Natixis CIB Green Summit 2024

• The most important key concepts when defining avoided emissions: 1/ they are part of the shift towards net zero together with induced emissions and offsetting and fail to be well integrated in Net Zero frameworks, 2/ they reflect the ability to reduce emissions beyond a given company’s value chain measuring to what extent a technology / activity allows other sectors to decarbonize; 3/ The trajectory and volume of Avoided Emissions over time are not static, as it is subject to the maturity of technologies. It is therefore expected to reduce over time, eventually reaching zero, as better technologies prevail and become mainstream and as reference scenario is constantly moving.

• Avoided emissions should not be used as a way to balance out or offset induced actual emissions, any claims have to be defendable, robust and preferably with the involvement of third parties. Standardization and a common framework would likely be helpful to all in the market. Qantis / Icare are developing an avoided emissions factor database (AEFDi) leveraging on existing guidelines to have a common building block for market players to be able to assess avoided emissions with a common framework and eventually compare differents players / projects’ impacts with technology /geographical granularity.  

• By focusing on innovation, new revenue streams also emerge as highlighted by Schneider Electric, long time practitioner of avoided emissions as a complement to their induces emissions measurement. Besides redesigning lithium extraction to account for sustainability, Vulcan Energy - for example - also produces renewable energy and renewable heat. 

1. Risk management & planning: Effectively phasing-out fossil fuel assets demands careful planning and robust stakeholder engagement. Such anticipation allows to mitigate environmental, social, and economic impacts, including performing environmental assessments, engaging in community impact studies, exploring potential substituting activities, securing still rare know-how and skills on dismantlement and rehabilitation, implementing safety protocols during demolition phases, and recognizing that these projects are hardly profitable as they seldomly generate revenues.  

2. Abiding by decommissioning norms when they exist: Navigating diverse and sometimes incomplete regulations is key to phase-out successful completion. Some norms were silent on critical aspects, however, in the past years, legal requirements enriched to prevent unforeseen negative side effects, requiring for instance sufficient time to project managers and authorities to assess, plan and execute assets decommissioning.  

3. Stakeholders management: Actively involving local communities, not only workers, is essential for successful decommissioning. Addressing legitimate concerns about job losses and rising energy costs can foster trust and collaboration.  

4. Virtuous circles:  Properly decommissioned sites present exciting prospects for repurposing into tourism spots, recreational areas, and environmental restoration projects, all of which can generate employment opportunities and enhance community involvement. However, the employment and productivity scales of previous activities are rarely matched, this is why policy banks invest in economic diversification in concerned areas. In Australia, on the economic aspects, the development of renewable energy assets contributes on the long-term to electricity prices decrease.  

5. Challenges when straight phase-out is not realistic: Supporting energy efficiency or retrofitting projects can lead to fossil fuels phase down but not phase-out, with risks of carbon lock-in for certain assets. However, these assets may still be preferable as interim solutions in some geographies (such as Croatia, Poland), where low-carbon solutions are not yet competitively available.   

6. Market guidance in the making: current initiatives aimed at framing the eligibility of managed phase-out spending under sustainability financing labels, which could support such programs provided carbon avoidance is tangible and social considerations are properly addressed. Exploratory work within an ICMA taskforce is scheduled.   

• The concept and practices around transition plans have matured. Current transition plan frameworks are addressing gaps left by earlier climate-related disclosure frameworks.   towards greater sophistication and standardization. Transition plans are also gradually being imposed by mandatory regulations (CSRD, CS3D, ISSB).  

• Credibility is key for Transition Planning. Although Transition Plan Frameworks are harmonizing, Transition robustness is achieved through three critical elements: 1) Sector specificities, 2) Geographical characteristics, 3) Availability & feasibility of decarbonization levers.  

• Speakers shared the view that corporates shouldn’t postpone the publication of transition plans in pursuit of perfection. However, it is essential to clearly communicate any unclarities, dependencies and assumptions, as external factors may affect implementation.  

