36th Round Table on Sustainable Development: Integrating Climate Change-related Factors in Institutional Investment

Delivered 08-02-2018 Paris, France

The Round Table on Sustainable Development has discussed many topics over the years. Tonight and tomorrow, we are discussing the integration of climate change by institutional investors.

What is the issue?

Today, investors, corporations and policy makers increasingly recognise the impacts of climate risks on portfolio performance and business activities.

Yet we are faced with a paradox: if investors acknowledge potential climate risks, why are the integration of climate change and mobilisation of finance delayed in the financial sector?

In his speech in September 2015, Bank of England Governor Mark Carney diagnosed the problem of the “tragedy of the horizon”. He deplored the costs we impose on future generations because of the short-term horizons of current decision-makers in government and business.

While the evidence shows that 81% of asset owners and 68% of asset managers view climate change as a material risk or opportunity across their entire portfolio[1], the degree and scope of integration of climate-related risks by institutional investors remains limited.

And according to a recent study, only 23% of the world’s top asset owners are taking tangible action to manage climate risks and opportunities.[2]

And on top of this, institutional investors manage up to 84 trillion US dollars in assets in OECD countries alone. But OECD data shows that only 1% of large pension fund assets are invested directly in infrastructure, and only a fraction is invested in low-carbon, climate-resilient infrastructure.[3]

So what can we do?

Mark Carney proposed a way forward to address this “tragedy of the horizon”: as chair of the FSB, and following a request by the G20, he established the industry-led Task Force on Climate-related Financial Disclosures to help investors and companies better evaluate and price climate risks.

This taskforce launched its recommendations to financial and non-financial organisations in June 2017. And they said that improving climate disclosure was one of the tools available to encourage more effective climate integration by institutional investors and companies.

The taskforce’s recommendations now need to be acted on by industry, including investors and corporations, as well as regulators.

Certainly, there is good news: the recommendations are gaining traction. As of December 2017, 237 companies with a combined market capitalisation of 6.3 trillion US dollars had publicly supported the taskforce, and it was also welcomed by France, Sweden and the UK.

But industry-led initiatives do not operate in a vacuum. We need more action from governments to encourage institutional investors to factor climate change in their investment decisions.

This is because progress could also be hindered by broader policy frameworks.

I want to commend the work of the EU High-Level Expert Group on Sustainable Finance, which released its final recommendations last week, under the leadership of Christian Thimann and the direction of the European Commission.

I am very pleased to welcome Olivier Guersent, Director General of DG FISMA who will deliver a keynote speech later tonight. Olivier, I know that the Commission is planning to launch an Action Plan on sustainable finance in March. I look forward to learning more about it during your speech.

What is the OECD doing?

The OECD is also deeply engaged on these issues.

For instance, we have been supporting, and will continue to support, the G20 Sustainable Finance Study Group, given OECD work and leadership on many of the issues. I believe that Michael Sheren, co-chair of the Study Group, is with us tonight, and I welcome him.

And in the run up to COP21, we prepared a report for the French presidency on “Investment governance and the integration of environmental, social and governance factors”, which identified the barriers to integrating these factors as a priority.

Our work on responsible business conduct and the MNE guidelines is also increasingly integrating the climate angle.

For example, the Guidelines are equipped with a unique grievance mechanism, the National Contact Points, and I’m pleased to hear that the first climate change-related case was brought to an NCP in November 2017. So it is working.

Our Centre on Green Finance and Investment, will be undertaking further work on institutional investment and climate integration.

Working with institutional investors, we will review and assess emerging practices and practical challenges for asset owners and asset managers. This will be in the context of integrating climate change in investment decisions, with support from SWEN Capital Partners.

The OECD will also work to  support regulators in considering climate integration by the financial sector, and of course, the approaches taken will need to be adapted to national circumstances.

And on top of all this, we’re ready to do more! The OECD could undertake future work to assess the role of policy makers to promote climate disclosures and the role of policy. We could also consider options to further incorporate climate change in relevant OECD instruments and standards, and the need for additional instruments.

