NDCs and COP21

David Pitt-Watson, former UNEP FI Co-Chair during the lead-up to COP21, reflected on the evolution of finance’s role in climate negotiations. He traced this from the early Kyoto Principles through to the landmark Paris Agreement. David highlighted how UNEP FI positioned itself as a constructive “dealmaker” ahead of COP21, pushing negotiators to be ambitious while providing clarity and tools (like green bonds and reporting frameworks) to attract investors. Bringing the conversation to the present, he underlined the critical role of the real economy and the need for credible, investment-grade policy signals.

Making NDCs Investible

Arianna Griffa, Senior Policy Manager at the IIGCC, presented the IIGCC’s report on Making NDCs Investible. Representing over 400 members with over $60 trillion in assets, the IIGCC explored whether NDCs could serve as useful tools for investors. The consensus was that while they offer valuable signals of long-term direction, challenges remain, namely around data quality, granularity, and policy consistency.

Key Findings from the IIGCC Report:

1. Granularity matters – high-level targets are insufficient. For instance, China recently became the first country to announce decarbonisation strategies for all sectors.
2. Credibility comes from coherence – public fiscal support, regulatory roadmaps, and implementation plans are key to making NDCs actionable.

The UK’s NDC was cited as the only one currently aligned with a 1.5°C pathway, according to Climate Action Tracker.

Are NDCs useful for finance?

The group wrestled with whether NDCs provide enough clarity or consistency to serve as meaningful tools for investors. Key points included:

• Drivers of decarbonisation targets were debated, with some questioning whether they stem from genuine national commitment or external pressure.
• Sovereign bonds were discussed as natural entry points for engaging with NDCs, though some felt this could shift over time.
• Despite ESG pushback in some markets, there is a growing cohort of investors committed to implementation and engagement.
• NDCs were seen as valuable inputs for scenario planning, even if not yet central to investment decision-making.

Investor-Government Engagement

There was broad agreement that constructive engagement with governments is necessary, but this should be clearly distinguished from lobbying. Partnerships were seen as essential for shaping realistic and investible transition plans.

One standout suggestion was the development of a scorecard to rank the quality and credibility of NDCs, helping investors better assess risk and opportunity.

Fiduciary Duty and Risk

Tensions were raised between fiduciary duty and climate outcomes. Some questioned whether the current framing of fiduciary responsibility allows enough space for climate-aligned investing. The discussion highlighted a need for more honest conversations about active risk-taking, especially when passive strategies are unlikely to deliver long-term value in a transitioning economy.

The example of Hungary’s green bond issuance to electrify its railway network showed how well-structured deals can align financial and environmental outcomes.

Geopolitical Headwinds

David reflected on how the diplomatic groundwork ahead of COP21, especially the US-China deal, set the stage for consensus. In contrast, today’s geopolitical uncertainty is hampering ambition. There was concern that early climate leaders like Colombia have been penalised by markets for bold transition plans, underlining the need for market stability and clear frameworks.

The Role of the Financial Sector

The session closed with reflections on what finance can do to accelerate progress:

• Collaborative engagement was deemed more effective than individual action.
• Silence is complicity, retreating from public engagement isn’t neutral, it slows progress.
• Central banks and incentives, participants called for stronger incentives, similar to the US IRA’s tax credits, to channel private capital into climate-aligned investments.

Conclusion

There was broad agreement that while NDCs are imperfect, they remain one of the few tools linking government ambition with investor decision-making. To bridge the gap, investors need:

• Clear, sector-specific policy roadmaps
• Granular and credible data
• Consistent regulatory frameworks
• Mechanisms to engage constructively with sovereigns

Perhaps most importantly, they need the courage to take active risks, aligned with values and value.

Despite the title of this, if you are expecting some scandalous confession, I am likely to disappoint.  But what this covers is my personal experience of the past 25 years in sustainable, ethical and responsible finance and my views to whether the sector is broken or still has a future.

So we start 27 years ago, a very young and naïve graduate, making my way to the city to “seek my fortune”.  I was fascinated that this one small square mile of London, was responsible for the UK’s economic prosperity and growth.  Finance intrigued and excited me.