• Transition plans are increasingly recognized by investors as valuable tools for ESG integration supporting decision-making processes and help, among others, to distinguish industry leaders from laggards, decide on the weight of investments. Investors are also observing a pricing differential linked to these plans, supported by evidence of their anchorage in the market. 

• Transition plans should not be seen as a sole reporting exercise, but also as a change management tool. It can help communicate to internal and external stakeholders the ambition, actions, and accountability of the organization and thus support against greenwashing claims.  

• Though progress has been made, as evidenced on transition plans’ use by different stakeholders, transition planning and implementation is not happening to the extent needed. 

Experts investigated the pivotal role of science-based scenarios in steering us toward net zero by 2050 and the distinction between credible and desirable pathways, emphasizing that these scenarios are strategic tools rather than mere forecasts. Key discussions focused on aligning long-term climate goals with immediate business actions, maintaining ambitious targets like the 1.5°C objective despite rising emissions, and understanding the social implications of carbon budget allocations. This session provided valuable insights into how credible decarbonization methodologies can drive targeted investments and inform effective policy decisions, ultimately shaping a sustainable future.

1.       Scenarios objectives

In recent years, science-based scenarios have emerged as essential tools for navigating the complex pathways to achieving net zero targets by 2050. Multiple scenarios currently coexist, some others are being built, each designed to meet different objectives. As an example, the IEA (International Energy Agency) initially focused on warning of potential energy risks, consequently, their scenarios were developed to explore various plausible energy systems. These scenarios range from “business as usual” (if everything stays the same) to consideration of current commitments made by countries, and finally to pathways for achieving the 1.5° objective. In contrast, the initiative triggered by Carbon4, target to reconcile  future economic and lifestyle balances with the Earth’s physical limits and explore with scenarios the trajectories to reach it. Scenarios are not forecasts, experts confirm they cannot be used as predictions.

2.       Current use cases and evolution:

Scenarios are usually built on a rather long-term perspective: 2030 or 2050. While long-term scenarios provide a strategic framework that encourages proactive planning and moving forward, companies and financial institutions often focus on shorter timeframes for immediate decision-making. By adopting a scenario-based approach, companies can take a step back, identifying now proactive measures to prevent undesirable outcomes and drive direct investments toward critical sectors particularly concerned by the transition and where the need of financing is massive, such as building and infrastructure. This dual approach enables institutions to align their strategies with both immediate market conditions and future sustainability goals.

There are two primary ways, often combined, financial institutions utilize these scenarios: 1/ qualitative analysis: this involves assessing the transition plans of companies, allowing for benchmarking against industry standards, and 2/quantitative analysis: financial managers develop metrics and benchmarks that provide concrete data for decision-making. On their side, policy makers should use scenarios to establish policies on a long-term view.

3.       Challenges are many fold

We can question the relevance of keeping 1.5°c scenarios as emissions are growing continuously: experts agree that we need to keep the most ambitious scenarios, to develop relevant actions plans that enable us to tackle the transition and land as close as we can to net zero: if there is a shift to that target, the smallest it is, the better.

There’s an increasing interest of going beyond climate issues in scenarios, integrating other factors such as land-use change, social issues (and especially the notion of ways of life) and more. This is made possible if it’s compatible with the scenario’s initial objective and the way it is built. All experts agree on integrating as much dimensions as possible to get the most complete scenarios

• Despite the urgent need for climate change adaptation, historical funding has favored climate change mitigation efforts. Our speakers tackled this question from their different perspectives: investor, corporate, insurance. 
• The first key challenge is identifying potential opportunities related to adaptation beyond risk management and measuring its impacts, which are often more complex due to overlaps with social issues. 
• The discussion highlighted the importance of understanding and mapping climate risks first for the entity itself with a better understanding of where they currently stand, and taking into account their supply chain, having both an asset level and systems-level approach. 
• While current adaptation measures need to scale up, there is also innovation with more nature-based solutions, and parametric insurance. 