As tonight’s dinner illustrates, the OECD can provide a neutral platform to engage stakeholders, including institutional investors, policy makers and civil society.

The OECD can also provide the analytical capabilities to inform discussions on the way forward.

Ladies and gentlemen, let me congratulate Connie Hedegaard for chairing this Round Table, and thank Laurence Tubiana for her precious support through the European Climate Foundation, which is sponsoring tonight’s dinner and tomorrow’s round table.

This Round Table is an occasion for all of us to share our thoughts, freely and frankly, so I encourage you to speak up during the discussions.

May I wish you a nice dinner, and productive deliberations.

Thank you.

[1] Mercer (2013), “Global Investor Survey on Climate Change: 3rd Annual Report on Actions and Progress”, http://www.iigcc.org/files/publication-files/2013_Global_Investor_Survey_Report_Final.pdf

[2] AODP (2017), “Global Climate Index 2017”, http://aodproject.net/wp-content/uploads/2017/04/AODP-GLOBAL-INDEX-REPORT-2017_FINAL_VIEW.pdf.

[3] OECD Global Pension Statistics, Global Insurance Statistics and Institutional Investors databases, and OECD staff estimates.

Global Forum for Development Migration: Myth vs. Reality

Delivered 03-02-2018 Montreal, Canada

The subject of this conference is very timely, and I can see why you have chosen it. Migration is an issue that pervades the politics of today. It is an often controversial issue, but frankly, it is one of the oldest issues of our world. Humans have always migrated in search of better lives elsewhere.

But today that fact has become wrapped up with a general sense of dissatisfaction in society, and migration is often used as a scapegoat or as an excuse for some other malaise.

And this is often reflected in the media, which has an exceptionally powerful influence over people’s politics and their views.

This is what I would like to speak to you about today.

When looking at recent election outcomes or reading the paper, one can get the impression that international migration is not well managed – or even “out of control” – and that rising migration is a challenge to the social contract in many countries.

We’ve seen this particularly in the media in many OECD countries, and it has had a knock-on effect at the ballot box.

It is easy to forget the many positive contributions that immigrants make to our societies. Indeed, throughout history, progress, innovation and economic and social development has occurred with the arrival of new ideas through trade and through migration.

You can make a generalisation that the most progressive societies are often those that are the most diverse and most open to others.

Indeed, this is the trend of globalisation and economic development: OECD countries are becoming more diverse.

One in ten people living today in OECD countries is foreign-born; among youth, more than one in five has immigrated or is native-born with immigrant parents. These shares have been rising virtually everywhere.

And yet recent developments have challenged migration policy in the current context. International migration through legal channels to OECD countries has never been higher.

Clearly, the Syrian crisis has been a migration of epic proportions, and the uprooting of so many lives has been traumatic and tragic. It has stretched the reception and processing capacity of several European countries and has highlighted the need for more coordination between them.

It has led to politically charged responses, which has been reflected in the media.

The backlash against what is perceived to be large swathes of people coming into countries has been palpable.

But it’s important to understand the different points of view.

Experts and analysts that dismiss the fear of migrants can easily lose legitimacy and make it harder to bring the policy debate back to facts and evidence.


So what is the reality of immigration in OECD countries?

As I said, people have always moved across communities, states and continents. Over the past decades, migration flows have increased and will likely increase further given large demographic and economic imbalances. In 2015, about 244 million people were living outside their country of birth, of which half were living in OECD countries.

Between 2000 and 2015 about 3 million migrants came to OECD countries every year.

In 2016, permanent migration towards OECD countries reached the highest absolute levels in forty years: 5 million people!

These figures on legal flows have generally received less attention than the mass inflows of asylum seekers.

In 2015 and the first half of 2016, a total of 3.3 million asylum applications were registered in OECD countries, the highest number since World War Two. 2.6 million came to Europe, and close to 1.5 million have been granted protection.

