was started in 1989 by Shandi J Modi with the objective of conducting rigorous
and original research to help public and private sector participants deal with
the problems of managing risk and conducting appropriate policy in the foreign
exchange and bond markets.
soon established itself as an important part of the fabric of the capital
markets, influencing the daily risk-taking activities of the leading players in
these markets, as well as advising central banks on the conduct of monetary
policy, particularly in the management of market expectations.
and its advisors were involved in some of the most significant events in the
financial world in the 1990s, establishing a role as a bridge between the policy
community and the financial markets.
Alan Walters, who joined us as a principal advisor in 1991 was a consistent
proponent of the GBP abandonment of the ERM (exchange rate mechanism), and
played a key role in advising governments in emerging markets on appropriate
currency regimes. He also provided critical insights on subjects such as
With IDEA, which by then had a voice to the “mind of the market”, Sir
Alan’s views effectively gave confidence to financial markets to correct
the error of the ERM and other semi-fixed currency regimes, including the UK
in September of 1992 and Sweden in November of 1992.
Doctor Helmut Schlesinger, former president of the Bundesbank, joined the
IDEA Advisory Board in 1995. As is well known, Dr Schlesinger played a
pivotal role in the creation of the European Central Bank and oversaw the
monetary unification of Germany. Professor Schlesinger spoke at
several IDEA events and directed IDEA clients on why the ECB and the single
currency had to be formed. He also used the IDEA Advisory
platform to communicate with the financial markets the structure of and
inherent checks and balances leading to the creation of the single currency.
1996 IDEA held a seminar in Hong Kong on the subject of ‘Future Shock: How
Asian Central Banks should handle a financial crisis”. Among the
speakers were Professor Helmut Schlesinger, Joseph Yam, Governor of the HKMA
and Dr Zeti, the current governor of Bank Negara Malaysia. They highlighted
the existing core issues at the time and key risks to the Asian economy to
an audience of leading financial market participants.
Within ten months, the exact risks that the IDEA conference had highlighted
materialised and became what is now known as the Asian Financial Crisis of
1997. The essence of the valuable content from this IDEA event was was
distributed to IDEA clients worldwide, including policymakers, and helped
them deal more effectively with the costs and opportunities that arose from
Stern, William Buiter, Ng Kok Song and Professor Schlesinger along with
leading financial market participants, gathered at the Merchants Taylor’s
hall in London in 1999. During the conference, the speakers clarified
the thinking on some of the critical economic and market issues of the day:
a) William Buiter highlighted the ‘Bubble in the US equity market based on
the lack of earnings of many leading Internet companies’.
b) Nick Stern, who at that time was Chief Economist of the EBRD, correctly
forecast the economic success of Eastern Europe seen over the last five
c)The positive ‘underlying’ outlook for the Asian economies after the
1997/98 Asian crisis was bought back into perspective by Mr Ng Kok Song, MD
of Public Markets, GIC.
2006, IDEA decided to play a similar role to help the private and public sector
deal with the problems and opportunities arising from action on climate change,
arguably the most significant challenge of today. Shandi Modi wanted to
make a contribution by providing transparency and market standards for
institutional/private capital to play a leading role, as IDEA Group has done in
many other public and private areas before. The work of IDEACarbon is centred on
helping provide the critical and necessary tools to help the creation of a large
and successful alternative asset class.
Johnson (then Vice-President at the World Bank) a leading expert in the policy
world, having established, inter alia, the Carbon Finance Unit of the World
Bank, had a similar goal of harnessing the private sector effectively to play a
role. Ian joined IDEACarbon as Chairman in April 2006, from the World Bank, to
spearhead the effort in creating tools and transparency in an opaque
marketplace, and give confidence to the vast pool of institutional capital to
enter the space.
work since March 2006, has culminated in the creation of a rigorous ratings
service, which analyses any asset with carbon collateral; publishes in the
standard nomenclature of rating agencies and classifies each asset/instrument or
paper with a carbon asset that helps investors size up the inherent relative
risk of these assets.
hope and expect our ratings will play an integral part in the evolution of
this stage, with significant binding commitments behind us, the
carbon market is ready to take off. We all hope and believe the prospects
of a “new global deal” on carbon emissions are promising; this would of
course reinforce the tremendous growth push from the voluntary carbon market
triggered by the California decision in 2006.
it still needs sponsorship by leading players with a long-term commitment, and
IDEACarbon is focused on helping to bridge the intellectual gap, reduce
regulatory uncertainty, improve market standards and enhance risk analysis and
transparency. These market needs are increasingly recognised by both the private
sector and public sector policymakers.
the recent Globe G8 + 5 meeting in Berlin, the final communiqué, for example,
recognised the need for ratings of carbon assets.
industry figures as well as policymakers increasingly understand the need for
is also working with policymakers to change the investment landscape to allow
sizeable/scaleable investment. The IDEACarbon team has a close understanding of
the evolving policy framework and its ramifications.
Johnson is involved in pro bono work with various organisations
and politicians worldwide seek Nicholas Stern out for his insights, after
his groundbreaking report on the Economics of Climate Change.
Nick is here tonight as a guest.
Fankhauser has participated in the 1995/2001 and 2007 Intergovernmental
panel on Climate Change and has recently joined IDEACarbon from his position
as Deputy Chief Economist of the EBRD.
believes the case for serious involvement by private capital is compelling:
it’s an opportunity to achieve healthy investment grade returns in a market
un-correlated to stocks and bonds. We encourage leaders in the financial
community to help us all set the standards and build a real market thereby
making a tangible difference in reducing the risk of climate change, which
affects all of us, and our future.
can IDEACarbon offer?
IDEACarbon team bridges the gap between policy driven initiatives and market
analysis and understanding.
innovative Ratings approach can set market standards.
IDEACarbon portfolio advice and funds advisory service.
IDEACarbon strategic consultancy advice product for a forward looking
understanding of the evolving policy agenda, aimed at CEOs of leading
corporations and CIOs of leading financial institutions.