9th International Sustainability Leadership Symposium 2008
Capitalising³ on Natural Resources: New Dynamics in Financial Markets
September 2008, Swiss Re Centre for Global Dialogue, Rueschlikon/Switzerland
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Symposium Theme
The availability and quality of natural resources are under increasing threat. Commodities, common and public goods such as food, clean air or water are becoming increasingly scarce. Ecosystems are reduced in their diversity. The rapid economic expansion of emerging markets such as the BRIC countries, the general rise in wealth and affluence, the growing global population as well as the evident climate change add complexity to the challenge of natural resource management.The complexities of mounting scarcity
The economic, social and political implications are multi-faceted: Scarcity boosts the economic value of natural resources and commodities. As a result, soaring prices attract investment capital to agriculture, water infrastructure and supplies or renewable energy. This mechanism might lead to an expansion of supplies and thereby help alleviate shortages. However, in connection with the rising demand for commodities, it raises the spectre and probability of over-exploitation and degradation of natural resources which could impair economic growth and human well-being. An additional layer of complexity is introduced by the fact that, typically, the least developed countries have to carry a disproportionate share of the burden. The current surge in food prices, partly driven by attempts to substitute carbon fossils by biofuels, highlights the dilemma of reconciling the protection of the natural environment with economic growth and political stability.Facilitating the protection and provision of natural resources
The financial sector has the potential and the instruments to play a vital role as a catalyst for the conservation and value enhancement of natural resources. Financial markets and institutions can channel investment capital into more efficient uses of scarce resources. Sustainability indices have been established to help asset managers structure their portfolios according to aspects of sustainable resource management and environmental commodities. Based on PwC and WWF data, in the German speaking countries alone sustainable investment funds have grown to a current volume of about EUR 14 billion. Further investment opportunities arise as, according to the International Energy Agency, the global market for clean energy, such as wind power, solar energy, biofuels and biocells, is expected to expand by 15% annually to USD 216 billion by 2016. Likewise, the financial sector is instrumental in funnelling investments into the prevention of shortages through credit management (e.g. loans tied to sustainable watershed management) and risk management (e.g. weather derivatives).Another prominent example of financial market solutions are carbon emission rights: According to the World Bank, the respective trading volumes have tripled to a value of USD 30 billion from 2005 to 2006 and are expected to have grown further in 2007. Against the backdrop of this success, the question arises as to how long it will take until also the management of water-related externalities will be facilitated through financial instruments.
The 9th International Sustainability Leadership Symposium
The management of natural resources presents societies and economies with an enormous long-term challenge. The 9th International Sustainability Leadership Symposium will address this challenge by specifically exploring the contribution of the financial services industry to both protecting and facilitating the provision of natural resources. Opportunities and risks of new and innovative financial products will be discussed.Participants
International senior business leaders; institutional investors; insurance and bank managers and other high-level representatives of financial service providers; advisors; analysts; academics and regulation authorities.Benefits
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