- 2 days ago
- #20
ESG Talk #20 - October 2026. Too hot to ignore: Investing in a warming world
Climate change is no longer a distant investment risk. As physical impacts intensify, understanding their implications for economies, companies and portfolios is becoming increasingly important.
In our latest ESG Talks webinar, Alix Chosson, Lead ESG Analyst, Environmental Research & Investments, explores what investing in a warming world really means — and why every fraction of a degree matters.
Discover why investors need to look beyond portfolio decarbonisation and consider physical risks, resilience and real-world impact, as well as where the opportunities may emerge across the climate transition.
The temperature is rising. The investment conversation should too.
Climate change is no longer a distant investment risk. As physical impacts intensify, understanding their implications for economies, companies and portfolios is becoming increasingly important.
In our latest ESG Talks webinar, Alix Chosson, Lead ESG Analyst, Environmental Research & Investments, explores what investing in a warming world really means — and why every fraction of a degree matters.
Discover why investors need to look beyond portfolio decarbonisation and consider physical risks, resilience and real-world impact, as well as where the opportunities may emerge across the climate transition.
The temperature is rising. The investment conversation should too.
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LearningTranscript
00:00:01Hello everyone and welcome to the 20th edition of Kandrium's ESG Talks. My name
00:00:07is Marian Imczyk, I'm Head of Strategies and Development in Kandrium's
00:00:11Sustainable Investment Department and I have the pleasure of being your host
00:00:14today. As you may know our ESG Talks serve as a forum to discuss key issues in
00:00:20sustainable investing with eminent experts in the field and my proposal for
00:00:25today is that we together explore the topic of climate risks. Have they become
00:00:30too hot to ignore literally or in other words how can we invest in a warming
00:00:36world. So just this summer again we had record-breaking heat waves, wildfires,
00:00:42droughts but also floods that really drove home the point once more that
00:00:47climate change is not just a challenge for future generations, it's also a
00:00:51defining challenge of our own time. Climate risks seem to become
00:00:56increasingly immediate and systemic but the question of course for us as
00:01:01investors is what is their materiality for us and we're also seeing that the
00:01:06consequences of global warming are extending beyond just environmental
00:01:10considerations, they are disrupting our economies, our societies, our supply chains
00:01:15even and hence our finances. So what does this mean for us and investors, how can we
00:01:21protect the long-term value of our portfolios, of our investments and how can we
00:01:26also in this complex environment continue to identify attractive opportunities for
00:01:33growth. So to explore these issues we are very lucky to have Alix Chausson with us
00:01:38today. Welcome Alix you have been an expert in sustainable investing for over 15
00:01:44years now and in particular a leader with regards to environmental research and transition
00:01:49research. Currently you're head of climate transition and impact investing within
00:01:54Kandrium sustainable investment department. Thanks so much for joining us today. Before
00:01:59we hear from you Alix, maybe just a few housekeeping points. Please note that this
00:02:05webinar will be recorded, you will receive the recording in a couple of days. You're also
00:02:10free to ask your questions at any point during the webinar. To do so please just use the Q&A
00:02:16functionality of the platform. We'll try to get as many of your questions answered at the end of this
00:02:22talk. So that being said now let's dive right in. Alix, I want to go back to recent memory again.
00:02:30So this
00:02:31summer it was hot. This once again brought to the forefront of everyone's mind the issue of climate,
00:02:38climate, the consequences of climate change. Can you give us give us a little bit of context where
00:02:44we are today globally in terms of climate objectives and maybe more specifically where do we stand with
00:02:52regards to the infamous 1.5 degree limit that is at the core of the Paris goals. Are we still
00:03:00on track or is
00:03:01that objective already foregone?
00:03:05Yes, thank you very much Marie for this introduction and good morning everyone.
00:03:10Very happy to be speaking about climate, climate investing, climate risk.
00:03:16Well of course the question you ask is the question everyone is asking.
00:03:20Well especially after as you said the summer with experience and by the way the autumn that
00:03:25started is quite nice but it's also pretty scary. But I believe that it is less the answer to that
00:03:32question that is important rather than what you make of this answer. But first let me just explain what
00:03:38we mean by the Paris goals, the 1.5 degree objective and what does it mean physically speaking let's say.
00:03:45So the crucial point when we talk about climate goals, temperature is the notion of carbon budget.
00:03:52Because CO2 is not only emitted but it stays for decades in the atmosphere and that's what
00:03:58why we talk about CO2 concentration. So for any CO2 concentration level there is a carbon budget
00:04:04associated and of course every ton you emit will spend part of it, part of this budget. So when you
00:04:11emit carbon you spend a part of the budget and of course you can replenish your budget if you increase
00:04:16your ability to store carbon through natural based solution like forest oceans but also through what has been
00:04:22called carbon capture and storage. So what you can see here on the slide, yeah I hope everyone is seeing
00:04:30that.
00:04:30What you can see here on the slide is that emissions have kept rising since the Paris goals, so since
00:04:362015
00:04:38and we are nowhere near the peak of emission. You can see there is a little dip, the little dip
00:04:44was the COVID year.
00:04:44So basically the only year when we had the minus six to seven percent absolute emission reduction
00:04:50was during COVID. So we are not yet at the peak of emission and we are very far from the
00:04:56reduction of
00:04:5750 percent by 2030 which was in a scenario of net zero by 2050 with no or limited overshoot.
00:05:04So we are on a scenario that could bring global warming between plus 2.5 degrees to plus 3 degrees
00:05:12depending on whether countries do what they have committed to. You can see here the different
00:05:18trajectories and what it actually means in terms of temperature increase. So in a plus 1.5 degree limit
00:05:28there is a little bit more than 100 gigaton of CO2 left in our carbon budget. So 100 gigaton of
00:05:35CO2 it's
00:05:36between 100 and 150 gigaton which at the current annual rate of emission would give us about two to three
00:05:43years before crossing the plus 1.5 degree limit. So then the plus 1.5 degree limit of the Paris
00:05:50goal is not
00:05:52dead yet but it is very likely that we're going to cross it by 2030. But then when you cross
00:05:59the line
00:05:59it does not mean that the objective is dead. You can have some overshooting at some point but then it
00:06:05means that you would need to store more carbon and you would need to emit less sooner and for a
00:06:13longer
00:06:13time. So basically you would need to accelerate your decarbonization which is unfortunately not what we
00:06:19are seeing at the moment. So currently plus 1.5 degree scenario still holds but with a significant
00:06:26degree of overshooting which means that yes well we will need to accelerate both the decarbonization
00:06:33and the earth ability to store carbon and you know that the earth abilities to store carbon through
00:06:39forests or through oceans has been decreasing as well which is of course is not helping our carbon budget.
00:06:45But as I said to me it's not really can we still achieve the plus 1.5 degree scenario objective
00:06:52that is important. It is what you do with the answer because it's not a black or white question. It's
00:06:58not either you win or you lose. Every fraction of degree matters and it is not because it is very
00:07:04unlikely that we can contain temperature rise below plus 1.5 degree that we should just stop our efforts and
00:07:09just prepare for adaptation to a 3 degree world. Climate impacts are not linear. A plus 2 degree
00:07:16scenario is not one-third worse than the plus 1.5 degree. It is much much worse because climate
00:07:22effects tend to be exponential with every fraction of degree. This is why it is absolutely crucial that
00:07:28climate action accelerates no matter the scenario rather than decelerate even if we cross the plus 1.5
00:07:34degree limits. Like the main message is every fraction of degree avoided matters. So what does this mean
00:07:42then concretely for climate action? What are the consequences of all of this? How do we move forward?
