reason is that many of them have a fiduciary duty towards their clients, and have not yet asked, let alone received, a mandate to sacrifice returns for sustainability, should this become necessary. an investor trusting her savings to a fund manager, or an insurance company, has probably been attracted by the win - win narrative emerging from the data thus far ( sustainable investing is good for the planet as well as for the investor ’ s wallet ), but might well change her investment choices if conditions changed. in that case, the intermediary would have to follow its client ’ s guidelines. furthermore, whereas many investors express a demand for sustainable assets, others do not ; intermediaries featuring both investor types among their clients can hardly make pledges on behalf of the latter. in sum, net zero pledges by financial intermediaries should be more appropriately viewed as conditional commitments, as they could be incompatible with a sacrifice in terms of return which might at some stage materialize and which the intermediary ’ s shareholders, or its clients, might be unwilling to accept. unless this issue is addressed, the net zero pledge framework set up by the financial industry in recent years might be at risk of unraveling, if and when difficulties materialize. some recent developments give food for thought. 11 second, there are reasons to doubt that investors would be willing to prioritize sustainability at the expense of profitability. even if some were, recent theoretical analyses suggest that their efforts could be undermined by opportunistic investors focused solely on the risk - return paradigm, who would invest in companies not interested in sustainability standards. there is therefore a risk of “ carbon leakage ” : responsible investors would give up their returns to the benefit of other investors, with limited effects in terms of progress on the climate front ; 12 this might be yet another instance of the “ waterbed effect ” which mars economic policies in many areas. 4. conclusions a strategy to promote an orderly transition of the economic system towards the paris goals should be multi - pronged. for instance, some large us banks that are members of the gfanz are reconsidering their decarbonization targets, due to concerns about litigation risk. vanguard group has recently announced the intention to pull out of net zero asset managers initiative ( part of gfanz ), explaining it wants to demonstrate independence and clarify its views for investors. following a series of controversies over its sustainability stance, blackrock has announced plans to allow

karnit flug : the state of the israeli economy and challenges ahead main points of a speech by dr karnit flug, governor of the bank of israel, at the “ calcalist ” capital markets conference, tel aviv, 19 november 2013. * * * i will begin by presenting the state of the israeli economy and the challenges we face in the short term, and will then provide a brief discussion of the long - term challenges as well. the israeli market, as we know, is heavily influenced by the global environment. we are in an environment of global economic moderation, with a very moderate recovery in the advanced economies, and expectations are that this process will continue in the coming year. with that, the emerging economies are in a slowdown, and the expectation is that growth will continue to be relatively moderate for these countries. global trade, whose influence on the israeli economy is very large, is growing at a very moderate pace, and despite the fact that we expect its growth to accelerate in the coming year, it will still be relatively moderate. inflation in the vast majority of advanced economies is low, and with this background, we are witnessing extremely low interest rates and very intensive monetary accommodation in the major markets. growth in the israeli market is higher than in the other advanced economies over the past few years, including during the crisis, however it is closely correlated to them. the data published for the third quarter point to moderate growth of 2. 2 percent. this is a disappointing figure, and the main factor pulling growth downwards is exports, while consumption is what is currently pulling forward. on the assumption that world economic growth recovers as expected, we expect continued growth of 3. 4 percent in 2014, but it is important to mention that excluding the effects of natural gas production, lower growth is expected, and since natural gas production does not make a significant contribution in the short term to growth in employment, we expect growth in unemployment in the coming year. an overall view of the labor market shows that it is strong, as reflected in continued growth in the employment rate, and continued decline in the unemployment rate to such low levels that we have not seen in many years. this is the aggregate picture, and it is certainly a good picture. at the same time, if we look a little closer, we see a picture that is somewhat less rosy : an assessment of the composition of the labor market shows that growth in the number of employed persons is concentrated in the public services,