But what about my values? These have always been part of who I am, someone who loves nature and cares about the environment. I recycled at university before recycling was a thing (people thought I was weird!).  I cared about the origins of my food and animal welfare embarrassing my mother by asking every restaurant whether their pork was free range or not. Yet, here I was excited about what many viewed as the den of inequity.

But I was fortunate to have my eureka moment. I went to work for a fund manager which ran the ethical investment advisory group for the church of England. A job that absolutely aligned values with finance – something I had no idea was even possible.

Leaving the banking trading floor for that first job in sustainable finance was a bit of a baptism of fire.  We introduced voting, in response to the Cadbury Code, engagement frameworks and well thought-out ethical investment policies. All based on fundamental research and hands on relationship building with the companies in which the Church invested.  Standards were essential to align investment funds with the Church’s beliefs within the need to balance the financial returns. That tension was a healthy one, albeit at times very strained.

It was at this time sustainable investment started taking off.  But even then, you felt you were sitting in a dusty cupboard, asking permission to come out, needing to be brave to speak about environmental issues with investment teams. Often you were made to feel like you were just a little bit crazy, a radical or “god-forbid” an actual tree hugger.

We had to convince our finance colleagues of the merits of what we were doing – even in the church fund managers in those days were wary of sustainability and just wanted a list of exclusions.  We took time to understand the very complex issues we faced, and engaged with a wide variety of stakeholders outside of corporates to build our credibility.  We also had numerous battles with companies we were invested in.

This experience taught me early on in my career that sustainability issues and ethics were complicated, that decisions had to be based on fundamental research and integrity and that corporate engagement could make a positive difference.  And to do this we had to be brave.

Now, there were not many of us in the industry in the early days.  We had to band together like a small army, with one mission and that was to improve, company governance and sustainability practices within the firms we were investing in. We all ultimately believed that this would improve long-term shareholder returns, as well as improve the lives of the stakeholders these corporates interacted with. There was no sense of competition, we weren’t being driven by bringing in flows. Principles and standards were the number one focus of this small but growing group of pioneers. It was this collaboration that led us to realise we were more powerful together. It was then that collective engagement really started taking off.

It was a fun time, it was exciting and new and together we felt braver. We were changing the way companies thought about sustainability issues. Companies were starting to recognise the value in strong business-focused sustainability practices. Competitive advantage, insuring them against scandals, protecting their reputation, building customer loyalty to name just a few.

But as the industry grew, the aims of investors started to differ.

And at the same time, the growing interest in impact investment was taking place. A real understanding that you could allocate capital in a way that achieved environmental and social outcomes as well as a financial returns.

Clients grew more interested in positive outcomes and with this the commercial interest in sustainability grew very rapidly.

This was exciting but worrying at the same time.  Just before COVID, I hit the headlines. I raised the question whether we were facing an ESG bubble. I had lived through the dot-com bubble, mortgage backed securities and other various bubbles and I was worried we were facing the same with sustainability.

Everyone had appeared to become a sustainability expert. People with little or no experience in ESG were being tasked with setting strategy and running teams.

It was clear to me that what was driving this growth was the recognition that sustainable investment products could be lucrative.

All of a sudden there was a shift to get into sustainable investment to make money rather than to get into sustainable investment because it’s the right thing to do and it will make you money.

The industry was been driving by value instead of values.

There was a rush to relabel mainstream investment products under SFDR.  The push from the commercial side was real – yet those who were not well versed in sustainability did not really understand what this actually meant.  There was so much confusion and I, like many other sustainability experts, found myself trying to explain to people that you couldn’t make sweeping claims on sustainability.  That engagement in itself could not make a fund sustainable. That there were still hard lines around some activities, such as tobacco, gambling, offensive weapons and coal.

The sector was facing an identity crisis. Once a bastion of standards and ethics, sustainability professionals were being pushed to water down these standards – all for the desire for profit – win new business, grow AUM in sustainability funds, and be bigger than others. For a few years, things got a little crazy, some might even say out of control.