Other OECD countries have also provided shelter to people fleeing conflict. Canada, for example, has admitted almost one hundred thousand refugees through its resettlement programmes in the last three years.

Indeed just last week Minister Hussen, the first Somali-Canadian member of the Canadian Cabinet, gave a speech at the OECD’s International Diversity Forum and discussed Canada’s plan to welcome even more migrants by expanding programmes that are currently in place, saying “we will be open to people!”.

These numbers seem large, but should be put in perspective: new migrants settling in OECD countries represent less than 0.5% of their total population. Syria’s neighbours remain the largest refugee-receiving countries; Turkey alone provides temporary protection to about 3.3 million Syrians.

In OECD countries, humanitarian migrants still represent only a fraction of total migration flows.

The vast majority of the migrants who come to the OECD are people who come to work, study or reunite with their families.

Free movement and family migration each accounted for one third of all permanent migrant flows in the past years. And there are about 3 million international students in OECD countries.


The integration of some immigrants, especially refugees, represents a particular challenge for destination countries. But the main message here is, immigrants do not usually have a negative impact on the economy.

Of course, immigrants that have recently arrived are unlikely to have the same labour market outcomes as those who are native-born. Outcomes improve over time as immigrants become more familiar with the host-country’s society, learn the language and acquire country-specific social capital.

For example, an assessment made by the Canadian government of early outcomes of Syrian refugees that arrived in late 2015/early 2016 showed that their initial labour market participation was very low, especially among those with lower education and lacking language proficiency.

So to help refugees achieve their full integration potential, government integration services must be wholly comprehensive and help from private sponsors is also critical.

Despite challenges, immigrants play an important role in the labour market of destination countries. Between 2005 and 2015, for example, new migrants accounted for about 20% of labour market entries into strongly growing occupations in both the US and Europe.

These notably include health care and STEM occupations.

Immigrants also represented about a third of entries into the most strongly declining occupations in Europe.

These days, migrants are frequently the people in our homes taking care of our children or elderly parents.

And importantly – contrary to a lot of what is spread in the media – it is a simple fact that, as the OECD’s International Migration Outlook has shown, in almost all OECD countries, migrants contribute more in taxes and social contributions than they receive in benefits.


There is a striking disconnect between empirical evidence and perceptions about immigration. The evidence is clear: migrants do not come here to steal our jobs or to take advantage of the welfare state. Migration – and the economy – is not a zero sum game.

But this is not what people believe.

A recent survey[1] showed that in many European countries more people believe immigration is bad for the economy than the opposite. And, although about a quarter of respondents think that immigration is neither good nor bad for the economy, those who hold extremely negative beliefs are more numerous than those who hold very positive views.

So why do we see such a disconnect between empirical evidence on the impact of immigration and public perception?

One possible explanation is the widespread knowledge gap on the relative magnitude of migration. Overall, opinion polls reveal that people typically overestimate the share of migrants in the population, sometimes by a factor of two or more.

Another possible explanation is that the impact of migration on certain local communities – especially disadvantaged urban areas with high concentration of vulnerable migrants – weighs heavily on the general public perception of migration. The nation-wide impact is not factored in.

And of course there is the fact that many have suffered since the financial crisis, with growing inequalities comes greater dissatisfaction. Many of those that are disadvantaged might feel resentful or threatened by new people arriving, and see them as a burden on a society that is already struggling to cope with inequalities.

But we should also look at what kind of information is available to the public on migration policies.

Migration policies are complex. And given it is such a complex issue, migration can be easily misrepresented by the media.

For example, when looking at how migration is represented in the media of different countries, it’s easy to see how the national psyche is reflected and / or influenced.

Research by UNHCR shows that the tone and content of reporting on migration varies from country to country[2].

For example, French media are more likely to report on social and cultural issues, the US media on economic concerns[3], Australian coverage is negative, and the British press are more likely to frame refugees as potential threats to culture, welfare, security and the health system than any other country in Europe[4].