• Sustainable finance Regulations have been characterized since their inception by an inherent tension between the need to scale up investments supporting the transformation of our economy (a volume effect) and the imperative for integrity to ensure trust and investors’ protection.  
• While these two objectives are complementary to ensure investor confidence, setting the cursor also reflects underlying choices between greening finance overall or financing the transition. ESMA has traditionally played a specific role in preserving integrity, but in an evolving landscape, this assignment can contribute to foster sustainable investments volumes. 
• The balance between these two goals also results from a learning dynamic. Meeting the sustainability goals requires a certain level of complexity. Balancing different situations, asset classes and strategies while ensuring comparability for investors remains a challenge. The learning curve is steep for all stakeholders, including regulators. Now is the time for streamlining on the basis of the lessons learned. 
• Assessing the results, the positive contribution of regulation has been noted and linked to the rapid development of sustainable finance within the European Union. On the real (EU) economy front, the sustainable finance package and the EU taxonomy start to play their role for some sectors where there are “pure” green opportunities (electricity production, cars, etc.) but remains more static when it comes to hard to abate sectors (heavy industries). .
• Bridging the financing gap of transition should be the next goal. In particular, going beyond the measurement of “dark green” will be key to the effective management of transition paths, at both macro (sector) and micro (organizations, activities and projects) levels. 
• The necessity for of a more comprehensive regulatory framework to foster and to track sustainable finance progress irrigated the whole discussion. Social taxonomy, SFDR revised products categories, .
• Transition definition and transition plans assessment (maturity, capex but not only),  benchmarks on non-climate environmental issues, stewardship code for investors at the EU level, dedicated tools for SMEs have been quoted as important ways forwards for the EU sustainable finance regulations. ).  
• The potential to leverage the sustainable finance regulations tools if also used by the public finance side has been stressed: public investment banks through their balance sheets and guarantees for instance.  
• To succeed, some keys will be coherence and interoperability between regulations (for instance SFDR, CSRD, rules on funds names…) and the interconnectedness of regulators, investors, corporations and rating agencies. 

• While the global landscape of carbon pricing has expanded markedly, with close to 60 different carbon pricing mechanisms worldwide, the EU remains at the forefront of this development, with its Emissions Trading System (ETS) being the most stable liquid market and the introduction of the upcoming Carbon Border Adjustment Mechanism (CBAM). 

• Compliance-driven regulatory markets continue to dominate, but our speakers agreed on the need for convergence between compliance and voluntary markets, which requires enhancing the transparency and credibility of the voluntary market. The recent guidelines endorsed at COP29 concerning Article 6.4 signal positive progress toward establishing a functional global carbon market. 

• Internal carbon pricing, which considers company-specific factors, helps organizations to identify effective decarbonization investment opportunities. Over the years, the development of carbon pricing mechanism has become increasingly sophisticated, featuring more complex pricing structures, and it is becoming an additional relevant lever for companies to deliver their long term decarbonization targets, tackling the specificities of each region where they operate. 

• In Europe, carbon prices are expected to rise in the long term, driven by a declining emissions cap and the need for further reductions in industrial sectors. That said, Europe is unlikely to be an isolated case as we see a clear global momentum supporting carbon pricing, on the back of further maturation of other compliance markets, entry into operation of new ones, and, last not least, higher linkage between compliance and voluntary markets. 

• The implementation of the European Taxonomy was challenging for a vast majority of companies due to several factors, including the need to translate Europe-centric reporting elements into a common language that can be understood by subsidiaries located in countries outside the European Union that are not familiar with this regulation, the requirement to develop IT tools for data collection and reporting, eligibility considerations for companies with multiple activities and reporting scope for sustainability data.  

