"The Paris Accord provides a new framework for businesses"
Europlace Forum - Statement by François Delattre, Permanent representative of France to the United Nations - 18 April 2016
I am very honored and pleased to be here with you this morning and I’d like to start by thanking Paris Europlace and our friend Arnaud de Bresson, its CEO, for their dedication and truly remarkable job.
As we all know, the Paris Accord is a landmark agreement, a true turning point and I had the privilege of participating in the negotiations with President Hollande and Minister Fabius, with its countless sleepless nights that I will never forget… The success of Paris is a collective one. And let me underscore that the commitment of the US, and the personal leadership of President Obama and Secretary Kerry to reach an Agreement in Paris was second to none.
At the end of the week, on April 22, world leaders will gather here in New York to sign the agreement that was adopted in December. While few heads of State were expected to come to New York only a few months after Paris, close to sixty heads of state and around 150 countries are about to sign the agreement, renewing their commitment to fight climate change. I believe it says a lot about the great momentum initiated by the agreement.
Paris is not the usual top-down agreement. It is also a bottom-up agreement based on a wide range of coalitions of governments and non-state actors. Among these many initiatives and coalitions, let me mention the International Solar Alliance launched by President Hollande and Prime Minister Modi of India, the Clean Tech initiative launched by President Hollande, President Obama and Bill Gates as well as the major initiative on the electrification of Africa.
These initiatives and others are part of what we call the Action Agenda, which is a game-changing agenda. A high level event on climate action will also take place on April 22 in the afternoon on this, giving another opportunity for civil society and business to take stock of their commitments, take further action and raise the level of ambition.
The Paris Accord provides a new framework for businesses and investors to operate in an energy transition economy aimed at low carbon emissions.
First the 2°C (1.5°C) scenario is a target that both investors and businesses will increasingly focus on – the panelists will certainly discuss this -.
Second, the Paris accord triggers a need for infrastructure and greenfield financing – a new opportunity for investors and a source of innovation for business.
Third, investors are increasingly focused on ESG – Environmental, Social and Governance.
Funds such as CalPERS have incorporated climate-related risk in their screening and investment strategies.
In addition, we are seeing retail investors asking for ESG investments. This market pressure is creating demand for financial products and services for investors worldwide.
As an illustration of this market pressure, Morningstar announced it would rank mutual funds on ESG.
In the same vein, we will hear in a few minutes from its CEO Philippe Zaouati how Mirova is investing in companies with a strong environmental impact, integrating ESG criteria in its investment decisions.
French investors and business are at the forefront of international efforts in this field (Amundi, BNP Paribas, Caisse des Dépôts, Société Générale, Crédit Agricole, Mirova donc Natixis…).
As far as this country is concerned, I personally witnessed and am impressed by the sea change in the level of engagement from investors in the US. The NY common retirement fund under the auspices of Comptroller Thomas Di Napoli, is one such illustration. There is a strong trend by institutional investors to focus on their carbon footprint, integrate climate change in their investment strategy, and better evaluate climate risk.
What this suggests is that the Paris Accord and its signature this week will unleash pent up demand for goods and services produced by businesses, and investment opportunities to fund them.
It is a very exciting moment that will bring to us innovation that frankly no one could have imagined possible less than ten years ago.
Other illustrations include the Sasb (sasbee) initiative under the auspices of Governor Carney and Michael Bloomberg aimed at extra financial reporting and disclosure.
In France, a law introduced by Environment Minister Ségolène Royal has already taken aim at extra financial reporting of funds.
The French law on energy transition for green growth introduced specific provisions on transparency into investor portfolios, making it easier for investors to reorient their strategies towards a low-carbon economy through new extra-financial reporting obligations.
Make no mistake: transparency and proper reporting mechanisms will be critical to achieving the objectives of the Paris accord.
At the same time, good progress is being made on carbon pricing. American corporations asked for a carbon price to be set in their “Business for Innovative Climate and Energy Policy” statement, an initiative of Ceres. 19 states and dozens of large companies are part of the carbon leadership coalition. Emissions of green bonds have met with initial success. Sixty countries and regions are paying for CO2 through taxes or carbon markets. Many companies are working with a carbon price internally. California has formed a market with Quebec and Ontario is about to join in. And last but not least, China is preparing for the creation of a domestic carbon market next year.
Moreover, the inaugural meeting of the carbon pricing leadership coalition which took place in Washington last Friday is an important step in consolidating the gains made in the Paris Agreement.
Within this Coalition, more than 22 Governments and jurisdictions, and more than 90 corporations support and recognize the need for some form of carbon pricing as an important economic tool. I know that Global Compact has always been very supportive of setting a price on carbon, and I would like to thank you for that, Lise (Kingo).
So Paris gives business the stability and clarity they need. If properly implemented, it means clean technologies will move to the forefront of future investment, and prices of low carbon technologies will continue falling.
And that’s where the US and Europe can together make a tremendous difference and actually take the lead to make the transition to a low-carbon economy a success and provide huge opportunities for US and Europeans investors and businesses.