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After an inflationary spike resulting from the pandemic and war in Ukraine, central banks had to raise interest rates. In line with their mandate, they are attempting to slow down the economic cycle to bring inflation back to its target level. While investors are familiar with the context, the current cycle is unusual because it has emerged after a long period of exceptionally low interest rates, followed by a short period of rapid rate increases.

This swift rise has exposed a whole series of underlying vulnerabilities that are now coming to light. The recent collapse of some banking institutions in the United States and Europe reminds us of the fragility of certain sectors. The ongoing contraction of bank lending will weigh on economies, and the prospect of recession could become a reality over the coming months. Geopolitical insecurity further adds to this fragile financial environment. This all suggests that markets will remain relatively volatile and uncertain for some months.

 

Investment conviction

Although the current market environment naturally leads us to be cautious, the climate transition clearly represents one of the most important opportunities for long-term investors.

Today, powerful forces are at work to encourage and support the climate transition that is now vital: consumer pressure, regulatory action, the transformation of industrial business models and fair capital allocation by investors. Government action also plays a part, through public investment programs and tax credits. The climate transition will be built around four main axes:

As in the industrial revolution of the 19th century or the IT revolution over the last fifty years, these transformations will have a major impact on all our economic systems. Leading companies will emerge stronger, others will disappear.

 

Solutions exist

Most of the technologies needed for these transformations already exist. They are currently evolving into mass market solutions. We are on the verge of an exponential acceleration of these industrial solutions that should release unprecedented growth opportunities.

Several factors are driving this acceleration. First, the fall in production costs: in the renewable energy field, costs have plummeted by 60-90% over the last ten years. Next, constant improvements in performance: electric vehicles are reaching energy efficiency of around 80% compared with 20% for conventional vehicles. Finally, massive support from public bodies, to the tune of hundreds of billions of francs for the three major blocs of Europe, the US and China, are helping to speed up investment and the implementation of large-scale industrial solutions – in the field of heat pumps, electric vehicles and construction materials, for example.

The war in Ukraine is another accelerating factor: we note, here, a renewed conviction in Europe regarding the importance of true energy independence.

 

Aligning portfolios with the ongoing transition

To benefit from investment opportunities linked to the climate transition, it is vital that we understand its nature and trajectories. This requires real, fundamental research. It is necessary to analyse the maturity level, returns and growth potential of the different technologies and to model their development. The challenge is to be able to anticipate the nature of major impending changes that will no doubt shake up many economic sectors and give rise to new business models.

It is useful to follow the investments made by companies, which often point to future sources of profitability. The energy transition alone is expected to account for almost CHF 3,800 billion in global annual investment over the next ten years. This figure is comparable to the capital expenditure of the information technology sector, which now represents nearly 20% of total returns of global companies, compared to just 5% in the 1990s. Reflecting what happened in this field, we must prepare for the emergence of the new GAFAs of tomorrow.

The climate transition is no longer a mere theory. It is no longer a distant project. We are firmly convinced that this transition has now begun. It is in motion. In many respects, it is accelerating. Investors must ask themselves: do we want to ignore it, or, on the contrary, should we not systematically integrate it into our portfolios?

 

Guest contribution written by Frédéric Rochat, Managing Partner at Lombard Odier Group.

This week, the Intergovernmental Panel on Climate Change (IPCC) released its new report that provides a five-year analysis on global temperature rises, fossil fuel emissions and climate impacts. This new synthesis report on climate change calls for more ambitious action and more effective policies on climate mitigation to limit the global average temperature below 1.5°C.

IPCC’s report underlines the urgency of the climate crisis, presents its causes, and lists its direct impacts on populations and biodiversity. In 2018, the Intergovernmental Panel stressed the unprecedented scale of the crisis. While progress in adaptation planning and implementation has been observed in 170 countries since 2018, current data shows that global warming will continue to increase in the near term, and projected long-term impacts will escalate with every increment of warming. Scientists explain that effective and feasible solutions to reduce greenhouse gas emissions are available, and that securing a liveable and sustainable future will depend on the actions that countries will take in the next ten years:

“Adaptation options that are feasible today will become constrained and less effective with increasing global warming. With increasing global warming, losses and damages will increase and additional human and natural systems will reach adaptation limits. Maladaptation can be avoided by flexible, multi-sectoral, inclusive, long-term planning and implementation of adaptation actions, with co-benefits to many sectors and systems.”

IPCC’s report underlines that the impacts of climate change will only get worse if deep, rapid and sustained actions are not implemented in this decade. Governments, companies, and civil society need to work together to transition to a sustainable system.

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Building Bridges is seeking Communications Interns to support the planning of the 2023 edition that will take place on 2-5 October in Geneva. The Communications Interns will work from June 1 to October 31 and develop content for the communication channels of the initiative.

Building Bridges is an open and collaborative effort that aims to accelerate the transition to a more sustainable economy in Switzerland and abroad. To this end, Building Bridges promotes the finance community’s contribution to realizing the SDGs. The initiative provides a forum for discussion and cooperation among financial and other private sector actors and institutions, public authorities, international organizations, as well as not-for-profit and academic stakeholders dedicated to achieving the transition to a financial system that is fit for the future.