• For investors at the end of the value chain of the EU Taxonomy, the implementation was also challenging because they had to report on it before the companies were subject to it. For many companies in the portfolio, particularly those not based in the EU and the smallest ones, data on the European Taxonomy is either unavailable or incomplete. As a result, it is necessary to use proxies and estimates from data providers, each employing different calculation methodologies.  

• Despite the fact that it is not an easy regulation to navigate, it is still worth pursuing. Two years ago, companies preferred to report 0% because it was too complex and required too much effort. However, today they are even striving to identify the few percentages beyond the decimal point for alignment. Moreover, it has facilitated significant advancements: for the first time, financial and sustainability departments have begun to engage in meaningful dialogue. Indeed, the internal implementation of the taxonomy has facilitated the mobilization of a previously disconnected set of teams. Finally, for green pure players, it was also an opportunity to leverage the EU Taxonomy as a bankable tool for integration into green financing transactions and add credibility to sustainable issuances.   

• The EU Taxonomy is not perfect and cannot explain everything; it only provides part of the picture (for example, some oil and gas companies have significant amounts of CapEx that are aligned). It is therefore also essential to focus on the non-aligned aspects to gain a better understanding of the company's business model, its decarbonization plan, and its efforts to implement it.  

• CSR must be seen as an integral part of the company’s business model, encompassing social, environmental and customer satisfaction. 

• The creation of a materiality matrix is an essential first step to identify which CSR issues are priorities for a company and to meet the expectations of stakeholders (customers, employees, and financial partners). 

• The implementation of a multidisciplinary governance structure (CSR, Purchasing, Finance, HR, General Management, Operations, etc.) is crucial to ensuring the integration of CSR in all of a company’s activities. 

• Management commitment is fundamental to ensure the sustainability and success of CSR initiatives and their long-term implementation.  

• The construction of a CSR approach fosters the company’s efficiency, resilience, risk reduction and attractiveness, resulting in higher customer loyalty. 

• The implementation of a structured sustainability reporting is essential to enhance the value of the company’s actions. The challenge is to improve transparency with its stakeholders on its impacts and its approach to reduce them. 

• The involvement of the Executive Committee is a key success factor to make the construction of a CSRD report an opportunity. 

• When it comes to carbon footprint reduction, a key theme as part of the context of CSRD, focusing on emitting industrial sectors and large emission pools is paramount. Energy consumption and water conservation are growing concerns, in a context of significant cost increases. 

• With the development of the “Global Biodiversity Framework”, we now have the tools to measure; it is time to enter the action phase. 

• Nature-related metrics and objectives are complex, but not insurmountable, as we have collectively established a comprehensive vocabulary. 

• Investors are seeking more consolidated metrics, but biodiversity issues are often local-specific. While local efforts may seem insignificant to investors due to the inability to consolidate metrics, they are crucial for corporate sustainability strategies. 

• At the same time, investors have to prioritize and can seek the projects with greatest delta for improvement potential. 

• Marine biodiversity is in freefall, but bold initiatives are emerging! Catherine Piante from WWF emphasizes that protecting 30% of our marine ecosystems by 2030 is not only vital for the planet but also beneficial for the economy. Every dollar invested in a marine protected area generates three dollars in revenue. A virtuous circle worth preserving!  

• On the mountain side, Dominique Thillaud (Compagnie des Alpes) highlights the impact of climate change on ski resorts, stressing the need for an ecological transition that is also profitable. Innovations like using cooking oils to fuel vehicles to reduce CO2 emissions, sharing natural space and resources are steps in the right direction.  

• Nils Joyeux from WindCoop adds an exciting twist to sustainability with their sail-powered cargo ships, which can cut carbon emissions by up to 50%. This approach not only reduces our carbon footprint but also empowers local communities through a cooperative economic model.  

• There is a critical required balance between leveraging efficient technology and empowering local labor in order for sustainable nature-based solutions to be sustainable. Key challenges persist, including project financing and establishing clear impact metrics amid the fluctuating voluntary carbon market.  

