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UNEP Finance Initiativeinnovative financing for sustainability

Issue 75, February 2010http://www.unepfi.org/ebulletin

Inside this issue

UNEPFI 2009 Roundtable

"Some 85 per cent of the financial resources needed to cope with climate challenges must come from private sources. In effect, the battle over climate change will be won - or lost – in the hands of private investors."
- Bjarne Graven Larsen, CIO of ATP, Denmark's largest institutional investor

UNEP FI February Thoughts

Paul Clemen-Hunt, Head of UNEP FI, writes: As the dust settles after Copenhagen, the financial services and investment community have undertaken an intense "what's next" on climate change during January and February. A UNEP Finance Initiative joint webinar with the Principles for Responsible Investment (PRI) in mid-January saw 100 plus global participants dissecting the aftermath of the UN climate summit in the Danish capital in order to make sense of a global policy process that did not deliver the legally binding deal many financiers and investors had hoped for. There is a sense that despite the immediate set back in the global policy process and the uncertainty going forward, the economic rationale for the shift to a low-carbon, smart energy, resource efficient future remains compelling. The level of activity in the market place around new funds-despite a tough fund raising environment-for assets such as responsible property, coupled with the enthusiasm for thematic funds around timber, water and natural resources, would confirm this.

UNEP FI's efforts to craft the Finance Chapter of UNEP's Green Economy Report (GER) continue apace with inputs covering banking, insurance and investment received from executives across the globe. The GER is part of UNEP's Green Economy Initiative and will be launched later in a busy 2010 which will also see the publication of the much awaited report, The Economics of Ecosystems and Biodiversity, or the TEEB as it is commonly known. When launched, the TEEB is expected to do for ecosystems and biodiversity what the Stern Report did for climate change, namely quantify emerging risks and opportunities.

Highlight

Financing the battle against climate change – scaling up private sector investment through public mechanisms:

Copenhagen, 11 December 2009: A well-attended side event to COP-15, co-convened by UNEP FI and the Institutional Investors Group on Climate Change (IIGCC), examined one of the most repeated phrases in the climate change debate – the UNFCCC estimation that around 85 per cent of funds needed to mitigate and adapt to climate change would have to come from private sources. The event was designed to redress the balance at a conference that appeared to focus entirely on the remaining 15 per cent of public sector money.

Many important questions were addressed including: How can private finance, particularly the largest institutional investors, be better embedded in an international climate change regime in order to mobilize the billions needed for activities and projects such as windparks, energy-efficient buildings and retrofits, reforestation, efficient public transport, or “climate proof” infrastructure? What should be the role, scope and design of carbon markets to incentivize low-carbon investment, particularly in developing countries? What is needed beyond carbon markets? What are the advantages and disadvantages of private money compared to public money?

The main points that arose from the panel discussion were:

  • 2009 had already seen unprecedented and pro-active initiatives from investor and finance communities aimed at identifying the private sector's roles, responsibilities and needs in a future international climate change regime. One output of this activity was the “2009 Investor Statement on the Urgent Need for an International Agreement on Climate Change” which said that first and foremost, investors needed the long-term certainty that can only be delivered by a legally-binding global agreement with specific emission reduction targets.
    http://www.unepfi.org/fileadmin/documents/need_agreement.pdf
  • A call was made to government negotiators to consider, in a less ideological and political manner, the potentials of private money to fund climate change activities relative to government funds. The meeting suggested that negotiators should stop focusing exclusively on the public money and consider both sources of funds.
  • Carbon markets, created by flexible mechanisms, are essential in mobilizing private funding, particularly in developing countries. Additional incentives, such as risk transfer instruments, should be deployed to boost the mobilization of private finance beyond the boundaries of the carbon markets.

The panel comprised:

James Cameron, Vice Chairman and Executive Director, Climate Change Capital Rob Lake, Head of Sustainability, APG Asset Management Nick Robins, Head of Climate Change Centre, HSBC Bank plc UK

Raekwon Chung, Climate Change Ambassador, Republic of Korea Karsten Sach, Head of the German Delegation to the UNFCCC Fernando Tudela, Mexican Vice-Minister for Environmental Policy and Planning

A video of extracts from the side event can be viewed under: http://www.climatetalks.tv/ClimateTalks/Preview.aspx?assetId=BPCZZk7k2KI%3d&SiteId=9RPAyiQZjEs%3d&locale=en-GB

Post-Copenhagen, the world’s largest investors urge prompt action on climate change policies

New York, 14.Jan 2010: The world’s largest investors have released a statement calling on the U.S. and other governments to quickly adopt strong national climate policies that will establish a stable investment climate and thus spur low-carbon investments to reduce emissions causing climate change.

The “Investor Statement on Catalyzing Investment in a Low-Carbon Economy”, which calls for “rapid action” on carbon emission limits, energy efficiency, renewable energy, financing mechanisms and other policies was coordinated and published by four investor networks - the European Institutional Investor Group on Climate Change (IIGCC), the North American Investor Network on Climate Risk (INCR), the Australian/New Zealand Investor Group on Climate Change (IGCC) and UNEP FI.

It builds on the first “Investor Statement on the Urgent Need for a Global Agreement on Climate Change” launched in September 2009 and responds to the fact that most of the demands of the 2009 Statement remained unmet by the outcomes of COP-15 in Copenhagen. The 2010 Statement focuses on what governments can do now, especially at the level of domestic policies, to support investors in moving towards low-carbon and sustainable economies.