00:07:48Yeah so well as you mentioned in your introduction of course the consequences of what we have seen and what
00:07:54we will see probably in the future in a plus 2.5 degree world they are negative from an environmental
00:08:03from a social and from an economic point of view and the consequences so all those consequences environmental
00:08:10social and economic will keep increasing with every fraction of additional degree. So it is likely that
00:08:16the summer we have experience will be just seen as normal in a decade or so. As you mentioned we've
00:08:22seen
00:08:23a lot of extreme events this summer throughout the world and there is no regions that is actually
00:08:30benefiting from global warming. Everybody will face increased extreme events and here you can see about
00:08:41I've taken here the wildfires in Europe and you can see that basically 2026 has destroyed twice the
00:08:50average surface surface that we had seen between 2006 and 2025. We had last year actually in terms of surface
00:08:58that where burns were even worse but in terms of economic consequences it was less. So this increase in
00:09:05in terms of physical impacts will probably continue and probably and there are studies that are starting
00:09:15to be published about that there will be cumulative consequences. With every fraction of degree you have
00:09:20cumulative consequences and you have as well from a physical climate science point of view what we call
00:09:27tipping points. Tipping points are seen as irreversible changes so the threshold beyond which additional warming can
00:09:36trigger large self-reinforcing changes that are difficult or impossible to reverse. So as an example we are pretty
00:09:43close to system limits when it comes to Greenland west Antarctic ice sheets for example abrupt thaw of permafrost in
00:09:51many regions I mean what we've seen in Nepal for example and so all these would bring irreversible
00:09:58consequences and further accelerate the climate consequences. So the message is clear here we should
00:10:04not let's say through the climate action towel because we passed the limit we should accelerate our efforts in order
00:10:12to
00:10:13contain temperature rise as much as possible. Thanks Alex. I want to bring it back a little bit to us
00:10:22as investors now.
00:10:23So we see the consequences of climate change. We see the physical impacts. We see them in our everyday life.
00:10:30We see them
00:10:31in our immediate environment now. But how does this impact our economies and via the impact of our economies also
00:10:41our investments?
00:10:44Yeah no well of course I mean we can talk about we we can try to have numbers about uh
00:10:51about what are the economic impacts.
00:10:53It's of course a very complicated exercise and I was talking about tipping points it is almost impossible
00:10:59to predict the economic impact of passing some tipping points just because we don't know it's just an
00:11:04acceleration of the machine and we don't really know. So the numbers on kind of economic impacts and GDP
00:11:10is still unclear just about last summer um and and also some economic impact can last but we've seen some
00:11:18estimation that basically the summer we've had in Europe could basically uh uh wipe out uh make us lose one
00:11:28percent of European GDP due to the multiplication of extreme events and in particular the prolonged
00:11:34heat wave. So basically the largest impact has been just productivity loss due to the heat wave and when
00:11:41we say productivity loss a lot of the models only assess the fact that people will be less productive
00:11:49because of higher temperature which of course is quite important but we have all seen last summer that
00:11:55it's not only that it's also the schools that are closed uh it's also nurseries that are closed it's also
00:12:00transport that that is impacted so everything is impacted and probably the economic impact and the economic
00:12:06consequences on productivity will be much wider and in terms of physical impacts as well I mean what we've seen
00:12:11in Germany with the low uh level of the Rhine uh river which basically has blocked uh the whole uh
00:12:18chemicals uh
00:12:20uh industry because water is also of course you need water for a lot of activities it's also a way
00:12:25of transporting
00:12:26goods in a lot of regions so when you have lower low water level you can no longer transport when
00:12:31transport is blocked of course you have a massive impact on your economy so we we are we're starting to
00:12:38see
00:12:38all those economic impacts and it's still uh very complicated to estimate uh how much it will cost but what
00:12:45is clear
00:12:47is that the slower pace of the energy transition is turning climate risk into physical risks
00:12:53and because we are moving to physical risk it is increasing the overall economic and environmental
00:12:58and social costs and probably the costs that have been projected so far in studies in academic studies
00:13:05economic studies are widely underestimated why this is what I'm showing to you here on this slide because
00:13:12a way of considering climate risks need to evolve as well to take into account the global systemic
00:13:19and cumulative effects along with the more specific localized impact so basically we need to move
00:13:25from just an insurance type damage focus to more macroeconomic and systemic assessment and
00:13:30I will explain I have selected here two recent studies that are quite interesting in trying to give a more
00:13:37comprehensive picture of climate physical risk which unfortunately translates into much higher costs
00:13:43so the first study is from London School of Economics in the UK and it highlights the fact that the
00:13:48effects of
00:13:48global warming need to be analyzed in a more global and cumulative way which results in a much higher
00:13:55economic impact of minus 12 percent of GDP per capita for every plus one degree of warming so in a
00:14:02plus three
00:14:02degree scenario it means a reduction of 46 percent of world output by the end of the century and the
00:14:09social cost of carbon
00:14:11what is the social cost of carbon it is the real social impacts and cost of every ton of carbon
00:14:16emitted
00:14:16and in in this scenario the social cost of carbon is $1,367 per tonne which of course is very
00:14:25much different from just the
00:14:27carbon cost that we're seeing on carbon markets and everything and of course when you have this
00:14:31kind of cost of carbon it could change slightly the price of a return flight from Paris to New York
00:14:37if you were paying the true cost of carbon it's one ton of of of CO2 so you will add
00:14:431367 tonne if you
00:14:46were paying the true social cost of carbon the second study which is from the University of New South Wales
00:14:53in Australia it is quite interesting it has highlighted the need to consider global interconnected
00:14:59interconnected dynamics so basically the macroeconomic consequences of the physical impacts of climate
00:15:06change have so far been analyzed just adding country level impacts so you add what happening
00:15:11what is happening in one country to what is happening in the next country so you just add up individual
00:15:15countries but countries of course are not separated entities in the global economy and when you have a natural
00:15:21catastrophe happening in Taiwan that blocks part of the semiconductor value chain of course it will have far-reaching
00:15:28impact in other regions as well so when you consider all those global interconnected impacts in a plus
00:15:34four degree scenario we could see global GDP shrink by 40 percent by the end of the century which is
00:15:42of course
00:15:43very far from the minus 10 ish percent that we have seen in a lot of past studies so the
00:15:51message is the
00:15:52delay transition means so we are in a delay transition right so it means more physical risk and it means
00:16:00higher economic and social consequences so it means that the climate discussion will be more important
00:16:06not less and it means that climate risks will need to be properly integrated into a macroeconomic model
00:16:13but also into our investment decision as investor thanks Alex and thanks for sharing those studies
00:16:20i think they really drive home the point of the concrete impact especially in an environment where
00:16:25estimates so far had been um often difficult to to obtain and sometimes a little bit on the on the
00:16:32underestimating side so we have this full picture now as investors what can we do what should we do
00:16:41in order to integrate those risks yeah of course very important question and it's not only investors
00:16:49it's also central banks it's also well the banking system as a whole so those risks are now kicking in
00:16:56they're having far-reaching economic impact so everybody will need to integrate those risks in
