Finance must play a key role in fuelling an orderly transition to a carbon-neutral economy, European Central Bank president Christine Lagarde has said.
Speaking at the Green Horizon Summit this morning (9 November), Lagarde outlined two areas financial institutions must improve on in order to combat environmental concerns; information and innovation. “Financial markets need to play a substantial role in developing new firms by supporting and financing innovation,” she said.
Environmental information is inconsistent, largely incomparable and at times unreliable, leading to a pricing gap, she said. Frameworks such as the Non-Financial Reporting Directive (NFRD) in in the EU are helpful, but the multitude of disclosure and reporting frameworks can lead to confusion. “Harmonisation efforts are crucial to ensure proper disclosure of climate-related information,” Lagarde said.
On innovation, Lagarde said financial institutions can help fund new firms and new sources of growth. “If we can manage that properly people in sunset industries can transition to new sustainable jobs,” she added.
The Summit brings together CEOs, policymakers, and governments to discuss the financial sector’s impact on a sustainable economy. It continues tomorrow and other speakers include Bank of England governor Mark Carney, BlackRock CEO Larry Fink and UK chancellor Rishi Sunak.