24 October 2019
Since 2007, Simon has been Chief Executive of the Chartered Banker Institute, an organisation that shapes professional standards in the industry. He has a strong background in professional education and is a graduate of the MBA programme here at the Business School.
He joined us recently at a well-attended event on Green and Sustainable Finance, held jointly with the Chartered Banker Institute, the Chartered Institute of Securities and Investment (CISI), and the CFA Society, a global association of investment professionals. A panel of experts and an audience of business people, academics, students, and policy makers discussed how the finance sector can play its part in aligning with the Paris Agreement goal of limiting global temperature rise.
Simon's insights included:
The greening of finance is about funding low-carbon activity but also about highlighting the risk to business from climate impacts.
"For me there's two key aspects—one is using finance to fund the transition to a sustainable world, financing climate resilience and adaptation. There's another aspect—climate risks more broadly impact on the financial services sector throughout banks and investment companies' portfolios. The key is pricing that risk, firstly understanding it, and by pricing it we will start to see a shift in how businesses are investing."
Finance needs to align with global climate targets, and it is starting to shift in the right direction.
"In most countries there's more going on than people are aware. A couple of examples: in China there's the AntForest app that hundreds of millions of Chinese consumers use to nudge spending towards green measures—so if you use public transport you collect virtual trees and when you get to a certain stage those visual trees are planted as real trees. In the States we're seeing a shift in wealth management where the majority of family wealth is controlled by female investors and they tend to be more interested in green and sustainable investments.
"We're also seeing the beginnings of green mortgages and other retail products in the UK and internationally but the key is not just niche green products but all products need to be green to meet the Paris Agreement targets."
There's a key role for local and national governments.
"There's a role for government to enable some small but important stuff—for example, it's really important to have efficient homes, but here we are in Edinburgh and at a local level there are a lot of restrictions on double-glazing. We have a climate emergency and we should follow that through to finance but also building codes, national energy supplies. It's got to be in those areas but at the minute it isn't joined up.
"I don't underestimate the challenge—it is for all of us, but the enabler is the government and public sector more broadly."
And there's a role for universities and business schools.
"Universities have a key role to bring together science, entrepreneurs, policy specialists, and we have a lot of expertise in universities such as Edinburgh with centres on climate and credit research for example. We've got a fantastic ecosystem. Outside of universities, bankers tend to talk to bankers. Universities, when they do what they do best, bring communities of interest together to tackle challenges and there is no bigger challenge than climate change."
Simon Thompson is Chief Executive of the Chartered Banker Institute