And that is when the regulators starting stepping in, fines were levied and new regulation introduced, creating an initial burden on asset managers and companies as these organisations work to meet the reporting requirements emerging from this.  At the same time, a culture of fear has crept in with a number of asset managers pulling back on commitments for fear of upsetting regulators, politicians or even clients.  This yo-yo between all or nothing has left those in the industry frustrated and disillusioned.

The last few years have been exhausting. Sustainability teams, focused on research and engagement all of a sudden became product people, IT, reporting and compliance functions. A couple of years ago I gave an interview to Financial News. It was a Friday afternoon. I had spent the week speaking with regulators and internal discussions over standards and client reporting. I made a comment to the journalist, which hit the headlines “We’re on our knees at the moment.  I am exhausted, I am fed up and I feel like I have become a compliance function”. Little did I know this would go viral. Dozens of people got in touch. The number of people this resonated with was extraordinary. I had said something everyone was feeling and no-one was saying.

After losing our way, we need to come back to basics. The business case for sustainability is clear: companies cannot thrive on a planet suffering from environment crises and unmanageable social risks. The sustainability actions of leading businesses demonstrate what is possible and generate momentum, even if progress is slow. We desperately require a brave mindset change to accelerate this.  A recent FT article called this “competitive sustainability” a move to long-term resilience rather than short-term gains. And a corporate mindset shift to view sustainability as a matter of competitiveness, not responsibility. I could not agree more.

So, am I optimistic for the future? Yes, I am.

All is not lost! Over 25 years, we have definitely made progress – albeit with a few hiccups along the way and slower than we would have liked. Did we get to the point where we confused value and values? Yes – the waters got muddied, marketers jumped on the bandwagon, we promised more than we could deliver.  However, the industry is now pulling back, with the push/pull from regulation to a potentially more realistic and sustainable path.

So what are some of the key takeaways?

1. Recognise that we have made massive progress – the backlash is evidence of that but there is still much to do to support the sustainable investment landscape.
2. To be successful, we need to let practitioners get back to principles rather than compliance, reporting, product development or IT.
3. We need call on investors, companies and politicians to be brave (like we were in the early days) to be agents of change, buck the trend and think long-term.

We can make progress and we are. But how we do it and pace we set will be determined by those brave enough to take the big steps. Just remember, things that look crazy now could become the norm in the future!

As I contemplate the next stage of sustainable investment, I am hopeful that the bright and enthusiastic (and hopefully brave) next generation will carry on the good fight, as the investors, politicians and company executives of the future.  Let’s work together to make a difference, build integrity, drive good corporate behaviours because without a sustainable innovative economy, the problems we face on this planet will not be solved. And all of this should help us make sustainable investment a fun place to be again.

Dame Susan Rice’s closing keynote provided a fitting conclusion to the GCBC Forum, emphasising the ambition, cultural change, and collaboration required to mobilise climate finance. She began by reaffirming a shared purpose: delivering urgent and effective finance to tackle climate and nature crises. Achieving this, she argued, demands not only a roadmap but also genuine ambition—exemplified by the UAE Banks Federation’s $1 trillion sustainable finance pledge.

Operating at the climate finance frontier means forging ahead without complete data or established precedents. In this uncharted territory, culture becomes critical. As Susan put it, “culture eats strategy for breakfast”—technical training matters, but without a culture that values honesty, tough conversations, and ethical decision-making, good intentions falter. She highlighted how strong leadership must extend beyond the top tier, enabling boards and teams to address complex dilemmas, as she experienced in banking when confronting potential forced labour issues in solar panel supply chains.

Susan’s reflections also underscored the importance of thinking beyond institutional boundaries. Drawing from her experience in economic development banking in the United States, she illustrated how creativity, partnerships, and a willingness to challenge old habits can revitalise communities and industries. Now, as she works on “green re-industrialisation” in Scotland, these lessons prove equally relevant—shared ambition, new alliances, and determined execution can overcome entrenched barriers.

Key Takeaways:

• Ambition and Vision: Bold targets and a willingness to venture beyond comfort zones are essential.
• Culture Counts: Organisational values must be lived, not merely stated, to support ethical, impactful decisions.
• Distributed Leadership: Empowering all levels fosters resilience and informed problem-solving.
• Collaboration and Creativity: Cross-sector partnerships and innovative thinking are crucial to unlock financing opportunities.
• Delivering Impact: Ultimately, success is measured not by pledges but by tangible, positive change on the ground.