Compare this to coverage of refugees and migrants in Sweden and Germany, which is more positive.

It’s easy to see a general correlation between media representation, national mood and the direction of national politics.

In some cases, the media – especially in the UK – has dehumanised migrants, or used loaded language, such as “floods” or “invasions” of migrants[5].

And I’m afraid to say that research shows that there is an ethnic or islamophobia dimension to this. Data shows that people in Europe associate migration from predominantly Muslim countries as a security threat.

Chatham House analysis found that 55% of people agreed that migration from mainly Muslim countries should be stopped.[6]

More generally, a 2016 survey by the Pew Research Center, found that most respondents in Poland, Greece, Hungary, Italy and the UK thought that refugees posed a major threat to their country[7].

And there is of course the role of social media, which has been documented as producing an “echo chamber effect”.

A study on the use of Facebook has shown that users tended to promote their favourite narratives, form polarised groups and resist information that doesn’t conform to their beliefs.[8] Confirmation bias accounted for users’ decisions to share certain content, creating informational cascades within their communities.

Alarmingly, when deliberately false information was introduced into these echo chambers, it was absorbed and viewed as credible as long as it conformed with the primary narrative. So you can see how a person’s perception of migration, for instance, could be reinforced or heavily influenced by others with the same beliefs.

Discussion of migration can become very polarised, with little room for rational discussion.

This picture was used widely by the anti-European UK Independence Party in the run up to the UK’s referendum on Brexit, in June 2016. It is a picture taken at the Croatia-Slovenia border in October 2015. It was an exceptionally controversial photo.

It’s clear that migration became a big factor in the Brexit referendum, despite the many other – some would say more relevant – factors in the debate, such as economic and security matters.

And I recall after the vote on Brexit, there was a lot of talk about it being the areas with the lowest amounts of immigration that had mostly voted to leave the EU.

However, on closer inspection, this doesn’t appear to be the full picture.

It appears there is a correlation between areas with the highest levels of immigration—notably London—and those areas most likely to vote to Remain, which chart 1 above, shows.

But what chart 2 shows, is that when you consider the percentage-change in migrant numbers, rather than the total headcount, the opposite pattern emerges.

Where foreign-born populations increased by more than 200% between 2001 and 2014, a Leave vote followed in 94% of cases.[9]

So it seems that it wasn’t high levels of immigration that worried people, but high rates of change, which can be linked to the perception issue.

For all the stakeholders involved, improving the quality of public information on migration and having a balanced debate is costly.

There is a political (and financial) cost for governments to engage in communication campaigns to explain the objectives of their policies and to evaluate them.

There is an opportunity cost for the media, especially in high competition environments, to try and provide an accurate and nuanced perspective, rather than going with attention-grabbing headlines.

And finally there is a time cost for the public to get access to more detailed or more balanced sources of information.


So what can be done? International migration is a sensitive issue in many countries, in part because it touches upon the very notion of the nation state.

Changes in the rules regarding who can enter or stay legally, can obtain citizenship or can vote, have implications for the composition of the host-country society and its institutions.

We need to start rebuilding trust in migration policies and institutions, in part by better enforcing existing laws and by tackling the challenges of irregular migration and illegal employment of migrants.

Scepticism about immigrants’ willingness to integrate into a host society is another challenge.

But indicators like the ones collected by the OECD in the publication Settling In provide information on the integration outcomes of migrants who arrived in past, which can help inform this debate.

Education has a big role to play of course, in encouraging intercultural sensitivity and respect.

Students could engage in experiences that allow an appreciation for diverse peoples, languages and cultures. By learning to appreciate the differences in the communities to which they belong – the neighbourhood, the school – young people can learn to live together as global citizens, and to appreciate diversity, which is so crucial to our success as a global community.

Promoting tolerance through education can be achieved by mainstreaming the principle of respect for human dignity and for cultural diversity across all subjects. The OECD is now testing these intercultural skills through our new Global Competence Framework, which is part of our Programme of International Student Assessments, or PISA.