00:17:01all economic and financial models as i said the difficulty in a delayed transition scenario as i mentioned
00:17:08is that you know we've been talking a lot about transition risks so transition risks are the climate
00:17:15risks associated with basically uh transitioning to a low carbon economy so basically if you have more
00:17:21regulation uh regulation for example banning the sale of a thermal engine vehicle by 2035 this is the kind
00:17:30of transition risk you can have and companies need to adapt adapt technological costs of course solar panel
00:17:37costs being reduced by 90 percent in the past 10-ish years this is a transition risks for other type
00:17:46of
00:17:46technology so we've been focusing a lot on transit transition risks uh as uh investors and now we will
00:17:54need in addition to transition risks because there will be some transition happening we just don't know
00:17:59the pace and the form we need to integrate now physical risks as well so what i mentioned the extreme
00:18:05weather events the fact that we'll have heat wave in the summer so all those kind of things will have
00:18:11an
00:18:11impact on our economies and our activities and so you will need basically to build two different model
00:18:16if you want to have a just a full assessment of of climate risks and of course because we are
00:18:24in a
00:18:25world of uncertainties we talk about risks there are a lot of uncertainties the the certainty is that we
00:18:32will have more climate risk but we the uncertainty is about the form again so as investors and we have
00:18:38been
00:18:39doing that for quite some time we also need to integrate climate scenarios and we need to work on
00:18:43different scenarios and we need to test those scenarios to see which of our investments which of our assets
00:18:48will be at risks and so then to prepare and to anticipate the the possibility that of course we don't
00:18:54know uh we don't know the the future and we don't know the future scenario will be will be on
00:18:59so i guess for
00:19:01investors it means a lot of new model to develop a much more sophisticated model when you talk about scenarios
00:19:07and
00:19:07everything we can like go into stochastics model and those kind of things climate science probably
00:19:12one of the most sophisticated science that there is so uh so yeah so very very uh fascinating and
00:19:19interesting to be in that space and to develop this model but of course this is a huge challenge for
00:19:24for the investment community and i want to come back a little bit to what you explained regarding the
00:19:31risk um the physical risks increasing quite quite significantly this has been a theme the past few years
00:19:37that we've moved our focus a little bit from transition risk to physical risk what does this
00:19:42mean in terms of investors thinking about adaptation versus mitigation and maybe then a second part to
00:19:49my question would be what does the rise of physical risks mean for esg analysis itself you already
00:19:56mentioned the importance of developing more sophisticated climate models but what do we do in terms of
00:20:02physical risks in particular i'm thinking about you know do we need to look more at geospatial analysis
00:20:09do we need to look at physical dimensions of the issues we invest in more
00:20:16yeah very important question and i it has been a question that has uh quite that that has made us
00:20:24think and work a lot in the past couple of years um so physical risk as i mentioned are different
00:20:30from
00:20:31transition risk and from other kind of risks physical risks and the physical impact of climate change
00:20:36are localized impact they are localized risks and so basically the physical impact will happen
00:20:43differently in different regions and just in different location so what it means in practice
00:20:48is that you need to add a new dimension to the esg analysis you know how in the esg space
00:20:54we've been
00:20:55looking a lot at what is the company doing the sustainability of its activity and we've been doing
00:21:01doing uh looking a lot at how is the company operating so how it's managing its stakeholders its employees
00:21:07its suppliers and everything so we had the what we had the how and now we need the where where
00:21:14are the
00:21:15activities located and it's not only the operation of a company it's also the supply chain and especially in some
00:21:23sectors uh food and beverage for example so the agricultural sector which is already and will be
00:21:30one of the most impacted by the physical impacts of climate change you need to consider where the
00:21:35supply chain are located and so that's a very complicated exercise because as you mentioned we need
00:21:41geospatial data in order to identify where the assets of each company are located and so then what we do
00:21:50is we have a system of kind of maps where we maps basically of physical hazards of physical risks and
00:21:57it's the same for biodiversity by the way because biodiversity is very much localized as well a question
00:22:03and so then of course you need to analyze what will happen in each asset and it in each part
00:22:08of the
00:22:09supply chain and what it means as well is that we need better disclosure from companies we need them to
00:22:15also disclose where their most tragic assets are located and where the supply chain are located and what they
00:22:20are doing in order to manage those very much localized uh impacts so it's for me and and it's very
00:22:28true that
00:22:29yeah it is it is changing the way we are doing and we will do ESG analysis because we talk
00:22:34about physical risks of
00:22:36climate we talk about biodiversity but social issues it's the same the location is very important if you want to
00:22:42determine
00:22:42what are the risks of uh yeah having negative social impacts and all those kind of things so this where
00:22:49dimension just adding this geospatial data i think will quite reshape the way we do ESG analysis and it will
00:22:57bring much more uh specific view about the specific risks that the company is facing uh uh um in view
00:23:06of those uh long-term risks
00:23:11and as you are talking to investors about these kinds of challenges what kind of feedback do you currently get
00:23:21um so yeah i mean we have as i mentioned we we are in a moment in the climate space
00:23:28where uh there are many challenges uh but what i always say is that complexity is what makes our job
00:23:35valuable and fascinating in a way so
00:23:37um we get a lot of questions from our clients from investors about yeah how to integrate physical risks
00:23:44how to measure physical risks as well because as i mentioned a little bit with the study uh the macroeconomic
00:23:50study at the moment physical risks are only assessed in an insurance type of thinking so basically uh
00:23:59if you have one location to what extent it will face a physical hazard and and to what extent then
00:24:04you will
00:24:05not be able to operate this particular asset but we don't take into account right now as i mentioned
00:24:11the the the value chain the the heat wave impact the interconnected impact that they are so and we
00:24:17don't take into account the macroeconomic impact that they are and that some value chain might be just
00:24:21not operating so we need to we are at the beginning of this physical risks assessment and of course the
00:24:28models need to improve massively and so we get a lot of questions from our clients about uh about how
00:24:35we
00:24:36assess and integrate physical risk and we are trying to work with everybody about how we can also make
00:24:41those uh kind of assessment more um more accurate the other thing uh is uh assessing the financial
00:24:49materiality the value at risk you know how in esg there is this kind of double materiality thinking
00:24:55and of course what drives uh changes and what has actually an impact you know financial economic
00:25:03model is really uh the financial materiality as well and as i mentioned basically physical risks well
00:25:10climate risk but physical risk in particular are having a higher and higher financial materiality and
00:25:17so we are working a lot as well with our clients in trying to um trying to assess what is
00:25:22the financial
00:25:22materiality of those climate scenarios of those climate risks in order to make more informed of
00:25:28course investment decision but in order to yeah just integrate in the way we we value companies in
00:25:36the way we evaluate their resilience on the long term their ability to um to uh generate growth and to
00:25:42grow their business on the long term to integrate in a more financial way uh those uh those uh physical
00:25:49risks
00:25:49uh so yeah so i guess those are the two main um the two main points that we are discussing
00:25:55with the