Duties, Responsibilities, and Output Expectations

Reporting to the Building Bridges Head of Communications, Interns will:

 

Qualifications and Experience

The ideal candidate has a/is:

Your experience and qualifications:

What We Offer

Application

Please complete the application form and attach your CV by April 6, 2023. For additional questions, please contact Nora Sada, Head of Communications.

Apply here by April 6

The 2023 edition of Building Bridges will showcase 60+ events, workshops, research presentations, panels, and fishbowl conversations. We invite all members of the community to help us advance sustainable finance, highlight innovative projects and create impactful discussions at Building Bridges 2023.

The Building Bridges Action Days will take place from October 3-5, 2023 at the CICG in Geneva. All types of organizations are encouraged to put forward their event concepts, whether they be finance industry players, academics, NGOs, international organizations, governments, or industry associations.

Building Bridges is an internationally-focused event, and therefore we welcome event applications from organizers based anywhere in the world.

Event Formats:

Event Requirements

Diversity of partners and/or stakeholders

Ideally, we would like to see events planned by more than one organization, but we will consider stakeholder diversity (for example, diverse speakers).

Interactive formats

This year we have very few spots of panels and will therefore favor workshops, trainings, discussions, etc.

Clear and defined scope

Participants benefit from concrete, actionable topics. Avoid subjects that are too broad or high-level and focus on the outputs you want participants to walk away with.

Solution oriented

We want to provide participants with actionable solutions and therefore will preference events with a solutions orientation (i.e. sharing or deriving solutions in the session).

Excluding Criteria

If an event is too promotional (particularly commercially) it will automatically be excluded.

Guidelines:

Before submitting your event proposal, please read our guidelines on the Call for Events process and requirements.

Download Guidelines

Information Session:

We held an information session on March 9 to address all questions on the call for events. Watch the video to learn more about event requirements.

 
Deadline:

Please submit your event by March 31, 6 PM CET.

Submit an event

We look forward to reading your event proposals! Don’t hesitate to check our 2022 Program and Report for inspiration.

In a recent interview with the Financial Times, Patrick Odier, President of Building Bridges, explains how we must address the looming social crises that decorbanization and the transition of our economic system are creating for vulnerable groups and populations.

We have to talk urgently about what we can do to mitigate the effects of the transition on vulnerable economic and social groups in our own societies — just like we do about the global south. Our social fabric depends on it — it is going to be the major issue facing us in the coming years.

Read full interview on the FT

The next edition of Building Bridges will take place on October 2-5 to leverage the power of finance for the Sustainable Development Goals. We invite all members of the community to help us shape the 60+ discussions, workshops, research presentations and networking events of the 2023 edition. We will officially open our call for events on March 1, and are hosting a Community Prep Call on February 28 to brainstorm themes and collaboration options with our community.

Community Prep Call

  • When: February 28, from 3pm to 4pm CET
  • Where: Online
  • For Whom: Members of the community and organizations working in finance or sustainable development
  • Why Join: To meet other people working in the field, brainstorm themes for the 2023 Edition, and prepare your event submission
Register now

Building Bridges is expanding its team to support the planning of the 2023 edition that will take place on 2-5 October in Geneva. We are looking for a Week Coordinator to support the planning and organization of 50+ community-led events, and for a Program Coordinator to manage Building Bridges’ flagship event.

Open Positions

The Program Coordinator will develop and execute an engaging program for the high-level Summit, as well as other content related to Building Bridges.

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The Week Coordinator will work with the Building Bridges community to develop an interactive, engaging program of over 50 events organized by over 100 partners.

Read more

Apply Now

A unique opportunity to learn about the fast-evolving sector of sustainable finance

Building Bridges offers an exceptional opportunity to be involved at the heart of the sustainable finance and SDG ecosystem in Switzerland and internationally, and to meet a broad range of players that are leaders in their field and determined to align finance with sustainability.

The third edition of Building Bridges took place from October 3 to 6 at the CICG in Geneva. This international event brought together members from the finance industry, the United Nations, international organizations, NGOs, academia and government during four days to address current global crises, and articulate common solutions to advance the Sustainable Development Goals.

Since 2019, Building Bridges has been promoting finance as a key lever to accelerate the transition to a sustainable economic system through annual convening activities. The 2022 edition of Building Bridges explored ways to cope with climate change risks, sustainable agriculture practices, opportunities in emerging markets, fintech, gender lens investing, greenwashing, and several other topics.

This year’s edition opened with a 2-day high-level Summit that showcased prominent actors in the field of sustainable finance, such as Ueli Maurer, Swiss Federal Councillor, Emmanuel Faber, International Sustainability Standards Board, Patricia Danzi, Swiss Agency for Development and Cooperation, Paul Polman, former CEO of Unilever, Rebeca Grynspan, UNCTAD, Margaret Kulhow, WWF, David Nabarro, Skill, Systems & Synergies for Sustainable Development, and many others.

