Hyewon Kong, vice president and head of responsible investing for the Canadian pension fund IMCO sat down with NZI editor Mona Dohle at this year’s NZI Annual Conference in London to discuss the net zero investment trends for the new year.
The C£73.3 billion pension fund for Ontario’s public sector has committed to invest at least 20% of its assets in climate solutions.
Kong said that despite the negative headlines, 2023 has not been a universally bad year in the energy transition: “We saw a huge tangible momentum on transition planning, there are now lots of regulations out there requesting financial institutions to take action on climate” she argued.
The year has also brought greater standardisation on climate reporting metrics with the adoption of new PCAF [Partnership for Carbon Accounting Financials] standards and the transition from TCFD to ISSB I and II providing greater transparency. “These types of sustainability standards are really what we as investors need to have to make informed decisions” Kong believed.
Consequently, she is optimistic that despite macroeconomic headwinds, there will be a lot more capital deployment in the energy transition.
Kong argued that nature-based investing, climate solutions for index investors and a greater focus on the just transition will dominate the agenda for the new year.
While elections in the US and UK will draw a lot of attention in 2024, Kong is confident that they will not change the fundamental direction of travel for investors in the energy transition. “90% of the new production capacity comes from renewables, the trend is not going to reverse, even in the current high-interest rate environment. It will take some time to see whether companies will really benefit from the stimulus packages. We will see a lot more volatility and noise next year with presidential elections in the US but the long-term trend is definitely not going away. I don’t think we are going to see a meaningful step back” she predicted.
Listen to the full podcast here.