• Marie Calmel (Verra) underlined the necessary collaboration with small landholders and emphasized on-ground monitoring while expanding labels to showcase robust co-benefits beyond CO2 reductions. Charlotte Lehmann (Mirova) views carbon credits as essential tools for project viability and aims to broaden the investor base. Meanwhile, Arnaud Doré (Imperative Global) emphasizes corporate challenges like greenwashing and the rising prices post over-crediting scandals. The meaningful discussion took place under the moderation of Chamss Ould (dClimate).  

Geospatial data (points, surface) is revolutionizing how financial institutions and corporates assess environmental and social impacts and risks. From traceability to compliance, these insights are becoming crucial for responsible business practices and sound risk management (mapping supply chains’ impact on nature and climate, nature stress testing, physical risk assessment, assessing the risks associated with the degradation of natural capital due to anthropogenic pressures).  

Though granular asset-level and entity-level robust aggregated geospatial data are still rare and incomplete, even if many data providers are working hard on it. Data acquisition is key and needs to rely on both public sector (e.g. the French IGN is mapping the whole French territory on different angles (coastlands, water / rivers, forests, urbanization) and with advanced technologies (Lidar HD program for a dense and accurate 3D mapping) and private sectors’ players / data providers mapping all physical assets of a given corporate.  

Three main use cases where geospatial data is making a difference: 

• Combatting Deforestation: By utilizing satellite imagery, geospatial data enhances traceability in supply chain management. It allows businesses to identify assets near sensitive ecosystems, promoting sustainable sourcing practices. This is particularly relevant with emerging regulations, such as the EU's upcoming rules on deforestation-free products. 

• Mitigating Climate Risks: Geospatial data helps businesses identify and assess exposure to climate-related physical risks (flooding, heat waves, wildfires etc.). This empowers organizations to take proactive measures in managing environmental risks, ensuring resilience in their operations. 

• Driving Inclusive Development: By pinpointing underserved areas, geospatial data enables financial institutions to build financing solutions to channel investments where they are most needed. This targeted approach fosters inclusive and sustainable development, benefiting communities and regions that require support. 

The Showcase Debate opposed two teams around the motion: “This House believes that technology will save us” 

• The Proposition side developed its case around the benefits that technology provides regarding access to resources, notably that technology is what allowed not to run out of resources either innovation for more efficiency in resource consumption and climate change mitigation and adaptation or through alternative technologies using other resources for the same basic service.  Technology benefits to the overall population, enabling humanity to live in a healthier and wealthier world, taking millions out of poverty. Tech is an amplification of human strength ! 

• The Opposition argued that the pace of technological innovation will not enable humanity to cope with the scale and speed of climate change, questioned fair access for all to technology, notably given the costs and barriers to technological development, and pointed out the rebound effects generated by technology use on resources consumption and its adverse effects on the environment (e.g. pollution, deforestation, waste generation). The Opposition would rather rely on behavioral adaptation, challenging cultural norms and promoting shifts in consumption habits, while enhancing nature self-repair capabilities, unobstructed by anthropic activities and technologies. 

• There is a growing demand for ESG data points from investment teams that emphasize ESG growing materiality investment decisions and is pushed by the necessary compliance with ever more stringent and numerous sustainable finance regulations. However, much of the information provided by corporations remains underutilized, with only around 50% of reported data being actively utilized. In this context, the burden of producing ESG data is increasing, as evidenced by the rising human resources and budgets that need to be allocated to it. Nevertheless, companies are expressing frustration over limited communication with rating agencies and investors on the actual data expected. 

• A movement towards global standards is in progress; however, there is a need for detailed data that addresses local market conditions. Moreover, each sector requires its own set and level of granularity of ESG data for it to be truly useful. In that respect, regulators are advocating for greater transparency regarding ESG rating objectives and methodologies rather than imposing stringent regulations on them. On their end, investors are increasingly seeking customized reports from rating agencies that meet their specific criteria, signaling a trend towards personalized ESG reporting. 