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PARTICIPANTS

This third edition was an important step in the growth journey of Building Bridges. It offered a diverse program with internationally renowned experts, leaders from the Global South, and strong voices from the younger generation. While the event was mainly attended by Swiss participants, it gained significant international interest, with 1800+ in-person participants coming from 51 different countries.

The event recordings have generated 20000+ online views from 40 countries.

More Information

Interviews

Building Bridges Voices 2022

Patrick Odier

Margaret Kuhlow

Louise Mabulo

Muthoni Wachira

Samuel Godfrey

Marie-Laure Schaufelberger

Watch all interviews

Despite many of us thinking that COP27 in Sharm El Sheik would not be a big COP, the attendance levels were much higher than anticipated. More than 50,000 delegates made the trip over to Sharm El Sheikh in Egypt, as well as more heads of state compared to some other COPs. Science and recent weather events helped to emphasize the urgency around the need to stay below 1.5°C. Even if no major step forward was agreed in terms of climate mitigation, there was no backsliding from the Glasgow agreement – which was feared at one point. COP27 was mainly marked by the agreement to set up a loss and damage fund to help poorer countries facing the harmful effects of climate change.

Outside of the negotiation rooms, the picture was much more positive:

Unfortunately, this year was no different from any other COP. The clock speed in the official negotiations is much lower than the clock of actors of the real economy. In the real economy, the discussion is all about the how to speed up transformations and how to get finance to flow. What is different, though, is that there is really no time to waste anymore. We can’t afford any other way than a way forward, toward 1.5°C.

This year, my one word that summarizes the COP for business is “ACCOUNTABILITY“. The High Level Expert Group, the ISSB and the strong interest from Capital Market players in understanding climate risk exposures will make it inevitable for leading companies to get ready to be held accountable for the progress they are making toward a net zero world:

  1. We need more companies to set science-based targets,
  2. Any company that sets a target without a transition plan toward implementation is no longer seen to have a credible target,
  3. Any transition plan without transparent disclosures on the progress toward the target will soon no longer be accepted by financial markets.

We will put in our best efforts to mobilize as many business leaders as possible to join the COP28 meeting next year.


AUTHOR
Peter Bakker, President and CEO of the World Business Council for Sustainable Development (WBCSD)

The curtains have come down on COP27 and the dial ticks upwards to COP28.  Also ticking upwards are global greenhouse gas emissions, parts per million of carbon in the atmosphere and the likely degree of global warming.

COP27 had all the elements of what has, over a quarter century, become a set-piece dance – the hope invested in it up-front, the coalescing of developing countries over a demand for real money and real commitments this time, the looming spectre of a colossal failure, the all-night sessions without which negotiators feel cheated, and the last-minute ‘victory’ snatched from the jaws of defeat.

Failure is not an option, so we need something to hold up – in this case agreement to establish a “Loss and Damage” fund to compensate the most vulnerable developing countries – those who suffer the most from inexorable climate change though they have contributed almost nothing to bringing it about.  As the gavel came down on COP27, the sense of relief was palpable.  Failure had been avoided.

But has it been?  The agreement to establish a fund is politically important, breaking a deadlock of thirty years, so its advent is clearly welcome.  From there to actual dollars being banked and expended on climate action, we still have a long way to go.  Almost everything about the fund and how it will work has been left to be decided at a later stage.

The problem is that global warming is not content to wait patiently to see what politicians will actually do.  We should remember that the climate change community’s greatest victory – the 2015 Paris Agreement – has in large measure not been implemented, and climate indicators continue to grow steadily worse.

We call for urgent action but, where it counts, we tend instead to make promises and then ignore them.  We can, for example, agree to establish a new institutional mechanism sometime in the future, but not to reduce fossil fuel subsidies, though commitments in this respect date back to a G20 decision in 2009!

Why does this matter?  Because the world is expected to have subsidized climate-destroying energy to the tune of nearly a trillion dollars in 2022 – more than collective global spending to combat climate change.  These subsidies serve as an inducement to consumers and investors to give preference to carbon-based fuels like coal, oil and gas over the cheaper, cleaner alternatives.  Instead of placing our money in a hypothetical loss and damage fund, we are spending considerably more real money incurring palpable losses and damages by accelerating climate change, affecting the poorest and most vulnerable as was evident from the floods in Pakistan this year.

We all love last-minute concessions.  We all popped the champagne corks when the Paris agreement was adopted.  We are relieved that COP27 did not collapse in chaos.  But at the end of the day, none of that matters much.  What does matter is progress towards net zero. COP27 laid the groundwork for that but did not progress it directly.  Do we now shift our unlimited capacity to hope to COP28? Meanwhile, the FIFA World Cup is underway, at a carbon cost estimated at some 3.63 million tons!  The host country reportedly spent $300 billion in preparation for the tournament.

AUTHOR
Mark Halle, Member of the Building Bridges High-Level Group and Senior Advisor at NatureFinance