NIB on sustainable finance at 2019 ICMA conference

Geopolitical issues, the resilience of financial systems and the need for harmonising regulation to pave the way for the green transition – these were the themes of the 2019 conference of the International Capital Market Association in Stockholm. NIB’s Henrik Normann and Lars Eibeholm took the stage at this global event to discuss the future of sustainable finance.

The 51st Annual General Meeting and Conference of the International Capital Markets Association (ICMA), held in Stockholm on 16-17 May 2019, drew over 1,000 participants from 40 countries.

A wide range of topics were covered at the conference, including the global operating environment, the financial system, technology and green finance.

At the event, Henrik Normann, NIB’s President & CEO, spoke on the panel “The global markets in today’s geopolitical and regulatory landscape”. The debate addressed global political risks – such as trade wars, Brexit and the situation in the Gulf region and other oil producing countries – that could potentially be disruptive to business and investments.

Against this backdrop, the panel discussed the crucial role of regulation to secure the resilience of the financial markets.

Climate change and the need for regulation

Pointing to the Libor scandals and missellings, Mr Normann argued that the industry had failed in self-regulation, and took banks and ICMA to task.

“If we here cannot agree on regulation, then how should politicians and civil servants in the EU and the US agree?” he asked.

Henrik Normann and Isabelle Mateos y Lago (BlackRock) speaking at ICMA. Photo: ICMA.

Further, the risks and impacts of climate change largely defined the debate.

“I think what ICMA is doing on regulation and taxonomy is incredibly important”, Mr Normann said, highlighting that the financial markets have an important role to play in the green transition.

“We are now building up green bonds and we are seeing large institutions going into ESG.”

“We need to get climate change right. We need to work closely with regulators. We need to have ex-post assessments”, Mr Normann argued. “We should also accept the fact that we could be making mistakes in what we think of as ‘green’ today. If we do that, I actually think we can make a big change.”

Green bonds and brown companies

Picking up on the sustainable finance theme, Lars Eibeholm, NIB’s Head of Treasury, moderated the panel “Sustainable Debt Markets – going mainstream”, discussing the risks and opportunities of the green bond market.

Lars Eibeholm moderating the panel “Sustainable debt markets – going mainstream”. Photo: ICMA.

“There is a huge demand for green bonds at the moment, and it creates a dialogue between the issuers and investors, it builds capacity”, Mr Eibeholm said. “This capacity building is extremely important for the transition of our economies.”

The panel pointed out the need for greater coordination between sustainability analysts and their respective treasuries. The forthcoming EU taxonomy for defining sustainable activities was seen as a positive development, as a lack of standardisation is holding back the retail market.

However, a rigid taxonomy could lead to a binary market with a too shallow set of assets that are accepted as sustainable.

Mr Eibeholm’s question as to whether a green bond could be bought from a “brown” company was answered with a “no” by some of the speakers, while others argued for the power of investor demand to change a company’s practices.