OMFIF’s Transition Finance Working Group convened bilateral meetings with public pension and sovereign funds representing over $5tn in assets under management. These funds included:
- GIC
- APG Asset Management
- CDPQ
- Norges Bank Investment Management.
The process, which featured working group members Franklin Templeton, EY and MSCI, yielded engaging, collaborative and at times difficult discussions on the state of transition finance.
These conversations have informed the working group’s first report. ‘Global public funds and transition finance’ explores funds’ investment strategies, barriers and opportunites to identify areas of common concern, including internal challenges, regulation and policy and the broader financial markets.
Key findings:
- Most funds believe they need to increase portfolio emissions in the short to medium term to ensure long-term decarbonisation.
- Policies need to be aligned with market outcomes and provide incentives for investors, such as risk-sharing and carbon prices.
- The International Sustainability Standards Board should form a global baseline for standards and frameworks.
- Scarcity of available assets, lack of credible transition plans and scepticism about certain markets and products are holding back funds’ portfolios.
- Investors recognise the potential of blended finance in helping emerging markets transition, but few believe that there are realistic investment opportunities.