Dame Susan Rice’s address left the audience with a clear message: sustainable finance breakthroughs depend on ambition, culture, and collective action to create lasting, meaningful impact.

The Global Capacity Building Coalition (GCBC) took centre stage as Simon Thompson provided a detailed overview of its mission, membership, and ambitious plans. Established under India’s G20 presidency, the GCBC is a broad-based alliance aiming to strengthen climate finance capacity, particularly in emerging markets. In just three months since its official launch, the coalition has grown to encompass around 5,000 public and private financial institutions, 160 financial centres and exchanges, and millions of finance professionals worldwide.

This diverse alliance, including UN agencies, multilateral development banks, philanthropies, and both public and private sector finance bodies, is focused on identifying the most effective approaches to capacity building. Its goal is to channel funding from MDBs and philanthropic entities into strategies that will accelerate climate finance. Simon emphasised that the GCBC’s work will blend both “high-tech” solutions—like a new global capacity building platform—with “high-touch” activities, such as regional forums and on-the-ground collaborations.

Demonstrating the Digital Platform – Clementine Le Nagard

Clementine Le Nagard then introduced the GCBC’s beta online platform, now accessible in six UN languages, including Arabic and Bahasa Indonesian. The platform is structured into three main sections:

• Knowledge Hub: A curated repository of reports, frameworks, and webinars searchable by topic, resource type, and geography.
• Case Study Map: A global showcase of real-world examples of capacity building and climate finance initiatives, enabling users to explore strategies relevant to their region or sector.
• Events Calendar: A regularly updated listing of upcoming conferences, workshops, and forums that support ongoing engagement and learning.

During the live demo, Clementine encouraged attendees to test the platform’s features and provide feedback. She made it clear that this is a living resource intended to evolve in response to user input and the changing needs of the climate finance landscape.

Looking Ahead: Involvement and Input

In closing, Simon Thompson invited finance professionals, educators, and capacity building providers alike to explore the platform, share their insights, and consider deepening their involvement with the GCBC’s efforts. The demonstration and overview reinforced the GCBC’s commitment to collaboration, transparency, and innovation in building the capacity needed to scale climate finance, especially in regions that need it most.

Key Takeaways

• Global Coalition with Local Impact: The GCBC’s rapidly growing membership highlights a collective effort to strengthen climate finance capacity worldwide.
• High-Tech, High-Touch Approach: Digital platforms are complemented by in-person forums, ensuring both scalability and contextual understanding.
• User-Driven Enhancement: The beta platform welcomes feedback from users to refine and improve its resources and functionalities.
• Knowledge, Case Studies, and Events: The platform’s integrated structure ensures stakeholders can access information, learn from global examples, and stay engaged with upcoming opportunities.

The GCBC’s presentation underscored a forward-looking vision: to create an ecosystem where knowledge, tools, and collaborations can effectively advance climate finance and support sustainable development goals, particularly in emerging markets.

The GCBC Forum’s focus shifted to the foundations of effective capacity building as Simon Thompson opened a fireside conversation with Alice Spencer, Interim Executive Director of Education at the Cambridge Institute for Sustainable Leadership (CISL), and Omar Shaikh, Managing Director of the Global Ethical Finance Initiative (GEFI). Their dialogue explored what truly works in helping individuals, institutions, and ecosystems translate knowledge into meaningful climate finance actions.

Defining Success Before Numbers – Alice Spencer (CISL)

Alice acknowledged the difficulty of measuring the real-world impact of capacity building, noting that mindset shifts and behavioural changes are often hard to quantify. She stressed the importance of setting clear objectives from the outset. Rather than focusing solely on the number of people trained, CISL tracks how effectively participants adapt business models, strategies, or policies as indicators of genuine progress. Moving beyond individual training, CISL has embraced scalable online programmes and peer networks to foster ongoing learning and collaboration.