00:25:55clients and i guess but probably we'll have time in the later part of the discussion to to discuss
00:26:00about that but a lot of clients as well are saying basically i've done a lot in decarbonizing my
00:26:05portfolio i really want to have portfolio decarbonization but i don't feel that it's doing
00:26:10anything in terms of real world decarbonization so this translation of paper decarbonization as it has been
00:26:17called this translation of just uh uh kind of financial carbon metrics uh that are improving into
00:26:26what are the the actual real world impact and how can i actually actually accelerate those real world
00:26:33impact is a very key discussion in the investment space and in climate investing and that's also
00:26:39something we're working on but i'm sure we'll address this question later in the discussion
00:26:43absolutely and it's good to hear that even though the challenges are enormous there are definitely
00:26:48solutions and ways to integrate into portfolios um i now want to take a little bit of time to
00:26:56move to an angle that has preoccupied i think all of us in recent years and it's the geopolitical angle
00:27:03to what extent does the geopolitical situation that we are currently facing reinforce the case for climate
00:27:12investing yeah so it's a very very key uh question uh because you know how we've been talking about
00:27:19the fact that yeah climate and climate action has been driven a lot by regulation by kind of political
00:27:25action uh this situation this situation has changed and what is quite puzzling i think at the moment in the
00:27:32in the current context is that the political situation in many countries and regions make it
00:27:38complicated to talk about the need for more ambition climate goals and climate action of course and
00:27:44not only in the us and a lot of regions of the world but at the same time the geopolitical
00:27:49context is
00:27:50making uh energy a matter of not only decarbonization but it's making it a matter of national security
00:27:59and sovereignty and sovereignty and you you know how in energy kind of system and energy politics and
00:28:06energy investment we talk about this dilemma of just conciliating different um objectives which are
00:28:14affordability so having cheap energy uh carbon climate having decarbonized energy
00:28:20uh and security having a security of supply and for a lot of time and especially in europe for example
00:28:28uh you've had some uh some kind of uh of some type of energy gas because we had very cheap
00:28:36gas from
00:28:37russia for example gas was seen as one of the best way of having this triangle yes on decarbonization it
00:28:43was not very good but you could quite well combine that with renewables and everything would be fine well
00:28:49everything has changed and actually now renewables are seen in this energy trilemma as one of the best
00:28:56way to have affordability because the reality is that renewable is the cheapest uh source of energy of
00:29:03electricity in a lot of regions in the world having of course decarbonization for for sure but also
00:29:10having security of supply because renewables of course you're not dependent on fossil fuels and so it
00:29:17means that you're more sovereign and more independent we can talk of course about the supply chain of
00:29:22renewables which is not that uh let's say um sovereign or it's quite difficult to have sovereignty in the
00:29:28supply chain but at least in the energy source itself um it it is uh at the moment one of
00:29:35the energy
00:29:35source that is performing the best on this energy dilemma so yes geopolitical fragmentation is creating a
00:29:41very complicated context to address global issues such as climate change of course we have
00:29:46less collaboration less cooperation and we need global cooperation if we want to have an orderly
00:29:52transition but at the same time the fact that energy security is now top of the agenda of most
00:29:59countries is creating a very strong support to be honest for energy investments but especially for
00:30:05renewable and grids and the fact that you also need in this fragmented world to build local supply chain
00:30:13because you don't want to be dependent on other regions or too much dependent on other regions so you
00:30:18will build local supply chain especially for clean technology uh of course this will increase the need for
00:30:24investment if you need to have a different supply chain in every region it increases the need for
00:30:30investment for cleantech investment so a lot of opportunities to invest in those more localized
00:30:35supply chain one um matter that i wanted of course to mention because i don't think there is a single
00:30:42call
00:30:43right now in the investment community without talking about ai and we get this question a lot like will ai
00:30:49um derail or accelerate the uh energy transition so i just wanted to mention that if you have any question
00:30:57please ask your question and i will try to answer it at the end of the the session so the
00:31:03ai revolution
00:31:04is of course creating massive challenges for power system so with a probable you can see here doubling of
00:31:10power demand from data centers by 2030 and yes what is very true is that it has translated in some
00:31:17regions
00:31:17in the us for example and but also in china in the us with gas in china with coal uh
00:31:22it has translated in
00:31:23an increase in fossil based power generation but the massive ai build out has also supported renewable
00:31:31expansion and a real scale up for energy storage as well which is a very important building block in
00:31:38a decarbonized energy system and also of course there is some potential potentially strong of ai to optimize
00:31:45energy and resources used across our industries so right now the question will ai accelerate or derail the
00:31:55energy transition is yet to be answered and it will depend a lot on economic and political choices
00:32:03and what is important to keep in mind because we talk a lot about ai is that ai is only
00:32:09one of the many
00:32:10drivers for increased power usage you have here one graph from the ie showing that basically data centers
00:32:17are not the main lever the main factor of increasing electricity demand by 2030. air conditioning so what
00:32:27is called space cooling here will generate more additional demand and it is an even greater harder
00:32:36of the challenges for power system just because of course everybody wants air conditioning at the same
00:32:40time and so in the management of what what we call peak demand so when everybody wants some electricity
00:32:47it can have very strong impact on uh just electricity availability and power prices and of course you
00:32:55want air conditioning when it's very hot and when it's very hot some uh power generation capacities might be
00:33:02very hard to operate we've seen that uh this summer with some nuclear power plants that were just blocked
00:33:08because it was too hot and uh we could not uh cool them down so this will have a massive
00:33:14impact on power
00:33:15system and i'm even more uh to be honest worried about the impact of potentially massive air conditioning
00:33:21massive space cooling increase on our power system on the short term than data centers on the long term of
00:33:27course data centers and ai could have massive impact that will need uh to be tackled so what we need
00:33:34what what it means realistically for climate investment for clean energy investment is that we will need
00:33:41more energy smarter energy and we will need to build it fast and the source of energy that is the
00:33:48faster to
00:33:49build right now is renewable again so what it means is that the years and decades to come will require
00:33:55more investment in clean energy and climate solution then of course and that's the the next uh slide and drafts
00:34:06here you can see
00:34:06the magnitude of the investment of the energy and of the clean energy energy investment that we need will depend
00:34:14on the
00:34:14transition trajectory but what you can see here is that in the latest world energy outlook the IEA forecast a
00:34:20rise in clean energy investment in all scenarios
00:34:23even in the business as usual which is the current policy scenario the current policy scenario means that we do
00:34:29nothing we just
00:34:31stay where we are at the moment uh with the policy that we have and so even in this scenario
00:34:36of business
00:34:37as usual and of massive rollback uh of kind of climate ambition and Paris agreement and everything
00:34:44there will be a rise in clean energy investment and what you can see on on this graph as well
00:34:50is that
00:34:51of course the required annual amount of investment will depend on where we are uh if we are in the
00:34:57business as usual if we are the stated policy scenario is basically a delayed but progressive transition
