Macron commands £2tr worth of sovereign funds to invest in green companies

Image credit: reuters

Companies will be encouraged to embrace more climate-friendly approaches to doing business under a new initiative spearheaded by French President Emmanuel Macron.

Macron has brought the heads of six sovereign funds together that collectively manage more than $2tr to embrace new guidelines that will see the money invested only in companies that agree to climate-friendly proposals.

It is hoped the new policy will inspire a snowball effect and influence other big-asset managers.

“Beyond the colossal amounts these funds manage, it’s the snowball effect we’re betting on,” one adviser at Macron’s office said. “By getting them to make this joint pledge, there will be a ricochet effect spreading across global finance.”

Earlier this week the executive director of the Green Climate Fund stepped down following a “challenging” four-day meeting in the wake of declining financial support from America triggered by waning interest in climate-friendly initiatives from the Trump administration.

The fund is trying to replace some of the money originally pledged by America by bringing in private investors.

Macron has taken a lead role in ensuring the pledges laid out in the 2015 Paris Agreement are adhered to after Washington announced it would pull out last year

With five of the six funds originating from oil-rich nations - Abu Dhabi, Kuwait, Saudi Arabia, Qatar and Norway - and the sixth from New Zealand, the Elysee dismissed suggestions that they could simply be opportunistically jumping on the climate bandwagon.

“They could have told us: that’s none of your business,” the adviser said. “So a big part of our work has been to create trust and show there is political leadership to get them moving, showcase them. It’s not greenwashing.”

Lawrence Yanovitch, an American national who is coordinating the initiative, said the funds understood it was in their financial interest to take account of the risks of climate change in their investments and that most of their countries were already seeking to transition towards low-carbon economies.

“They also see a business opportunity,” the former Bill and Melinda Gates Foundation investment manager said. “Financial markets are risky because they don’t take these [climate] risks into account.”

The guidelines will include obligations for companies to calculate their carbon footprints, he said.

That, and Macron’s background as a former investment banker, encouraged the sovereign funds to work with France on the framework, Yanovitch said.

“They see him as a committed leader on climate,” he said. “He’s got this background, he’s a banker. He understood that the funds were the strategic entry point. If you motivate them, it will cascade down.”

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