The private sector has a pivotal role to play for climate action and needs to “stand up and be counted” despite any dismissiveness from governments of the day, according to former UN Principles of Responsible Investment chief executive Fiona Reynolds.

Speaking at a dinner ahead of the Lonsec Symposium: A Whole New World, the now CEO of Investment Magazine’s parent company Conexus Financial said, capital is being held back by lack of government clarity.

“The private sector needs to be better about their lobbying efforts with government. The government tries to browbeat a lot of investors and businesses to keep their mouths shut,” she said.

The private sector needs to “stand up and be counted” about policy it wants to push, she said.

“On the climate issues, the Business Council has been saying they want certainty, regulation and knowing they can move ahead and invest with some certainty,” she said.

While attending the most recent COP 26 event in Glasgow last year, Reynolds noticed it wasn’t the green energy sector doing the most lobbying.

“One of the biggest representative groups in Glasgow was the fossil fuel industry more than any other business sector,” she said of the climate conference hosted by the UN. “Why were they there? Part of the lobbying business they do is stop action on climate change.”

Reynolds said finance and environmental policies from government need to be aligned, citing the example of the APRA performance test which doesn’t take ESG into consideration.

“At the moment Australia has a net zero policy but our financial policies don’t take into consideration net zero. Financial policy and government policy around environmental issues aren’t aligned. You can’t talk about these things in isolation.”

Reynolds said the private sector is able to take a better long-term view on these big issues without having to worry about an election every three years.

“That’s why the private sector is so exciting. You can achieve many more things because it’s aligned with the long term whereas governments aren’t.”

Protecting workers

Reynolds said it is naïve to pretend every job could be saved during the transition to net zero emissions and there is still a duty not to leave behind the workers of fossil fuel industries.

“I’m a climate zealot, but the workers shouldn’t pay the cost for climate [action]. We have to factor them into the cost of the transition. As part of the finance sector we should be speaking to businesses about how to do this.”

When speaking at the RIAA conference in April, shadow superannuation minister Stephen Jones noted the transition away from fossil fuels needed to be “managed carefully and transparently”.

“We tend to think of ESG driven investment approaches as always having upsides for every investor and every community, and we know in some cases that won’t be the case,” Jones said.

Reynolds said history showed that not handling this transition properly could lead to communities feeling the effects for generations.

“When the Thatcher government closed all the coal mines in the UK they did so in a short space of time. If you go to many of the places today, they’re still suffering from the ramifications of that decades later,” Reynolds said.


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