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David Malpass: a marked man?

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This week I am heading to Washington for the autumn meeting of the International Monetary Fund and World Bank. It could be an intense week: with the world teetering on the edge of an economic slump, an energy crisis, emerging market defaults — and nuclear war threats — the ministers have much to discuss.

But there are also a number of important issues for the sustainability community to watch. One is the degree to which big banks, such as JPMorgan, are still ready to cut carbon emissions — given the rising tensions over the recently tightened UN guidelines (see our scoop on this). Another is whether $100bn of IMF special drawing rights should be reallocated for climate change projects and/or the World Bank should change its capital adequacy guidelines to unlock more climate funding.

Some developing countries will be championing the so-called “Bridgetown” initiative from Barbados that calls for a comprehensive poverty alleviation plan. And, as we write below, the World Bank will be in the crosshairs over its (in)action on climate finance.

Do pass on any thoughts about all this to myself or Patrick Temple-West (who is also at the meetings). And take note of the tale below about how India’s Gautam Adani, one of the richest men in the world, is now embracing green energy after making money on coal. (Does that make him a hypocrite? Realist? Or just the sign of a trend? I suspect all three.) (Gillian Tett)

Is Malpass a marked man?

(Almost) everyone we speak to in the climate world loves to hate the World Bank right now — particularly its Trump-appointed leader David Malpass. Last month, Malpass refused to confirm whether he accepted the basic scientific consensus on climate change, before later “clarifying” his words — an incident which prompted Al Gore, former vice-president, to demand that the Biden administration replace him.

The White House has not commented (yet). But last week Janet Yellen, Treasury secretary, subtly jumped into the fray by calling for an overhaul of multilateral development banks, such as the World Bank.

“In the past, most anti-poverty strategies have been country-focused. But today, some of the most powerful threats to the world’s poorest and most vulnerable require a different approach,” Yellen said, citing climate change as a “prime example of such a challenge” where reform is needed.

What shape might an overhaul take? Blended finance is one hot topic. There is widespread agreement that a huge problem for any green transition is the question of funding for poor countries wanting to cut emissions. For while parts of the developed world’s green ecosystem are drowning in investor cash (think electric vehicles or wind turbines), little of this is going to the developing world because of political risk, opacity and a lack of viable projects.

Last week, the Net Zero Asset Owners Alliance issued a hard-hitting report which called for blended finance frameworks to tackle this gap; this means using public money from entities such as MDBs to provide a safety net for investors backing developing world climate projects.

“I am looking to the World Bank right now — they have the tools,” Magnus Billing, chief executive of Alecta, a Swedish member of the NZAOA, told Moral Money. “But it is not happening today and falling short of what needs to be done.”

So will this change? It is unclear. One problem with blended finance, as I have observed before, is that it is the political equivalent of spinach: a virtuous and sensible idea that tends to sound very dull. That means that politicians rarely embrace this cause. Meanwhile Malpass, for his part, says he has no plans to resign. But, as an FT story explains, Germany and America are losing patience. Stand by for more jostling. And (understandable) anger in the developing world. (Gillian Tett)

Adani: climate saint or sinner?

Where do you invest if your vast wealth puts you in the same category as Elon Musk and Jeff Bezos?

The answer from Gautam Adani, founder of India’s giant ports and logistics conglomerate Adani Group, seems to be in the field of green energy.

Adani grabbed global headlines last month when the Indian tycoon briefly displaced Jeff Bezos from the number two spot on Bloomberg’s Billionaire Index. He currently ranks as the fourth-richest person.

Adani recently said his group would invest $100bn in the next 10 years. And 70 per cent of that investment, he declared, was earmarked for “the energy transformation space”.

Adani’s sudden green fervour has raised many climate activists’ eyebrows. Among the top 10 billionaires in Bloomberg’s list, Adani is the only one whose wealth hasn’t declined this year amid market volatility. His fortune has increased, partially thanks to his businesses in coal — which have thrived in the energy crisis.

“A coal baron does not get to be a green champion, too,” said Bryony Walker, climate finance consultant at Sum Of Us, a consumer campaign group. The group said that Adani was aggressively expanding coal operations, while its analysis shows the company’s present mining operations have already accounted for approximately 3 per cent of global emissions from coal. “His words and actions simply don’t add up,” Walker told Moral Money.

Adani Group didn’t respond to a request for comment.

Some specialists, on the other hand, argue that the green push by India’s richest man will have a significant impact on the country’s energy transition. Adani is a close ally of Narendra Modi, India’s prime minister, who has pledged that the country will reduce its net carbon emissions to zero by 2070.

Adani Green, the group’s renewable energy branch, is already one of India’s largest renewable companies and had signed the world’s largest green power purchase agreement, said Shantanu Srivastava, energy finance analyst at Institute for Energy Economics and Financial Analysis. The company also recently said that it had commissioned the world’s largest wind-solar hybrid plant. With an annual revenue growth rate of 36 per cent over the past five years, Adani Green, Srivastava told Moral Money, was “one of the largest and fastest-growing businesses in the Adani empire”.

Despite the Adani conglomerate’s huge coal exposure, some green-minded investors still see the value of investing in its renewable energy arm.

KLP, Norway’s largest pension fund, took a case-by-case stance on individual companies under Adani Group as they were separate entities, Kiran Aziz, head of responsible investments at KLP, told me. KLP introduced an exclusion policy for coal investments in 2019.

While it has excluded Adani Power and Adani Transmission — two units central to Adani’s coal energy business — from its portfolios, KLP holds more than $3mn of shares in Adani Green. “A new strategy that . . . accelerates solar and wind power will be profitable and will attract many investors, as Gautam Adani has already seen first-hand with Adani Green”, Aziz said. (Tamami Shimizuishi, Nikkei)

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