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Janus Henderson’s Decarbonisation panel at COP26 inspires new emerging market report

Janus Henderson has today announced it will launch a new series of reports investigating decarbonisation and the part governments, corporates, capital markets, and asset managers need to play to facilitate further decarbonisation across the world.

At the World Climate Summit in Glasgow on Monday, Janus Henderson convened a panel to discuss whether decarbonisation could be an opportunity for emerging markets, rather than a challenge to mitigate.

Paul LaCoursiere Global Head of ESG Investments at Janus Henderson who moderated Monday’s panel said: “Our panel was the jumping off point. There are success stories like Chile where markets are already in the midst of their own decarbonisation journey. Our reports will set out the role that needs to be played by governments, corporates, capital markets, and asset managers to facilitate further decarbonisation. The asset management industry is hungry to play its part in resolving the risk of climate change, but it cannot solve this problem alone. Our new series of reports will outline the role we all need to play in helping emerging markets decarbonise.”

For the purposes of the report, emerging markets will be divided into four regions: Eastern Europe; Africa and the Middle East; Latin America and Asia. The first of the four regional reports will be published in the first quarter of 2022.

The panel culminated with some bold conclusions:

Dr Nina Seega, Research Director at the Cambridge Institute of Sustainable Leadership (CISL): “Financial markets participants and climate scientists must recognise the gap that exists between their thinking about the carbon transition. As an economic community, we tend to think the future will be linear and will broadly follow the pattern of the past. Climate scientists think in terms of disruptive transition. While financial analysts may worry about the effect that the slow but steady carbon transition will have on the net present value of legacy assets, a climate scientist would ask: what happens to the value of an asset under a quick and potentially painful disruptive transition from climate change? Overall, this was an encouraging COP but now I want to see more ambitious Nationally Determined Contributions from governments.”

Mark Cutifani, Chief Executive Officer at Anglo American Plc, said: “COP26 has firmly shifted the conversation from the “Why?” to “How?” around decarbonisation. We all understand that we have a collective role to play in addressing climate change and now the focus is on how we must work in partnership with multiple stakeholders – such as governments, regulators, local communities – to define the actions we need to take. We currently have several requests from asset owners to help finance our various green projects and our CFO is looking at these various financing options.”

Krista Tukiainen, Head of Research at Climate Bonds Initiative, said: “The fixed income space already has relatively good definitions and governance mechanisms to ensure projects can be financed, but market and policy-based mechanisms can work better in tandem to deliver impact in emerging markets. My reflection on this COP is that the introduction of a global baseline taxonomy is perhaps the single most crucial element in enabling financial institutions to make a tangible impact in addressing climate change and other sustainability priorities sooner rather than later. Taxonomies can help identify eligible projects even at the smallest levels and, if we can harmonise taxonomies in a scattered marketplace, this will ensure capital flows where it needs to.”

Francisco López, Chile’s Vice Minister of Energy: “Chile’s goal of achieving Carbon Neutrality by 2050 is a challenge, given the need to decouple our economic growth from energy consumption and reduce our dependence on imported fossil fuels. 77% of Chile’s Green House Gas emissions are linked to the energy sector. However, this is the same sector that will help us tackle climate change and bring both social and economic opportunities to the country. The energy sector is leading Chile’s decarbonization plan and commitment to reach carbon neutrality by 2050 through investing in renewable energy, developing a green hydrogen industry, withdrawing from coal-fired power plants by 2040, replacing fossil fuels with electricity in the transport sector and aiming to have 100% electric light and medium vehicle sales by 2035, amongst other things.”

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