00:35:02this is what we have uh at the moment or if we are in a net zero scenario in a
00:35:07net zero scenario you
00:35:08will need of course a massive increase in clean energy investment and a massive decrease as well in fossil fuel
00:35:13investment you can see here that it's already the case that clean energy are much uh more significant
00:35:21much more higher than fossil fuel energy yeah it's it's already a two to one uh ratio i mean 10
00:35:27years ago
00:35:28it was just equal so you know how fast we have moved with that so that's something to have in
00:35:32mind
00:35:33and um there are some of course trends that uh that we we see emerging and that will be very
00:35:39important
00:35:40i've just put here one graph about the massive increase in investment in grids so if you want more
00:35:47clean energy you need uh smarter and larger grids basically and it has been one of the major bottleneck
00:35:54of just accelerating the transition and power generation deployment over the over the the last years
00:36:00and it is now seen as a key aspect of energy security so we we are seeing uh in many
00:36:07regions china
00:36:08europe the us so the the regions that will bring like uh the the the the the fastest and most
00:36:15significant energy investment uh a massive increase in the plan to uh invest in grids and already uh on
00:36:23the ground uh china last year it has china in 2025 compared to 2024 and again probably
00:36:30in 2026 it's a double of what is investing in the grid so we are seeing a massive update in
00:36:35that
00:36:36uh and then you mentioned that in one of your previous questions so i'll just address part of
00:36:41the answer now and then we can discuss of course uh and if you have questions again use your q
00:36:46a and we'll
00:36:47try to answer but this you know how we talk about the shift from billion to trillion when we talk
00:36:52about
00:36:52climate finance um it does already happen for climate mitigation because you can see here that we are
00:36:59already at 2.2 trillion so now the challenge will be to sustain or even increase the space
00:37:07of climate mitigation investment we need to do more if we want to be on a net zero scenario you
00:37:11can see
00:37:12now see here that we need to invest even more but we also need to invest in climate adaptation at
00:37:18the
00:37:18same time because as we have seen we already seen physical risks physical impacts and it will continue
00:37:24to increase so we need to keep investing in climate mitigation and we need at the same time to invest
00:37:30to invest as well in kind of adaptation and you can see here that if you take only public financing
00:37:35in the direction of developing economies it needs to be multiplied by 1414 by 2035
00:37:45and even when you add private investments well basically we are around 65 billion of dollars of
00:37:53adaptation investment right now public plus private this is very tiny compared to what is necessary right
00:38:00now and what will be necessary in the future but what is important to keep in mind and i'm sure
00:38:06they
00:38:06will have questions we already have a lot of questions about that you know we have a lot of people
00:38:09saying
00:38:09why should we not just just move or mitigation investment towards adaptation because we know that
00:38:17on mitigation we're not doing enough so let's just channel all the all the money all the capital
00:38:22towards adaptation what is important to keep in mind is that mitigation and adaptation are two sides of
00:38:29the same coin as i said every fraction of degree avoided matters and every fraction of degree could make
00:38:36adaptation more costly and less effective and at some level just impossible there is no scientific
00:38:43consensus that we could that we could adapt just could adapt as humanity to plus three and even plus
00:38:50four degree world like it will be just a nightmare scenario so what it means is that really for governments
00:38:56but also for investors mitigation and adaptation need to go hand in hand in designing energy and client
00:39:02policies and we need to invest in both basically uh if we want to create a resilient energy system of
00:39:10tomorrow sorry i've been a little bit long but at least you have like a food for thoughts and if
00:39:15you
00:39:15want to to ask questions uh please feel free yes and we already have questions coming and so we'll pick
00:39:21them
00:39:21up at the um end of our discussion um you mentioned quite a lot of potential um areas for growth
00:39:29new pockets
00:39:30of growth emerging are there any particular areas where you would say you see the most compelling
00:39:37investment opportunities yeah so um well i guess from what i just mentioned uh renewables are one of
00:39:48course pocket of growth and where we see a lot of opportunities despite the political uh let's say
00:39:54uh the political uh uh speech that we hear a lot about about renewables what we're seeing on the ground
00:40:01that is that we are breaking records every year and the slowdown that we've seen in the last year has
00:40:07basically been more than compensated by energy storage and grit so it's not that we invested less in climate
00:40:13it means that we've been doing quite a lot in renewable but we've been adding grits and and and and
00:40:19energy storage in addition and as i mentioned um well renewables they are now not only being driven by
00:40:27regulation uh you don't need subsidies in most regions for renewable anymore uh they are the the
00:40:33most economic the cheapest geopolitics is helping as well because a lot of regions don't want to be
00:40:39dependent on fossil fuel anymore and this increase in electricity demand that we've seen in oecd
00:40:45countries driven by ai air conditioning again since you need a very fast rollout of power generation
00:40:51at a very low cost we see a lot of growth potential for renewables it has been the case and
00:40:56it will
00:40:56continue grids as i mentioned for every dollar invested in renewable you need one dollar investing in
00:41:02grids we're not there yet but we are closing this difference and we with what we've seen as
00:41:09announcement in the us in europe but also in china where it has been massive we think that we are
00:41:16probably close to a new kind of capex super cycle in the grids in the grid space uh in in
00:41:22in uh you know
00:41:23power system the other uh the other uh area that i really want to mention because this is where we're
00:41:30seeing a lot of very very interesting development and this is as i mentioned a very important building
00:41:36block for a decarbonized energy system is energy storage i put here the capacity addition that we
00:41:42see by region so like like with like a lot of clean technology the main engine of the transition is
00:41:50china and it's the case for almost all building block of uh the the energy transition and again for uh
00:41:57for
00:41:57energy storage china is really driving the race both in terms of also um technologies in terms of
00:42:05equipment both in terms of rollout and you can see here and the you have the 2025 numbers but the
00:42:112026
00:42:12numbers will probably be even exponential and we are seeing uh of course we've seen the cost of
00:42:18batteries decreasing by 90 percent in the past 15 years 90 so and even in the past two to three
00:42:27years
00:42:27we've seen also massive improvement in terms of cost so of course it's when you have the economy
00:42:31changes changes changing that fast you don't even need regulation it is a very strong push expectations
00:42:37in china around energy storage the cager the compound annual growth rate is 14 in energy storage
00:42:46to reach 60 652 gigawatt hour by 2030 and about 300 gigawatt uh and we'll have 300 gigawatt hour but
00:42:55uh by 2025 and we are seeing as i as i mentioned in energy storage some very key technological breakthrough
00:43:02because what is important in energy storage is the density the range so how how much power you can store
00:43:09for how long uh and of course then the costs and here in solid states in sodium ion batteries so
00:43:17not
00:43:17lithium ion but sodium ion so we see a lot of potential here a lot of very interesting technological
00:43:22uh developments that will make energy storage a very very interesting uh space to to look at in
00:43:29the in the coming years last but not least just mentioning a few because there are there are lots
00:43:35but evs i mean of course when you have a massive increase in energy prices and especially in just
00:43:41gasoline uh prices uh you uh have some impact on the on the uh ev and in terms of ev
00:43:49sales and it has been a
00:43:51market that has been that has been quite difficult quite subdued in the past years because ev needs
00:43:56regulation ev needs subsidies total cost of ownership is very interesting but you need to help people to
