While most sovereign entities have committed to greening their economies and investment under the United Nations Framework Convention on Climate Change (UNFCCC), several of them are also bound by obligations contracted under the Energy Charter Treaty (ECT), which protects investors in renewables and fossil fuel alike. Arguably, such a situation triggers a ‘regulatory clash’ that has the potential to impede the implementation of net zero carbon policies, such as the European Green Deal. This contribution contextualises the ECT within the framework of the UNFCCC and scopes the potential conflict between such regulatory regimes. Particularly, in light of the so-called ‘sunset’ clause, the contribution concludes that a suitable avenue to resolve the clash is establishing a preferential track for investment in clean energy under the ECT. On this basis, fundamental solutions are envisaged for greening investment, by applying model de lege ferenda proposals for a substantive and procedural modernisation of the ECT.

Companies are advocating in favor of Paris-aligned climate policies and the majority of companies are not holding their trade associations accountable for their lobbying on climate policy. This is contrary to the fact that many companies have the correct risk management and governance systems in place to manage economic threats from climate change. Following Ceres’s theory of change, the impetus for the project was to engage in an action that would result in short-, medium-term outcomes, and ultimately resulting in a long-term impact. For the responsible policy engagement project, Ceres took action to identify the misalignment between what corporations state they are doing on climate change, and whether their policy actions represent those statements, in hopes to influence companies to better align their lobbying practices in the short term. In the medium term, the goal is more ambition climate policy adoption across the United States, thus impacting the long-term goals of overall emissions reduction.

This chapter considers the South African shareholder stewardship code, the Code for Responsible Investing in South Africa (‘CRISA’). CRISA sets a strong agenda for the promotion of sustainability considerations in the investment analysis and investment decisions of institutional shareholders. The principles of CRISA are mostly accepted by both asset owners and asset managers side. However, disclosure on compliance with CRISA principles has been weak. Adoption of CRISA is supported by the South African corporate governance code, the King IV Report on Corporate Governance for South Africa 2016 (King IV). Principle 17 of King IV expects that the governing bodies of institutional investors will ensure responsible investment to promote good governance and value creation. The responsible investment framework for institutional investors is further supported by hard law in the form of regulation 28 of the Pension Funds Act 25 of 1956, which promotes the responsible investing of pension fund assets. The South African Financial Sector Conduct Authority has published a guidance notice to further guide boards in ensuring the sustainability of investments and assets. The chapter ends with recommendations for the improvement of CRISA and argues that the supervision of stewardship could improve if overseen by the Financial Sector Conduct Authority.

Far from their image as a boring technical tool of the financial world, indexes are becoming a critical lever for investors to raise market-wide standards and to catalyse sustainable corporate business models. Investors can choose from a wide spectrum of benchmarks to suit their precise needs. The rise of benchmarks and passive investments, then ‘smart beta’ and now the emergence of ‘smart sustainability’ has been a global phenomenon, and the stage is now set for their powerful application in active ownership strategies.

Mobilising capital for a sustainable economy requires action on two fronts. Current capital allocation must be shifted from an unsustainable pathway to a sustainable one and the investment gap must be filled to ensure that sustainable economy objectives are achieved; this includes fulfilment of the Paris Agreement on Climate Change and the UN Sustainable Development Goals. This chapter focuses on the latter issue: filling the investment gap. Primarily, it focuses on the example of tackling the climate change challenge, although these ideas can be applied to the wider environmental and social agendas too. It discusses how to: understand and articulate investment needs; adapt market arrangements using policy to encourage investment; improve the efficacy with which public finance crowds in private finance; and ensure impact through positive real economy outcomes. Throughout the chapter, real-world examples of the 'policy prescriptions' are offered to turn theory into practice.