• AI is beginning to play a significant role in assisting ESG data vendors with the collection of data that was previously difficult to obtain. It is estimated that 70% of the data collected by rating agencies does not come from a single official disclosure document, highlighting the complexities associated with data collection and aggregation. The urgency of integrating AI into data collection processes has been emphasized, with claims that immediate adoption is essential for improving data harmonization, analysis, and usage, but also for reducing and better allocating the resources dedicated to it. 

• Animated by Debate Mates, a global social business dedicated to teaching the skills of communication and leadership in businesses and schools around the world, participants had the opportunity to engage in a unique, high-energy and interactive way to facilitate discussions on this topic: British Debating. 

• The audience first got a chance to warm-up through mini-debates to get engaged with the topic and familiar with the rules of British-style Debating, developing arguments in small groups for the Showcase Debate. 

• The Showcase Debate then opposed two teams of three around the motion: “This House believes that degrowth patterns are unavoidable in a sustainable future” 

• The green hydrogen market development faces slowing momentum due to high production costs, lack of demand and project delays. This is, however, interpreted as a sign of market maturation, as it seeks better solutions and finds its footing. 

• Our speakers agreed on the relevance of having end-use merit order from a global decarbonization perspective, some sectors having highest decarbonization potential (such as mobility, power, steel), but they debated around the “when” in terms of its implementation timing and the “who” in terms of sector prioritization in order to effectively scale-up green hydrogen development: proactively stimulating and capitalizing on existing demand vs. waiting for the "perfect" market conditions to favor some sectors. 

• Additional levers such as cost reduction, supportive policies and coordinated action across stakeholders (governments, industry, investors) are also required to trigger a virtuous circle. 

• The International Energy Agency reported that data centers are the fastest growing source of electricity demand in the U.S., with consumption expected to double by 2026. 

• By 2030 DCs will be 8% of total US electricity demand vs 3% today (GS Report) 

• EU power demand is down 10% from 2008 peak, now due to growth of DCs that could increase 10-15% over the next 10 years. 

• Increased focus on sustainability by: 

• Energy is becoming the limiting factor for DC growth. Therefore, this is opening up new areas that were not previously being considered. Especially as AI training does not need low-latency. Those with access to cheap renewables are attractive. E.g. Kenya (geothermal) or Nordics (hydro). 

• Increasing need for enhanced granularity on sustainability reporting regarding the power sourcing, as well as water sourcing and usage 

• Energy efficiency discussions need to start moving away from PUE to the efficiency of the compute. However, no agreed metrics today 

• Cooling technologies are rapidly improving which will dramatically reduce water consumption (closed loop, immersion etc). However, interface and risk allocation frameworks still need to be agreed. 

• Concern that in the short term hyperscalers are putting sustainability concerns at a lower priority due to a focus on wining the AI arms race 

• Expected passenger traffic and with i,t  aircrafts, are expecting to face a very strong increase. 

• SAF is one of the main levers to decarbonize aviation industry, but it is still nascent. 

• According to the EU regulation, a fuel characterized as a SAF must save at least 65% of GHG emission in LCA.  

• SAF represents a very good investment as it answers to a high demand and supply unbalance and strong investment needs and strategy needs. 

• SAF represents more than 55% of the decarbonizing target solution. 

• According to Air France KLM representant, 70% of the fleet will be new engine by 2030 and the second most important lever will be SAF. 

• SAF is more expensive yet and will stay more expensive 

• There is 4 ways to develop SAF: HEFA (transforming use cooking oil into SAF); alcohol-to-jet; gasification and power to liquid. Looking at the price component, the HEFA is the most affordable to meet the price. HEFA is approximatively 6 times cheaper than other methods but still 3 time higher than Jet A1. 