00:44:02just buy because the upfront cost the the the the when you buy an ev car it's quite uh it's
00:44:09quite a lot
00:44:10but then in total cost of ownership uh you it's it's much more interesting than uh than thermal engine so
00:44:18in ev we've seen a move from what has been called ranging anxiety so the fact that you won't have
00:44:24enough range in your ev towards pump anxiety which is the fact that you go to the gas station and
00:44:30you're
00:44:30not able to fill your tank just because it's too expensive and so the the numbers we've seen in terms
00:44:36of ev sales in a lot of regions uh more importantly asia well china has always been uh it's more
00:44:43than 50
00:44:43percent sales that are easier but the rest of asia southeast asia in the first quarter of 2026
00:44:50uh you had plus 80 percent in terms of ev sales compared to the year before 80 percent and then
00:44:57in
00:44:58latin america it was 75 percent in europe it was 30 percent so we've seen very very strong quarters in
00:45:05terms of uh in terms of ev sales and that's uh again a part of the uh energy transition that
00:45:12is
00:45:12very important if you want to decarbonize transport we need to electrify transport and that has been
00:45:17kind of slowing down in the past years because of a little bit less strict um uh regulation and that
00:45:25we
00:45:25see accelerating again and that will continue to accelerate as long as of course energy uh costs
00:45:32energy prices are at that level so yeah so if yeah if i have to to give you just a
00:45:37couple of
00:45:37examples i think those would be the very interesting space to watch thank you alix i want to move on
00:45:44now
00:45:45to one of the buzzwords of recent years and especially today transition investing um in a context where the
00:45:53transition is delayed and the paris goal you know are to a lot of people um seem out of reach
00:46:00there's a lot
00:46:01of talk about this concept of transition investing you know investing companies that that are late in
00:46:06their transition um and using that investment to help them accelerate their transition what do you
00:46:12think about this contact concept yes so very typical question again um i won't talk about sfdr 2.0 i
00:46:21will
00:46:22keep that for another time and you know how we probably have a transition uh category and everything but let's
00:46:29focus more on what we mean by transition investing um so yes so assessing the transition is not a black
00:46:37white question or a green brand question let's say there are a lot of shades in of color in the
00:46:43transition so of course we cannot focus only on the green and on the dark green technologies and
00:46:49companies and just let the rest of the economy as it is because it is all the economy that need
00:46:54to
00:46:55transition we need drastic systemic changes so it means that we need all sectors to transition and
00:47:00it's true that in some sectors the transition is very much delayed in industrial in materials if you
00:47:07take cement if you take steel if you take transport uh if you take some part of the building as
00:47:12well so
00:47:13this is where electricity has been going fast but all the rest is kind of a little bit delayed so
00:47:19we need
00:47:19to accompany those sectors we need to invest more capital potentially to make the necessary investment
00:47:25to transition and so we need transition investing as well to accompany those sectors that are late
00:47:33but the fact is when we talk about transition i mean everybody is in transition i mean the world is
00:47:38in
00:47:39transition so all companies are in transition so what is important is not investing in a company that is
00:47:44in transition because you would invest in the whole economy basically uh it is investing in a company
00:47:49that has a credible transition and as we said you know climate is a lot about scenarios a lot about
00:47:56trajectories and it is the same carbon budgets we are not changing the carbon budget it is the same
00:48:01carbon budget for a 1.5 two degree scenario so what it means is that if you're delayed right now
00:48:07you will
00:48:07need to accelerate at some point so what is very important when you assess the transition is the capacity to
00:48:13accelerate at some point and of course what is very important if you want to accelerate is what is
00:48:19your what are your objectives as well of course but you can have a lot of nice objectives you can
00:48:25say i want to be net zero by 2050 and nobody will chase me before 2049 and then i can
00:48:31do whatever i want
00:48:32so what is very important is are your objective quite consistent with the net zero trajectory meaning you
00:48:39need to have ambitious objective by 2030 already and not wait uh but also what are the capacities
00:48:47what are what is your ability to achieve those objectives in terms of decarbonization strategy
00:48:52and what is very important if you want to assess the transition is capex capex and opex you know the
00:48:57sector but what you're putting on the table in terms of resources to accelerate your transition so
00:49:03if you want to build a kind of transition thinking the central notion should be
00:49:10the credibility of your decarbonization trajectory and strategy we've seen a lot of for example cement
00:49:17companies saying i'm not doing a lot right now i'm delayed but believe me on my words i will invest
00:49:23in
00:49:23a lot in ccus in carbon capture and storage well the issue with ccus is it's one of the technology
00:49:29that costs the most you need carbon costs around 150 or 200 dollar if you want to collect the co2
00:49:35and to store to store it and then it needs to be stored indefinitely so you need somebody to ensure
00:49:40that it's stored indefinitely so it's very very complicated and of course you have a lot of other
00:49:45technologies that are much cheaper and that could help so if you have a cement company saying it's
00:49:50all in ccus i will invest only in ccus it's not a credible transition uh strategy because it will cost
00:49:57a
00:49:58lot and there are a lot of doubts about the ability to do that at scale so we need to
00:50:03assess very
00:50:03carefully the transition plan and what the companies are saying in in terms of action they will take to
00:50:09achieve their objectives and capex if you're an oil and gas company and we see a lot of them saying
00:50:14i want
00:50:14to be zero by 2050 but i still have 80 percent of my capex that will be towards fossil fuel
00:50:22by 2030 or by
00:50:232035 it takes about 10 years to deploy capex and to have then projects operating so what it means is
00:50:31that your capex of 2030 will be probably your energy mix of 2040 and so of course if you're 80
00:50:38percent
00:50:39positive fuel capex in 2030 it means that you're not going fast enough to watch your transition so
00:50:45capex capex are just the factor of change of changing companies so we need to spend a lot of time
00:50:52assessing
00:50:52decarbonization action are the credible and the capex puts on the table are they also credible to
00:50:58accelerate the transition transition investing should not be just uh let's say an easiest an easiest way of
00:51:05doing green or a worse way of doing green just a little bit less green like light green it should
00:51:12be something that really foster change and so what it means as well is that you will need very strong
00:51:17engagement strategy you will need to engage with companies to make them accelerate if you want to
00:51:22have a credible transition strategy yes thank you very much for those pointers because just like with
00:51:28sustainable investing there was certainly a risk of greenwashing we're now seeing this risk of
00:51:32trend transition washing emerge as well um i now want to come back to something you you had already
00:51:38mentioned earlier because it's also a question that i get a lot when speaking to investors it's how do we
00:51:43translate climate investing into a real world impact um you know for example there's this contradiction
00:51:50to a certain extent that we've seen carbon footprints of portfolios um and of indices too going down in the
00:51:58past few years but we don't have the same reduction of global emissions in the real world um what is
00:52:05needed in order to ensure that the decarbonization efforts at investment level also translate into real
00:52:12world impacts yeah so this is a key question and it's probably one of the questions we get the most
00:52:18from
00:52:19our clients and just the investment community right now what we've seen recently uh is that you know if you
00:52:26take the past five years on the msci for example you had a decarbonization rate an annual decarbonization
00:52:33rate close to eight percent this is even faster than what is required under the paris agreement so if
00:52:39you take the carbon footprint of the msci you could think wow we are decarbonizing very very fast and
