Finance and business representatives meet at Re|Source to discuss investment opportunities in sustainability and resource security

13 July 2012, in Re|Source 2012 (1)

Professor Sir David King, former chief scientific advisor to the government and co-director of the event, opened proceedings yesterday (12 July) by highlighting the calibre of the delegates, referring to them as “250 leaders from around the world who can develop and action the way forward”. With combined assets under management of US$5 trillion (£3.2 trillion), the representatives of the finance community present heard of the competitive advantages to be gained from investment in resource efficiency.

The emphasis on businesses’ need to act comes in the wake of the disappointments of the UN’s Rio+20 conference last month. Speaking at Re|Source, David Nabarro, the UN Secretary-General’s Representative for Food, Security and nutrition, referred to Rio+20 as “a sort of funeral procession” for the UN-led environmental process, the last time it was expected that 192 world leaders could come together and sort out the world’s problems. Politicians are no longer able to do this, Nabarro insisted, as short election cycles mean “their electorate won’t let them”. The solution, he claimed, lies in multi-stakeholder partnerships involving government and businesses, as well as civil society to provide the “moral compass”. The UN, likewise, would provide a compass in the form of “vision” in this new world order.

As the market forces have begun to recognise that businesses that invest in resource efficiency perform better and minimise risk, according to Vice Chairman of Deutsche Bank Group Caio Koch-Weser, other speakers at the conference addressed investment opportunities, as well as risks, in the key areas of food, water and energy. Jeremy Grantham, Chief Investment Strategist at GMO, for instance, advocated investors put 30 per cent of their funds into resources now as the
commodity spike in 2008 and continuing high prices represent “the biggest paradigm shift since the industrial revolution”; agriculture was his preferred area of investment.

Poppy Allonby, Managing Director of Blackrock Investment, however, warned that low-carbon energy has been extremely difficult for investors over the past year, noting that if you’d invested in the world’s largest wind turbine manufacturer last year, you would have lost 80 per cent of your money. Reasons for the failure of low-carbon alternatives to attract  investment include a lack of regulatory framework and a lack of policy (calls for a carbon floor price or a carbon tax were repeatedly made throughout proceedings). Another reason for difficulties is the vast subsidy currently made to the fossil fuel industry; Oxford’s Professor Sir Chris Llewellyn Smith pointed out that US$400 billion goes to that industry every year and that only eight per cent of the money winds up helping the 20 per cent of the poorest people, the alleged
reasons for the price support. Along these lines, speakers noted that business are not always benign and resource efficient, a fact brought home by Grantham’s point that big business in the US has made it impossible to get anything like a climate change bill through Congress. Indeed, some of the businesses represented both in the audience and on the stage at Re|Source 2012 have less than pristine environmental and social records.

Speaking to Resource, Sir David King pointed to the variety of businesses present, and explained that in his work with business, he doesn’t tend to help companies that are already perfect environmentally, but rather those that need to bridge the gap to sustainability. He also pointed out that previous misdeeds can lead to actual change through public and media outcry, citing Dow Chemical as an example.

The conference continues today (13 July) and will conclude with a key note address by former US President Bill Clinton.

More information can be found on the Re|Source 2012 website. - Finance and business representatives meet at ReSource

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