• The surcharge of SAF price is directly impacted in tickets price for Air France KLM. Then, the targeted customers are B2B clients willing to buy SAF to decarbonize their scope 3. 

• SAF is possible to use without changing engines as it can be mixed directly in the tank with conventional kerosene up to 50%, regardless of feedstock. For airports, it is possible as there is no difference either for storage facilities. 

• SAF represents an opportunity of jobs creation to scale up all the supply. It is also a great opportunity to develop sovereignty against fossil fuels. Indeed, the feedstock and the raw materials are available in every country. It would also be an answer against price volatility. 

• Carbon Capture and Storage technology isn’t new by itself, but the scaling-up of CCUS projects and application to new types of underlying industrial emitters remain the challenges. As illustrated by the Northen Lights storage project in Norway, the value chain is gaining traction and mostly through public like EU’s Innovation Fund, Inflation Reduction Act in the US or Regulated Asset Base model in the UK 

• From a technology perspective, while most of the building bock can globally demonstrate sufficient technology readiness levels and track record, the greatest challenge for project developers and investors comes from the fragmentation of the CCUS value chain requiring integration.  

• From an economic perspective, subsidies for both capture and storage technologies are still crucial to address bottlenecks, reduce risk, and engage project finance by solving, on top of economic support,  the “chicken-and-egg” problem, leakage risks or long- term liability.   

• Beyond the initial public support, additional levers to scale-up CCUS to the Net Zero scenario required levels would consist in: 

Questions persist regarding the concept of greenflation: its definition, materiality, drivers, and current and future consequences.  

• Three types of climate-related inflation can be identified (Isabelle Schnabel 2022):  

•  Key Drivers of Greenflation: Greenflation is influenced by multiple factors The main factors contributing to greenflation include carbon pricing (limited impact - (0.2% from 2018 to 2023)), supply and demand imbalances for essential commodities like critical metals, and policy uncertainty that affects market stability and green investments.  
• Current Inflation Trends: Currently, fossilflation and climateflation are more prevalent than greenflation. Fossilflation is largely influenced by external shocks and dissimulated, for instance, by states’ subsidies during the Covid crisis and the Ukraine war, with rising prices of Liquid Natural Gas adding to volatility.  
• A key risk about inflation is the tendency to focus on a single cause, potentially overlooking other significant contributing factors. Effective management of greenflation requires early, credible, and consistent policies that anticipate market changes.   
• Role of Central Banks: Central banks, such as the Banque de France, are seen as having a role in managing greenflation and anchoring expectations, but there are concerns that, due to conflicting objectives, current policies may unintentionally exacerbate climate issues.  
• Role of governments: Effective fiscal policies, carbon taxation adjustments, and a focus on circularity in materials are crucial. Carbon pricing alone is crucial but not enough, subsidies have to accompany consumers, especially the most fragile households, allowing the adoption of low carbon equipment. The ringfencing of carbon taxation proceeds may bring benefits.  
• Government and Central Bank coordination would contribute to ensure a smooth and orderly transition.   

• There will not be much creation of new "green" jobs per se, but all jobs (examples: outdoor professions but also support functions, such as buyers) will be impacted by the ecological transition 

• In concrete terms, UNEDIC is developing a benchmark on employment related to the ecological transition, and is beginning to integrate climate-related topics into its risk models because extreme heat situations for example can give right to partial unemployment 

• Consensus that there will be no ecological transition without social transition so this is not the time to forget about S in ESG 

• Employment is not equal to work: beyond macroeconomic scenarios, we must give the assets of today and tomorrow the skills and the desire to move towards transition jobs (by acting on working conditions, prospects for change, wage attractiveness, etc.) 