There is a broad range of public policy tools that can be used to promote diversity, ranging from awareness campaigns, to anti-discrimination legislation, to quotas and active labour market policies. At the OECD, we are currently assessing which policies work best for which groups and why.

Another key challenge is to maintain the ability to respond to migration shocks.

To visibly remain in control of the situation and of its aftermaths, public policies must be able to adapt quickly.

Leadership and effective policy communication are also critical. When political leaders try to avoid the public debate on migration, extremists views have room to prosper.

And of course, it’s important to address the latent belief that others coming in hampers the opportunities of those already there – this means addressing inequalities.


Overly rosy approaches to migration issues are counterproductive and satisfy only those who are already convinced of the benefits of migration.

Acknowledging the challenges of migration and integration is a precondition for any effective communication strategy.

Countering extremist views on migration requires that each of us – politicians, journalists and citizens – take a hard look at the facts.

It is only once we disentangle myths from reality can we have an informed public debate on this critical issue.

Thank you

[1] European Social Survey

[2] UNHCR, 2015; Crawley et al., 2016

[3] Benson and Saguy, 2005

[4] Berry et al., 2015; Crawley and McMahon, 2016; Doherty, 2015; UNHCR, 2015

[5] Allen and Blinder, 2013),

[6] A 2016 Chatham House survey of 10,000 people in ten European states found that 55% agreed with the statement that ‘all further migration from mainly Muslim countries should be stopped’, with particularly strong support for this sentiment in Austria, Poland, Hungary, France and Belgium (Goodwin et al., 2017).

[7] Wike et al., 2016

[8] Echo Chambers on Facebook, Quattrociocchi, Scala and Sunstein, June 2016

[9] The Economist, data taken from the Office for National Statistics

Preventing Ageing Unequally

Delivered 25-01-2018 Ljubiljana, Slovenia

Ministers, ladies and gentlemen,

[..] I am particularly happy to open this conference on the topic of equal ageing. This is an issue that is central to the OECD’s Inclusive Growth Initiative, as supporting governments around the world to address inequalities along the life course is one of our key objectives.

The OECD analysis

The OECD’s recent report, Preventing Ageing Unequally, presents shocking evidence on how early the foundations for inequalities in health, education, employment are laid – and how damaging they can be. Because the truth is that inequalities accumulate and compound over the life cycle, leading to deeply entrenched divisions by the time people reach the age of 50. The Economist magazine summed this up very nicely when reporting on our findings, by saying that “all men are created equal, but they do not stay that way for long.”[1]

Our findings show that disadvantage begins in early childhood. Children aged between 11 and 15 years from poorer families are 7 percent more likely to report poor health than those from affluent families (18 percent compared to 11 percent) and show a rate of being overweight that, at 22 percent is 1.5 times the level among children from richer families[2].

Child poverty can damage brain development and reduce learning outcomes later on in life; so children from poorer families often have a harder time at school, are in worse health and thus more often find it difficult to make a smooth transition from school to work.

Whereas children who are healthy and living in a safe and nurturing environment perform better in school, reach higher degrees and have better chances of succeeding later on in the labour market.

At all ages, people in bad health work less and earn less when they have a job. For low-educated men, bad health reduces life-time earnings by one third; high-educated men, by contrast lose less when they are in bad health: only 17 percent, thus reinforcing inequality; women also lose, but the effects are smaller.

These differences feed through into retirement.

Those of us with a good education and skills, in a well-paying job with good working conditions, have a higher chance of a more pleasant life in retirement.

But this is not the case for those whose education wasn’t as good, or who had long spells of unemployment, worked part-time and were paid little, or those who had physically demanding jobs, as people are more likely to be in bad health, and therefore earn less on which to retire.

And younger people are finding working lives increasingly difficult compared to their parents’ and grandparents’ generations.

