July 30, 2021

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Wall Street uses political A-listener for $ 30 trillion green boom

(Bloomberg) – Mark Carney, Brookfield Asset Management. Brexit architect Nigel Farage to the DGB Group. A senior Obama advisor to BlackRock Inc. has been joined by high profile employees over the past few months, and in each case the same mandate has been repeated: To help their new employers secure and expand their burgeoning green finance The sudden onslaught, political Hugging Insiders is a powerful sign of how far responsible investing is from the eccentric fringes of finance. While business has long been a route in and out of politics, joining a company that plants trees to offset emissions was once a risky career move. Yet so much money – more than $ 30 trillion in some ways – is now tied up in green finance that the industry has been successfully wooing an illustrious list of household names and political wins to have lawmakers in London, Brussels and Washington on their side to keep the good times rolling. Other recruits include Chuka Umunna, Farage’s one-time opponent of Brexit, and Luciana Berger, another former British MP: “They don’t hire these politicians for their expertise in finance and economics – they hire them for their expertise in influencing politics, both their connections with government officials and their knowledge of how to play the system, ”said Simon Youel, director of politics at Positive Money, who advocates reform of the banking system. “This revolving door allows large institutional investors and corporations a disproportionate influence on policy making.” While fears of climate change helped build that cash cow, politics will determine whether the industry ossifies or earns trillions more dollars in the next decade. From the United States to China, governments design rubrics, standards, and regulations to define what is “green”. They are reshaping the landscape for the banks and money managers who dominate this world and want to surprisingly influence the bottom line. There are already signs that companies are exaggerating or misrepresenting their environmental problems in selling debt, a practice known as greenwashing. Questions about the impact of carbon credits, which companies use to reduce their environmental footprint, are also growing. And the financial services sector itself has been criticized for funding fossil fuel producers. With mainstream banks now recruiting familiar faces to promote their green finance brand, the industry’s feel-good veneer could crack: “Because of the effectiveness of the green finance agenda, it tends to have more supporters than critics,” said Adrienne Buller, a senior executive Research Associate at the Common Wealth Think Tank, focused on building a sustainable economy, with former UK Labor Party leader Ed Miliband as its director. “There are some people who call out greenwashing, but the answer is more like” We have to eradicate greenwashing so that green finance can do its job “rather than critically looking at green finance as a whole.” ESG – as retained Adeline Diab, head of ESG for EMEA at Bloomberg Intelligence, said key policy makers are known to expedite corporate disclosure requirements. So it is in the interests of banks and asset managers to get a little political about hiring, even though those relationships have been scrutinized more closely after former Prime Minister David Cameron’s lobbying for the collapsed lender Greensill Capital that legislative hype is fraught with trouble afflicted. The influence of finance and the economy on environmental policy already creates some problems. “We’re seeing a lot more sustainability laws in financial regulation today, and of course some people are trying to stop that back, so it’s not that strong,” said Fiona Reynolds, executive director of the United Nations-backed Principles for Responsible Investment. The change is not yet complete, but “there must be strict rules and transparency,” she said. Read More The European Union watchdog ruled in November that the European Commission did not fully consider a conflict of interest when BlackRock was hired to advise on new sustainable finance requirements for banks. The company’s separation of the advisory arm from the investment unit was insufficient to prevent employees from being influenced by the company’s general strategic interests, wrote an ombudsman. BlackRock is the world’s largest asset manager overseeing billions in green funds. The European Commission pointed to the technical quality of the company’s pitch to aid its choice. And in the UK, the government is preparing to issue the country’s first sovereign green bond following a parliamentary push led by Gareth Davies, Columbia’s former head of responsible investment, Threadneedle Investments, who is now a member of parliament for the ruling Conservative Party is. In 2019, the same year Davies was elected, Columbia wrote Threadneedle a letter calling on the UK government to release green gilts, “Davies said in an interview.” We recognize the power of the financial sector, some of the Solving problems the government is trying to solve, it’s not because we’re trying to influence the financial services sector more. ”Mark Carney, former Governor of the Bank of England and longtime advocate of sustainable investment, is the most well-known contributor to Green Finance. He joined Brookfield last year as Head of ESG. CEO Bruce Flatt said at the time that his close relationships with sovereign wealth funds and diverse business experience mean he would be instrumental in growing the company’s ESG group, including Morgan Stanley and Citigroup Inc. to sign an emissions reduction plan, and its work extends to practicing r the private and public sectors. He is currently the financial advisor to UK Prime Minister Boris Johnson for the November COP26 meeting in Glasgow, making him an important voice in the United Nations climate negotiations. He is also head of the Task Force on Scaling Voluntary Carbon Markets, which seeks to build global trade in carbon offsets for the private sector. A less likely convert is Nigel Farage, a climate change skeptic, when he heads the British Independence Party, which recently joined a Dutch company that deals with carbon offsetting. Its mission is to “facilitate adoption for politicians and business leaders in the UK and around the world,” the company said in a press release. “From a PR perspective, it’s a headline,” said Selwyn Duijvestijn, CEO of DGB Group, Farage’s new company. “The oil workers in Texas do not listen to Greta Thunberg, but they have to be aware that we have to do something,” he said in an interview, referring to the youthful climate activist. “You’d rather hear Nigel Farage than Greta Thunberg.” On the other side of the political spectrum, Chuka Umunna, Farage’s one-time sparring partner during Britain’s lengthy exit from the EU, became head of JPMorgan Chase & Co. ESG for EMEA earlier this year. Umunna arrived in parliament after almost a decade after serving as co-head of Edelman’s ESG advisory service. A bank note at the time said he was helping clients “successfully navigate the evolving ESG landscape.” Umunna’s former colleague Luciana Berger is now the new chairwoman of the ESG committee of the used car dealer Cazoo. Cazoo declined to comment beyond an earlier testimony. It’s not just a European phenomenon. BlackRock recently replaced one White House insider with another. Paul Bodnar, an Obama-era climate policy advisor, is now the company’s sustainable investment director, succeeding Brian Deese, who returned to politics as chairman of President Joe Biden’s National Economic Council. The company has recruited more than a dozen alumni from the Obama administration over the years. Where once it was beneficial for voters to take a hard line against bankers, as it did after the 2008 financial crisis, the financial industry has worked hard to rename itself as a means of change, critical to moving to a low carbon economy. This has made it easier for politicians, especially those with more progressive or left-wing liberal positions, to join their ranks. There will be no shortage of opportunities in the years to come. According to Bloomberg Intelligence, ESG assets are set to nearly double to $ 53 trillion by 2025. And while banks still make more money lending to companies on fossil fuels than marketing sustainable bonds, environmental sustainability has other benefits, not least the fact that activist shareholders, regulators, and tax collectors are pressuring the financial industry to shut down clean up. “When the policy makers go for large banks or other investment institutions that care about ESG, this is very welcome in the financial sector,” said Kenneth Haar, researcher at the Corporate Europe Observatory, a Brussels-based group of public interest. “More than anything, they need to be seen as institutions that take climate change seriously, and they need a friendly face to sell this idea.” (Adds comment from Bloomberg Intelligence.) More stories like this one are available on bloomberg.com. Subscribe now to stay ahead with the most trusted business news source. © 2021 Bloomberg LP