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The financial system can play a major role in contributing to a transition towards a low-carbon, resilient and inclusive economy. However, for this to happen, three key deficiencies must be addressed: the misallocation of available capital for long-term development; externalities and systemic risk, including climate change; and environmental stress, notably natural disasters. Critical to aligning financial and capital markets will be measures within the financial system to green private finance through adjustments to key policies, regulations, standards and norms, and through market innovations.
In 2018, the Global Environment Facility (GEF) launched the GEF Aligning Finance Policies project to build international consensus to align financial systems with the UN Sustainable Development Goals (SDGs) and develop national regulatory actions. The project focuses on the development of national Sustainable Finance Roadmaps in six countries – China, India, Kazakhstan, Mexico, Mongolia and Nigeria – and building international consensus on best practices – from policies and regulations to standards and norms – to green the financial system.
This Green Forum discussion is for professionals to share their knowledge and experience on sustainable finance, particularly best practices to help align the financial system with sustainable development and climate change mitigation needs, as well as ways to incorporate sustainability factors into the rules that govern banking, insurance, institutional investment and capital markets.
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Created a Post in Sustainable Finance
Money Managers Pledge to Hit Net Zero. Now the Hard Part
In the past week, Macquarie Asset Management, the New York State Common Retirement Fund and a group of 30 fund management companies have come out with statements saying they’re serious about getting the world to net-zero emissions.
The announcements are welcome news, but now comes the hard part: How will all these investment firms and pension plans put their words into action, and how long will it take?
China takes the lead in development finance.
China has provided many developing countries the additional resources they had long sought from the West. If Chinese lenders align this funding with efforts to ensure financial and environmental sustainability, the world would stand a much better chance of achieving a green and inclusive recovery from the Covid-19 crisis.
Created a Post in Green Recovery from COVID-19, Sustainable Finance, Natural Capital
This report provides an update on the deployment of blended finance in LDCs and analyses its potential role in helping those countries recover from the COVID-19 crisis. It highlights the importance unlocking green finance, prioritising green and resilient recovery projects, and investing in green jobs. It also shares examples of blended green finance, including the Tropical Landscapes Finance Facility, Land Degradation Neutrality Fund, Global Fund for Coral Reefs, Althelia Sustainable Ocean Fund, Meloy Fund, Circulate Capital’s Ocean Fund, and more!
Created a Post in Sustainable Finance, Natural Capital
Missing metrics: climate vs nature Data on nature-related risks is more complicated than for climate
Just like its precursor did in the climate space, the emerging Taskforce on Nature-related Financial Disclosures (TNFD) has gathered significant mainstream finance sector interest. With a group of new members joining today - including the Brazilian development bank, BNDES, clothing giant H&M, and the world’s largest meat producer, JBS - the initiative’s Informal Working Group now totals 73 members, including over 40 financial institutions. But while the TNFD builds on the successful Task Force on Climate-related Financial Disclosures (TCFD), the new nature-focused Taskforce faces unique challenges: when it comes to data, metrics and methodologies, there are critical differences between climate and nature.
On the fifth anniversary of the TCFD, a call to action
Five years after its birth, the TCFD’s work is not done. More robust disclosure — both in quantity and quality — is needed. Investors cannot make apples-to-apples comparisons on sustainability information if companies do not report their data within a common framework. Companies that choose to solely provide TCFD-related information via standalone reports end up doing themselves a disservice for this reason.
Top three ESG themes for 2021
1. Build back greener: Valuing our natural ecosystems 2. Build back stronger: Narrowing the social divide 3. Build back inclusively: A focus on digital ethics
Created an Event in Sustainable Finance
On Wednesday (9 December), 37 financial companies, including some of Europe's biggest banks and asset managers, signed up to the Finance For Biodiversity pledge. Among them were ABN AMRO, Lombard Odier Investment Managers and Swedbank Robur.
They have pledged to set targets and report on the impact their investments have on biodiversity, in much the same that many shareholders are calling for data on carbon emissions.
Targets will be set by Convention on Biological Diversity (CBD), a United Nations group which is due to meet next year. Companies signed up to the pledge will then be forced to report on things like species extinction, habitat loss and water and land degradation that are affected by their work.
China Takes the Lead in Development Finance
According to new estimates, China now finances overseas development at nearly the same level as the World Bank. With countries currently struggling to combat COVID-19, protect the vulnerable, and mount a green and inclusive recovery, this significant increase in global development funding could potentially bring major benefits to the world economy.
But, like any huge influx of capital into the developing world, China’s financial assistance also poses large risks – especially regarding debt distress, biodiversity loss, and climate change.
Businesses Disclose More On Climate Despite Pandemic Hurdles
50% of global market capitalization, which equates to approximately 10,000 companies, reported data through the environmental not-for-profit charity, CDP’s global disclosure system in 2020. This is the highest number of environmental disclosures CDP has ever seen, with a 70% increase since 2015. The sectors with the most disclosures were manufacturing, apparel, and transportation services while the lowest response rates came from hospitality, fossil fuels, and biotech. No surprise there.