FEX - The Financial and Energy Exchange Group

English / 中文

Copenhagen Climate Conference Might Boost Global Sustainable Investment Market

Ms Li Mo, Financial News, 19 December 2009
( Original Article )

Even though it’s freezing cold winter right now, the Copenhagen Climate Conference is “sizzling hot”. There are heated discussions on some crucial issues between developed and developing countries. The conference has also attracted zealous attention from all walks of life.

It is reported that over 100 leaders from various countries, regions and international organisations have attended this meeting and there are more than 5,000 reporters in Copenhagen providing media coverage of the conference. Outside the Conference venue, numerous entrepreneurs and ordinary people are also closely watching the Conference progress. Why is the Copenhagen Climate Conference so “hot”? Will its outcome provide any business opportunities?

In a recent and exclusive interview with the reporter of Financial News, Mr Brian Price, CEO of Financial and Energy Exchange Group (FEX) in Australia, commented that in light of people’s growing concerns on the issue of climate change and the increasing economic and financial impact on each country from the global negotiations on climate change, the development of a global sustainable investment market would “leap to a new level”.

Mr Price said, “Let’s not understate the importance and complexity of achieving an agreement in Copenhagen. The issues around developed versus developing nations, relative national competitiveness around differential costs of energy and global development equity will not be simple to resolve.” He also said, “I do agree that the climate change discussion has become very much an economic and financial matter for the various participants in discussions. In the long term, the strength of a nation and its economy may be determined by its climate change policy, and the research and development it has implemented.”

Additionally, Mr Price commented that “no matter what the result is, for us, the Copenhagen Climate Conference is important because its aim is to provide nations across the globe with a universal understanding of what is needed to efficiently trade off environmental costs and benefits of economic development. Further, I see the Copenhagen Climate Conference as an opportunity to discuss sustainable development. We (FEX) have seen and expect to continue to see a shift in attitudes towards sustainable investment. This shift will be geared in the way investment and development capital is allocated.”

“Once there is a transparent and global price for carbon, I would expect an even greater allocation of capital to cleantech and renewable companies, who in turn would be expected to return consistent profits to their shareholders,“ Mr Price said.

In light of this tendency, it is very important for developed and developing countries to pro-actively recalibrate their domestic financial and real markets to underpin sustainable growth of their national economies. Mr Price said “Markets are an essential component of national economic infrastructure. One of the many lessons from the 1997 Asian financial was the need for well functioning markets. In particular, markets that allow for capital and price formation and markets for risk management and transfer. In many respects, an indicator of the economic maturity of a nation is the quality and integrity of its financial markets. Such markets include markets for the key commodities of energy, resources and environmental instruments where there is a more efficient mechanism for price discovery.”

Mr Price said, “As China is a significant consumer of energy and resources, it would invariably be in China’s national interest to have a transparent pricing mechanism for the main commodities it consumes – and well functioning markets provide such a mechanism.”

How can developing countries further strengthen their financial markets? Based on his many years of market experience, Mr Price believes that markets, and especially financial markets, operate on trust. For markets to operate effectively, market participants must have confidence and trust that pricing reflects actual supply and demand, and that transactions entered into will be completed and be honoured. Without trust and confidence, market participants will not transact, thus diminishing the benefit of operating markets. Trust and integrity includes ensuring a level playing field where all participants are treated equally and where the “rules” of the market are clear and well understood by all participants. Trust, integrity and certainty – these are key ingredients.