00:52:46actually faster than what is required in the paris agreement but then it comes back to my first graph and
00:52:51the fact that real world emission are not decreasing so how is that well of course if you take carbon
00:52:57financial carbon metrics for example a carbon footprint it's the co2 emission and the domain
00:53:03denominator it's enterprise value and in enterprise value of course a big part is the uh the share
00:53:10price the market cap and so what we've seen over the past years is that in a lot of sector
00:53:15tech of
00:53:16course is one massive sector uh you've had uh quite a lot of increase in market cap and of course
00:53:23then
00:53:24in enterprise value while actually emissions were kept the same or increasing a little bit and so
00:53:30artificially you could see that the carbon footprint was decreasing quite a lot but then not translating
00:53:35in real world emission reduction so this is what has been called paper decarbonization and so it is very
00:53:42important also in terms of credibility for the investment community that we ensure that the
00:53:48decarbonization we see in our portfolios also translate into real world impact and so for that you need
00:53:55more than just a carbon footprint you need to develop more sophisticated tool and more importantly you need
00:54:01to develop company specific sector specific trajectories that are based on real world metrics what is a real
00:54:09world metric it is what has been called physical intensity so basically it will be the gram of co2
00:54:15per kilowatt hour for utility it will be the kilogram of co2 per ton of cementitious product for a cement
00:54:20company it will be the ton of co2 for a ton of steel for a steel making company so those
00:54:26are the physical
00:54:26metrics that will assess whether what the company is actually doing producing electricity producing cement
00:54:33producing steel is actually being decarbonized and so it is very important when we build climate
00:54:39strategies climate investing strategy that we pay a lot of attention to investing in companies that
00:54:44are making the effort to have those physical intensity metric improve so if we invest in the companies that
00:54:50are making those physical intensity improve then it means that overall we'll have more chance let's say to
00:54:55have real world decarbonization at some point and so that's why you need not only to have portfolio
00:55:02decarbonization target but also very much issuer specific alignment methodology and so if you want a
00:55:08very uh credible climate investing approach you need to have much more sophisticated and much more
00:55:14fundamental research in dna all that is fundamental research forward-looking type of assessment and so
00:55:21you need more education yeah and actually speaking about the real world also brings me to another point
00:55:28um the transition is not just an ecological one um what happens at the environmental level also has
00:55:36strong social consequences um how do we integrate those notions of social fairness and of justice as we
00:55:44approach the topic of climate risks and of transition yeah so there won't be any transition if it's not a
00:55:52just transition because yeah basically if you change all your activities but then everybody is just uh
00:55:57unemployed and you just have to lay off all your workers it won't work so we need companies to put
00:56:04in place just transition plan you have some of them that are working on that at least disclosing something
00:56:11but it's something on which a lot of companies need to do much more what we've seen is that you
00:56:16there is
00:56:18there is stuff happening on the ground and we've seen a for example a glass making company that we're moving
00:56:23from blast furnace to produce uh glass so thermal basically furnace to electric furnace and it's
00:56:32not the same kind of furnace so you need to train what they spent like one year training the employees
00:56:37so that they are able to then operate the electric furnace that then makes much more decarbonized
00:56:42glass so we see that in a lot of companies they're not talking a lot about it but yeah we
00:56:46will need
00:56:46we will need a just transition and we will need companies to train to retrain and to accompany the
00:56:52employees but it's not only the employees and the just transition just keep in mind that in the latest
00:56:58numbers that we've seen you have only 40 percent of the impacts from natural catastrophes of the cost
00:57:05that are insured meaning that you have almost two-thirds of the physical impact of climate
00:57:10stress that are not insured so people will have to pay and then the question is who will have to
00:57:15pay
00:57:15in the end who is responsible for the climate risk and we will have to pay in the end and
00:57:20so you might
00:57:21have some risks that insurance no longer want to insure or where the premium will be very very high
00:57:27and then it will be just a matter of just politics and government to decide who will pay in the
00:57:33end
00:57:33and potentially we've seen some talk about you know some countries saying well actually oil and gas
00:57:38companies should contribute part of their profit right now into just building more resilient economy
00:57:44and i think this discussion will continue for sure um and of course um this put justice and climate
00:57:51justice at the heart of the of the climate question and it is also a matter of global international
00:57:59solidarity because uh we have common birth differentiated responsibilities in climate
00:58:05change but developing economies vulnerable countries are suffering the most and the other one as well in
00:58:11the macroeconomic context where interest rates are quite high it is very very complicated for those
00:58:17developing economies to just borrow some money and to finance the necessary investment so if we want to
00:58:22have also world that transition uh we will need to solve and it's the matter of the cop and there
00:58:28is a coming cop uh in turkey uh in in one month or so so this is a question that
00:58:33the international
00:58:34community will need to solve about how do we accompany as well the transition and adaptation
00:58:40in developing economies because there will be no transition if we let just half of the world on the side
00:58:47of the world on the side of the world on the side of the world right alix i think we
00:58:49could continue
00:58:49listening to your insights for many more hours also the issue is so complex and far-reaching
00:58:56but i want to open it up to questions from the audience at this point and we've already received
00:59:01some of them here in the chat so thank you so much for sending them in a first question going
00:59:06back
00:59:07to the topic of the ai revolution and in particular the impact of the water use water scarcities
00:59:14um notably with regards to the air conditioning and cooling systems we have a question here is
00:59:20there potential for the rise of more sustainable cooling systems are there any companies currently
00:59:27doing this um so yeah so i see that a lot of the questions are about ai uh so i
00:59:34i was expecting that
00:59:35uh and i'll put back the slides with uh the electricity demand and a lot of uh so i see
00:59:42some questions
00:59:42about electricity and about water uh of course i mentioned only electricity but water is absolutely
00:59:48indispensable to cool data centers but also to produce electricity half of the water consumption
00:59:55is actually uh for the electricity uh consumption of the data centers and especially when you have
01:00:01thermal uh generation capacities we talk a lot about nuclear but you need also a lot of water to cool
01:00:06down uh coal uh power chain uh gas power chains water is is uh is really uh an important uh
01:00:15topic uh so
01:00:16here about the cooling uh of data centers we see in data centers uh in ai we see a lot
01:00:22of um efficiencies
01:00:24we see a lot of efficiencies in the chips we see a lot of efficiencies in just the way the
01:00:30data centers is
01:00:31operating so we see a lot of um we see a lot of improvement in what is called pue poor
01:00:37usage
01:00:37effectiveness so how much basically power you need to make your data centers operate and so
01:00:43if it's one it means that everything is used in the calculation and in the in the the the yeah
01:00:49just the
01:00:50function of the data centers if it's above one it means that part of it is basically lost because of
01:00:56usually cooling so it's very important to get close to one and the hyperscalers are getting basically
01:01:03close to one right now but we have a lot of other data centers that are not very close to
01:01:07one
01:01:07so there is this efficiency part that is very important and we see a lot of improvements but let
01:01:15me just address the elephant in the room of ai and tech which is just the rebound effect of the
