for Frontier Finance stresses:

“For the last decade and more, every year the questions are the same, the answers are the same and the problems are bigger…we must step back and ask questions differently because, clearly, the questions we’ve been asking and the methodologies we have been applying are not working. Inequalities are getting greater and the risk of climate change is increasing. This gives an opportunity to ask those fundamental questions on how we do this differently, how do we make transformation happen at scale going forward?”


A Roadmap for Transformative Investment

By asking these different and difficult questions the Global Investors Panel has pledged to create an innovative roadmap and philosophy for ‘Transformative Investment’ that tackles the climate crisis in fundamentally new ways within the finance and capital arena.

As panel member Roberta Benedetti del Rio of Just Climate highlights, there have been advances in the sector yet there is much to achieve:

“The fact that it is now taken as a given that sustainability factors should be considered with investments, that by itself is a great achievement. It simply wasn’t the case just a couple of years ago. Having said this, unfortunately, sustainable investing, as it is now, is not correlating to better outcomes for our biosphere or for our society. So clearly something isn’t working. Investors target different objectives so there isn’t really a coherent system level roadmap that addresses, for example the SDGs (Sustainable Development Goals), to shed light on what the interactions, tension points and potential trade-offs are. These considerations are very much a new thing for the finance industry.”

The project funder James Anderson, one of the UK’s most visionary investors and Strategic Advisor to the Panel, outlined to host Victoria Ward from Jigsaw Foresight on why he has backed the creation of the Global Investors Panel and the ‘Transformative Investment’ manifesto, he states the central issue as:

“The investment management industry is badly oriented for addressing radical and risky projects.  In fact, we have almost designed the system to make our capital allocation as pointless and as least interested as possible in changing the world. We cannot keep going in the same direction.”

Within policy and business circles, there is much discussion on why climate action is crucial with a direction change needed. There is less on how to achieve this, particularly within the finance and investment spheres where old beliefs, methods and thinking are stifling the evolution to sustainability.  Anderson continues to highlight how investment must focus, first and foremost, on solving problems – not just on creating profit. He stresses this is essential to see the social and technological advances that are needed to mitigate the emergency. Fellow Global Investor Panellist, Audrey Desiderato of SunFunder highlights the issue:

Incentives are misaligned right now, just focusing on financial performance. I want to see a practical agreed-upon roadmap for how we value and incentivize positive impact to becoming a sustainable planet. I think that we need measures for more funding and support available to innovators at an early stage with capital going to those niche players and entrepreneurs that are really pushing the boundaries of our cultural ability. This would be a great market for success.”


Urge to ‘Embrace the Radical’

Urging confidence in this approach, James Anderson appealed to the sector to ‘to embrace the radical’, relaying how when he began investing 20 years ago in TESLA and car electrification, he faced severe criticism and ridicule that took fortitude to ride.  The belief in and success of Tesla’s innovations have altered the direction of the global car market, markedly shifting the trajectory away from fossil fuel usage. Anderson states that more courageous action and leadership, that plays the long game, is required to activate these crucial transformative shifts.

Professor Schot from the Utrecht University Centre for Global Challenges, continued the debate cautioning on only thinking about niche alternatives:

It is not sufficient, just to back up alternatives and niches. To find ways to do better, we also need to destabilise the current approaches because they need to open for change, perhaps even with compensation. When we are talking about Transformative Investment, we need to see measures that enable that process. With transitions, unavoidably, it’s about winners and losers too.”

For the transition around car fuel and usage, Professor Schot urged that a wider perspective on the whole system must be taken involving the ‘mobility-as-a-service’ approach to solve other issues, such as the car congestion. Other modes of transport and ways of procuring mobility through digitalisation are also essential for a transformative mobility transition that addresses wider problems faced with the dominance of the car. Schot counsels:

If you look at Tesla, of course, it was very important in enabling electrification of mobility, but you also need investors in the wider infrastructure and culture too. You need city councils, making sustainable cities that people can move easily around in. You need a whole set of actions to make electrical vehicles scale and be profitable. You need a whole set of policy measures with public and private investments to make it work. To really drive the process for system change, we need to think about a collection of coordinated measures.”

James Anderson and the Deep Transitions Futures Global Investors Panel see opportunity in the situation. Anderson states:

“It is hopeful. I think that there is opportunity. Along with the deep frustration, we have the ideas and the technologies. We are not taking full advantage of them, so I think radical, risky policy is necessary. It is the only way forward.”

Any transformation that, by definition, sees a sector, system, institution, or culture ‘transcend form’ to create new configurations, will feature change and dissent from present norms, rules and values. Yet if the world and its leaders, are to tackle the climate challenge, it is bold, inspiring, radical leadership, as urged by Anderson and modelled by the Deep Transitions Futures Global Investors Panel, that is the only viable option.


Launch Event of Deep Transitions Futures and the Global Investors Panel

The entire launch event can be watched back below.

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