An Ecosystem Approach – Omar Shaikh (GEFI)

Omar reinforced the need for a holistic perspective. Capacity building, he explained, must be integrated with an enabling regulatory environment and the development of concrete financial products and solutions. This ensures that knowledge is not abstract but directly linked to practical application. Omar highlighted the importance of fostering a shared understanding among stakeholders before launching training initiatives, tailoring interventions to local contexts, and encouraging broader, more strategic discussions around the purpose of sustainability rather than focusing solely on technical details.

Broader Perspectives and Purpose

Both speakers agreed that while technical knowledge is essential, mindset and capability shifts drive transformational change. Faith-based finance, such as Islamic finance, can enrich these efforts by bringing valuable perspectives on ethical, social, and community-focused dimensions—often the overlooked “S” in ESG.

Looking Ahead

Asked for one piece of advice to newcomers in the climate finance arena, Alice advocated nurturing curiosity and maintaining a hopeful vision, while Omar encouraged engaging in selective forums and team-based learning to strengthen collective capacity.

Key Takeaways

• Set Clear Goals: Define desired outcomes beyond participant numbers to ensure capacity building leads to tangible changes.
• Integrate Across Systems: Align training with policy, regulation, and product development for lasting impact.
• Foster Mindset Shifts: Go beyond technical knowledge to embrace philosophical and strategic dimensions of sustainability.
• Leverage Diverse Perspectives: Incorporate insights from faith-based finance and other communities to enrich understanding.
• Invest in Ongoing Learning: Use scalable platforms, peer networks, and collaborative forums to sustain engagement and growth.

By marrying technical knowledge with purpose-driven dialogue, capacity building can transcend mere instruction and become a catalyst for the systemic transformation needed to mobilise climate finance at scale.

Omar Shaikh (GEFI) moderated an expert panel examining the complexities of mobilising climate finance for emerging markets. Building on earlier insights, the discussion focused on bridging capacity gaps, addressing project development challenges, and overcoming market constraints.

Islamic Development Bank (IsDB) – Mohsin Sharif

Mohsin outlined the IDB’s “Promising Strategy for Sustainable Future,” which evolved from its COVID-19 response. With a goal of directing 35% of annual approvals towards clean and climate finance by 2025—a target met two years early—the IDB highlights the importance of harmonised definitions and taxonomies to clarify financing priorities. Establishing dashboards and guidelines further supports banks in improving their sustainability practices.

HSBC – Sabrin Rahman

Sabrin emphasised HSBC’s focus on catalysing new economies, decarbonising, and leveraging global trade. Partnering with think-tanks, development banks, and policymakers helps translate policy into practical solutions. Harmonising regional taxonomies and engaging early with policymakers to integrate climate considerations into trade agreements are key. HSBC’s experiments with outcome-based bonds and blended finance initiatives, including nature-based solution funds, showcase innovative approaches.

Franklin Templeton – Mohieddine (Dino) Kronfol

Dino presented a reality check. While acknowledging vast financing needs, he highlighted significant barriers—limited creditworthiness, potential crowding out of private investment, and a scarcity of mature projects. Strengthening fundamentals such as sustainable public finances and reliable capital access is essential before expecting trillions in climate finance. Public-private partnerships, blended finance, and de-risking strategies can help attract the necessary capital.

Common Threads

All panellists agreed on the need for unified taxonomies, clearer regulations, and stronger capacity building across the ecosystem. Faith-based finance, impact-driven strategies, and balancing fiduciary duties with environmental goals also emerged as important themes.

Key Takeaways

• Harmonised Definitions: Aligning taxonomies is crucial for clarity in sustainable finance.
• Policy and Practice: Early engagement and better-aligned trade agreements bridge the ambition-to-action gap.
• Strengthened Foundations: Robust public finances and improved project pipelines are prerequisites for large-scale climate funding.
• Innovative Tools: Outcome-based bonds, blended finance, and public-private partnerships are promising mechanisms.
• Capacity Building: Strengthening skills, frameworks, and understanding is vital to mobilise climate finance effectively.

The panel underscored that while the challenges are significant, strategic collaboration, innovation, and capacity enhancement can pave the way for scaling climate finance in emerging markets.