01:01:22jevons paradox and this is what we've seen when you have more efficient technology even if you improve
01:01:27the pue close to one if you have a lot of increase in usage uh basically you will increase you
01:01:36will
01:01:37increase the overall emission and i mean carbon reduction it needs to be absolute we see a lot of
01:01:43intensity or efficient efficiency in carbon but in the end it needs to be absolute and what it means in
01:01:50real terms is that if the tech sector emits more carbon because you also can have carbon budget by
01:01:56sector so if the carbon budget of the of the tech sector is is higher well it means that the
01:02:03carbon
01:02:04budget of other sector will be lower and so what it means is that ai need to prove and we
01:02:10need to see
01:02:10that in numbers that they can reduce carbon emission in other sector by having more efficient energy
01:02:16management by having more kind of digitalized and efficient power systems meaning that you can
01:02:23integrate more renewables by having more efficient industrial processes and for example there is a
01:02:30lot of potential in hard to abate sectors such as cement such as steel but at the moment it's a
01:02:35lot of
01:02:36potential and we don't see that translating into the numbers what we see into the numbers at the moment is
01:02:41more the
01:02:42rebound effect and the fact that if you look at the scope 3 of a lot of tech companies it
01:02:47has increased
01:02:47massively so yes ai can help but we need to see that now in real terms and real numbers in
01:02:56terms of
01:02:57reduction of emission for the rest of the economy right thank you alix maybe another question just to
01:03:04close out the talk a question with regards to the role and positioning of insurers and reinsurers
01:03:11with regards to emerging climate technologies what is the role of the insurance industry in financing
01:03:20such emerging technologies should they kind of way to really see what's coming out of new developments
01:03:28or is it already time for them to support emerging new technologies maybe make sure via engagement that
01:03:35they understand them well in order to contribute to a world that is still insurable in the end
01:03:42okay yeah so i see two parts in that question there is the role of insurer and reinsurer in climate
01:03:47in
01:03:48general to be honest because of course it's one sector one industry that is at the center of a lot
01:03:53of
01:03:53things insurers they of course insure risks and you see a lot of insurers now saying well actually i will
01:04:00increase my premia or i will not insure some type of risks so then comes back as i said the
01:04:06question of
01:04:06who will pay in the end um they also have of of course they are also an investor uh insurer
01:04:13and reinsurer so
01:04:14they are they they they also invest a lot and they need also to integrate climate in what they invest
01:04:18and what you mentioned about technologies i think i would enlarge the question um to our economies and
01:04:26and and to just financers as a whole we need to find a way so there are two things a
01:04:32lot of the clean
01:04:33technology that are needed to reach minus 50 percent of emission by 2030 already exists so basically here
01:04:40it's more a matter of financing and more matter of scale it's not a matter of innovation but what is
01:04:45clear
01:04:46in that is that in a lot of sector and especially hard to abate sector we still need a lot
01:04:51of
01:04:51innovation innovation of technologies innovation of processes and the question is how do you finance
01:04:56innovation because of course uh financing innovation comes at a cost and you don't know what will work
01:05:03and so you will need to find a way to incentivize either companies uh or kind of private investors
01:05:12to invest in innovation i think that's a question that is more like road about how to finance innovation
01:05:19but for climate is something that is a little bit missing in a lot of the climate plan of government
01:05:25climate plan of yeah and and the discussion that we're seeing at a global level is how do we finance
01:05:32innovation and also innovation in developing economies as well you know um so that's something where the
01:05:38financing need to flow a little bit more into this um this yeah innovation and so more risky part
01:05:44and of course when you are in a context where interest rates are quite high and potentially high
01:05:49for longer well it's quite the cost of money is higher and it makes it more difficult to invest in
01:05:55in
01:05:55innovation or at least you need to take to take more risks um to take into account the more risks
01:06:01uh in
01:06:02your uh in your decision so uh so yeah so for me it's more yes there is the role of
01:06:07insurer and
01:06:08reinsurer and these need to be defined and we will need them if we want to also have a world
01:06:15that is
01:06:15insurable and there is a very quick question about how do we accelerate the financing of innovation
01:06:22and of of climate innovation and just one one thing to finish i think some companies are doing
01:06:27things that are quite interesting in order to foster innovation they are basically using a carbon price
01:06:33that is different for their activities for the investment so for the capex if they want efficiency
01:06:39they use 180 or 100 euro or dollar per ton but for innovation for innovative project in their r&d
01:06:48they use a cost of carbon about 200 or 300 dollar per ton which of course makes then a lot
01:06:54of technologies
01:06:55back in the merit order and quite interesting and kind of profitable at least in shadow numbers
01:07:01so i think this kind of thinking is quite important to have to consider innovation as a separate entity
01:07:06where you need more incentives than for normal climate climate capex thank you very much alex and
01:07:13thanks again to our viewers today for your questions should you have any um follow-up questions don't
01:07:18hesitate to get in touch with um a member of the country arm team and we'd be happy to to
01:07:25take
01:07:25discussions offline as well um i want to conclude though now and maybe by way of conclusion alix you
01:07:32could just give the audience maybe two or three keywords to keep top of mind when thinking about
01:07:38investing with consideration of climate risks going forward yeah um so allow me not to use word but
01:07:46sentences here i know we're a little bit uh we we are running out of time but uh the transition
01:07:53is
01:07:53not a matter of if it's a matter of how and when so the transition will happen it's just the
01:07:59form of
01:07:59the transition that will be different so we will talk more about climate climate will become more
01:08:04important not less despite all the kind of political discussion what we're having on the ground
01:08:09climate will become and economically more important not less the other notion that is very important
01:08:16is resilience and especially when we talk about adaptation is how do we have resilient economies
01:08:22how do we have resilient societies how do we have resilient companies as well what is important what i
01:08:27find interesting is that resilience is basically i don't know the exact definition but it's basically
01:08:32anticipating long-term risk and preparing to long-term risks this is what esg has been doing so esg is
01:08:38back
01:08:38you know there has been an easy backlash but actually resilience thinking long-term and anticipating long-term risks
01:08:45it's all what we've been doing about esg so let me have a hope that then the esg mindset and
01:08:50energy
01:08:50thinking comes back in this kind of resilience uh in this resilience uh uh question or notion and just
01:08:59yeah probably uh i will i will finish by um by just saying that yeah climate investment and we need
01:09:07to find
01:09:07what is very important and as i mentioned the question that we're having and if we want to stay
01:09:12credible in the climate investing investing phase we need to find a way to translate
01:09:19financial decarbonization into real world decarbonization and real world impact because
01:09:23ultimately our responsibility our responsibility is to finance the economy not to have nice numbers in
01:09:30all kind of spreadsheets and just say well we are decarbonizing our portfolios everything is fine
01:09:34is to find this translation it is very complex exercise but i think it is only if we do that
01:09:40that we can have a compelling case for climate investing we need climate investing to become
01:09:44to translate into real world decarbonization and to become real
01:09:49thank you very much alix very clear everyone we hope you found this esg talk useful if you want to
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01:10:13today
01:10:13have a great rest of your day bye bye thank you bye