20 October 2020

A CIO perspective on climate - how policy and regulation need to change

Without bigger incentives for the private sector to invest in the transition to a low carbon economy, the EU will fall short of its carbon neutrality goal, according to Lars Haram, chief investment officer and head of asset management at Oslo Pensjonsforsikring.

Giving a keynote speech at Insurance Asset Risk’s 2020 EMEA conference held online on 19 and 20 of October, Haram highlighted four areas policymakers need to focus on to help the private sector play its part in the transition to a low carbon economy.

“First of all, policymakers have to secure a stable long-term framework for investing,” he said. “All investors need to believe that the system put in place can be used as a basis before they commit capital with a 30-year investment horizon. This should be done both through legislation and long-term government and supranational guarantees—but the current levels offered are not enough.”

Second there should be a global carbon pricing mechanism that reduces the probability of carbon trade wars, Haram continued.

“Third, there has to be large scale support to insurers and banks in order to bridge the gap in cost of capital between different energy solutions. Today this gap is starting to become too big to be ignored and we need mechanisms to reduce the probability of a green bubble,” he added.

Last, but not least, Haram highlighted the need for better information and disclosures.

“There is no doubt that climate performance is a big future competitive factor to accelerate and spur investments,” he said. “Public information about companies’ performance is key. The [EU] taxonomy looks promising but policymakers need to make sure that information remains easily accessible and well understood.

More information about the event and how to attend it, is available here.

“From our experience with Solvency II we know that standardising is easier said than done so this should be a major area of focus.”

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Lars Haram