Baby boomers, i.e. those born after World War II and until the early 1960s, benefited from a period of sustained economic growth, major health and social improvements, and growing employment rates. But today, a “job for life” and even a “career for life” are rare commodities for people starting out.

Non-standard work arrangements are becoming more frequent. Between the mid-1990s and the mid-2010s, more than half of all jobs created in OECD countries were in part-time and temporary work or in self-employment.

Low-skilled temporary workers, in particular, have much lower and instable earnings than permanent workers.

So “Generation X”, the people now aged 35-50, can no longer assume to be richer in old age than their parents. And the “Millennial Generation” has been particularly hard hit by the financial crisis and its aftermath, reducing their prospects for stable careers

The situation is more unequal when it comes to wealth. In 2014, the bottom 40 percent owned only 2 percent of total household wealth[3]. By contrast, the top 10 percent controlled half of all total household wealth and the wealthiest 1 percent owned 18 percent, which means that the money people make on their investments is even more concentrated than other forms of earnings.

This, of course, will affect what people have to live on in retirement.

In OECD countries in the 1980s, those aged between 66 and 75 were 25 percent more likely to be poor than the population average; but 30 years later, the pattern has turned around and the same age group is 20 percent less likely to be poor than the average. So across generations, there has been a shift in the risk of poverty with the younger groups nowadays being more likely to be poor.

Poorer people are not only less healthy but they also die younger than rich people.

Many of the future elderly may move into older ages with disabilities, in bad health, and a limited ability to keep working and contributing to society. On average across the 15 OECD countries for which we have data, the gap in life expectancy between 25-year-old people with low and high educational levels is about 8 years among men and 4 years among women.

This is truly shocking!

Looking at the situation of Slovenia, we find that inequality among people over 65 is lower than the OECD average.

However, vulnerabilities increase with age: while Slovenia’s poverty rate among the 66-75 age group is in line with the OECD average, it is substantially higher for those older than 75. More than one in three individuals older than 80 and living alone were below the (relative) poverty line in Slovenia in 2014. And as women live longer than men, it is very often female retirees that are affected by poverty, adding to gender inequalities during the working life.

The policy solutions

So what do we do about it? It’s clear that to prevent ageing unequally, we need swift and decisive policy action. The OECD’s Action Plan for Equal Ageing identifies three sets of policy packages that should be adopted.

First, policies to prevent inequalities as early as possible, such as starting social protection measures at early ages, especially for children from disadvantaged backgrounds; improving low performing disadvantaged schools; breaking gender stereotyping early; and designing effective labour market policies to connect those that are not in employment, education or training) with jobs.

Second, policies are needed to mitigate entrenched inequalities along the working life.

So for example, promoting healthy ageing through equal access to health care and having a patient-centred approach; strengthening policies to assist displaced workers through job-search assistance; and improving access to lifelong learning, especially for the low skilled and including older workers; and removing barriers to retain and hire older workers.

Third, we need policies to cope with inequalities that persist in old age, for example, increasing pension coverage, especially for the self-employed and those with non-standard employment, reducing inequalities in long-term care by making home care affordable, and ensuring adequate levels of retirement income through a combination of old-age safety nets, mandatory pensions, annuities in private schemes and pension credits.

These policy packages need to be designed in a comprehensive and cross-cutting manner. We need the Ministries of Education, Health, Labour and Social Affairs to work together closely and coordinate their measures to pick problems up early. This will create synergies and ultimately save costs.

Trying to solve the problems once people retire will be too late, too difficult and too expensive!

I am delighted that we will be discussing the policy challenges in each of the 4 conference sessions with Ministers and high-level officials from all of these Ministries, but also with the social partners and researchers, sharing good practices and learning from each other’s experiences.

I very much look forward to this exchange and want to assure you that the OECD stands ready to support you in making sure that all of our societies age equally.

Thank you.

[1] The Economist, edition Oct 28th-Nov 3rd, 2017, page 68

[2] (Inchley et al., 2016)

[3] In the 26 OECD countries with comparable data