• Social dialogue in the company on environmental issues is key but largely insufficient today, despite regulatory obligations. Indeed 80% of employees think that climate change will have an impact on their work but less than 15% have already spoken about it within the company (source EESC) 

• Expectations of a straightforward transition globally overlook the complexities of sustainable development, energy security and affordability, and poverty alleviation among geographies, which sometimes tend to take priority over the energy transition.  

• Varying transition pathways across countries were discussed, noting that while all nations are striving for a 1.5°C target, their approaches differ significantly based on their economic contexts.  

• The discussion focused on the challenges and strategies surrounding energy transition in developing economies, with particular focus on Brazil and Asia. Key points include Brazil’s energy matrix, which is largely renewable derived from historical decisions made during the oil crisis in the 1970’s, and the recent policy measures and frameworks introduced to promote the energy transition, such as the EcoInvest Program, which aims to address the high cost of capital faced by developing countries through currency hedging mechanisms 

• Challenges faced by European development institutions, such as AFD, in navigating EU regulations while maintaining a focus on financing transitions in developing countries were also discussed, stressing the need for tailored approached rather than a one-size fits all solution. The transition will be multidimensional, with different starting and end points for different geographies.  

• The panelists also emphasized the need for a nuanced understanding of risk profiles in different countries, an historical skill developed by bilataral and multilateral public development banks, and the importance of fostering investor confidence through transparent long-term strategies. Along with the importance of regulatory changes to enable transitions and not limit innovation, as exemplified by an initiative in Chile that allowed for the financing of electric buses by changing ownership laws 

• The panel highlighted the crucial role of multi-stakeholder engagement in shaping effective transition strategies, emphasizing the need for collaboration between, government representatives, technology experts and the private sector to create comprehensive and actionable plans that align with the 1.5-degree target 

• Overall, the panel underscored the complexities of sustainable finance, the necessity of collaboration among stakeholders, and the importance of context-specific strategies to effectively support transitions in diverse global settings. 

• The EU needs to be less “naïve” in its trade and sustainability approach, notably vis-à-vis the U.S. and China, while handling the risks of escalation and retaliation.  

• The CBAM is an instrument aimed at conciliating competitiveness and decarbonization, establishing a fair level playing field.  

• In some instances, strategic autonomy and sustainability can reinforce each other. The EU switched from a dependency on Russian gas to United-States gas, if reelected President Donald Trump curtails part of the existing supply, the EU will have to further accelerate on low carbon energy development. 

• Sovereignty is also financial. Channeling European savings is critical, strategic autonomy is also about capital allocation and routing investments towards European-based firms while all major indexes are predominantly invested in American stocks (70% of MSCI indices are U.S. Based).  

• For global investors like Mirova, European sovereignty cannot be the sole lens, as neither its customers nor its investees are all European.  

• International cooperation, especially towards the “south”, is also essential. 

• The EU institutions need to fast-track procedures, responsiveness is key. 

• The European Investment Bank is increasingly the policy bank of the EU, teaming up with private investors and signaling key strategic areas or value chains. 

• In an increasingly belligerent world, defense investments are soaring, with a risk of eviction effect for sustainable investments in a context of narrowing fiscal scape for countries displaying unbearable debt levels.   

• The topic of climate change has faced backlash and has been de-prioritized during election campaigns in 2024. Emphasis has been put on purchasing power & competitivity.  

• However, election outcomes are unlikely to put a full stop to the progress of renewable energies and other low-carbon techs, but could slow their advancement pace.  

• Citizens and voters are not against climate action and environmental protection per se, they are against ill-designed and burdensome policies. There is a need to subsidize the adoption of low-carbon equipment for low-income households. There is also a necessity change the narratives on transition, and to market sustainability action in a more palatable manner.  

• Companies like Haffner Energy need legal and policy certainty, long-term visibility help anchoring investment decisions alongside business model transformations.  

• Sustainable finance cannot be depicted only a burden, it helps catalysing demand changes, as it is the case for instance with airlines with SAFs targets being incorporated into financing instruments or programs.