Full Statement:
http://www.unepfi.org/fileadmin/documents/14jan_investor_statement.pdf
Press release:
http://www.unepfi.org/fileadmin/documents/14jan_investor_statement_pressrelease.pdf

UNEP FI Sustainability Beat

UNEP FI welcomes three new signatories

Corporación Financiera de Desarrollo S.A.(COFIDE)

COFIDE – a mixed ownership corporation in which capital stock is held by the Peruvian State (98.70 per cent) and the Andean Development Corporation – CAF- (1.30 per cent) – was created in 1971. Since 1992 it has been acting as a second tier bank. COFIDE has also become the Peruvian Development Bank by fostering investment in infrastructure projects and promoting the active inclusion of micro, small and medium-sized enterprises in the financial market. COFIDE also acts as trust entity by managing different trusts and funds and is rated “A” by top local rating agencies.

As a multi-sectorial bank, COFIDE specializes in the financing of productive investment and infrastructure projects, the small and medium enterprise (MYPE) sector and sustainable development projects.

COFIDE aims to become a leader in sustainable development financing and is developing strategic alliances with different local and overseas institutions, in order to assure the success of a new product called the “Green Projects Financing Programme”, designed to finance renewable energy projects , programmes for natural gas conversion, rainforest preservation, solid waste recycling, wastewater treatment, among others.

For further information, please visit: http://www.cofide.com.pe/

Ecobank Transnational Incorporated

ETI, a public limited liability company, was established as a bank holding company in 1985 under a private sector initiative spearheaded by the Federation of West African Chambers of Commerce and Industry with the support of ECOWAS. It was incorporated with an authorised capital of US$100 million. The initial paid up capital of ETI of US$32 million was raised from over 1,500 individuals and institutions from West African countries.

ETI has two specialized subsidiaries:

  • Ecobank Development Corporation (EDC): develops Ecobank’s investment banking and advisory businesses throughout the countries where it operates. EDC operates brokerage houses on all three stock exchanges in West Africa and is licensed to operate on the two stock exchanges in Central Africa: the Douala Stock Exchange in Cameroon and the Libreville Exchange in Gabon.
  • eProcess International (eProcess): manages the Group’s information technology with a view to ultimately centralizing the middle and back office operations to improve efficiency, service standards and reduce costs.

For further information, please visit: http://www.ecobank.com/default.aspx

Samsung Fire & Marine Insurance

SF&MI is the biggest non-life insurance company in Korea, boasting total assets of US$21,694 million as of November 2009 and a solvency ratio of 422.2 per cent (as of September 2009). It is the leading domestic non-life insurance company in terms of size, financial structure, and management and has offices in USA, Europe, and Asian countries such as China, Indonesia, Japan, and Vietnam.

In 2008, SF&MI launched its green bicycle insurance. It is the first bicycle insurance that provides personal and third party liability protection against the costs of damage or injury to other people or vehicles in Korea. SF&MI is also helping conserve nature with pollution liability insurance which not only provides financial protection for damages caused by pollution incidents, but also prevents their spread and facilitates the clean-up of the environmental hazards.

For further information, please visit: http://ir.samsungfire.com/ir_index.jsp

What our Signatories are Doing...

KB Kookmin Bank launched Carbon dioxide Emission Management System

Republic of Korea, 25 November, 2009: UNEP FI Signatory KB Kookmin Bank has launched its own Carbon dioxide Emission Management System (KB-CEMS) to improve the bank’s energy efficiency and resources use.

KB-CEMS uses the IPCC’s CEF (Carbon Emission Factor) to calculate the bank’s total amount energy and resources use for its 1,300 branches. This includes electricity, 1,600 vehicles, heating oil, general LPG, district heating, water supply, copying paper and other items.

This is the first case of a finance sector institution in the Republic of Korea launching its own CO2 management system. KB Kookmin Bank is also offsetting any remaining emissions through The Carbon Neutral Forest, a carbon-offsetting programme initiated by the government of Republic of Korea using KB Kookmin Bank’s social contribution fund.

Tools & Training for Sustainable Finance

2010 DATES FOR ENVIRONMENTAL & SOCIAL RISK ANALYSIS (ESRA) ON-LINE COURSE

Dates for the Environmental & Social Risk Analysis (ESRA) On-line Course, which has trained 900 financial sector professionals from 52 countries since 1995, have been announced for 2010. The course is designed to educate risk managers and analysts in commercial, corporate, investment and retail banking in or dealing with developing countries and emerging markets in the identification, analysis and management of environmental and social risks generated through their lending and investment activities.

The ESRA On-line Course is delivered over three weeks although participants can set their own study times with an average commitment of two hours/day. Main course activities are readings, discussion forums, case studies and exercises. Participants are supervised by a Core Tutor and an Associate Tutor, who actively promote interaction and information exchanges between participants, while providing personalized support throughout the course.

The course is a product of UNEP FI, the INCAE Business School, and Capacity Building International (InWEnt), through the Ecobanking Project.

  • Upcoming Courses in 2010:
    - 15 Feb. to 05 Mar. :Spanish
    - 01 Mar. to 19 Mar. :English
    - 10 May to 28 May :Spanish
    - 24 May to 11 June :English
    - 02 Aug. to 20 Aug. :Spanish
    - 16 Aug. to 03 Sept.:English
    - 01 Nov. to 19 Nov. :Spanish
    - 08 Nov. to 26 Nov. :English

For further information, visit: http://www.unepfi.org/training/risk_training/index.html or Contact: training@unepfi.org

ON-LINE COURSE ON CORPORATE ECO-EFFICIENCY FOR FINANCIAL INSTITUTIONS (CEFI)

The On-line Course on Corporate Eco-Efficiency for Financial Institutions (CEFI) aims to help financial institutions reduce their environmental footprint by training middle and higher-level representatives responsible for operational and procurement matters on making the most efficient use of the resources involved in their daily internal operations.

The CEFI course, a joint product of UNEP FI and the Ecobanking Project, is highly interactive with tutors providing personalized support throughout the course. The course, which consists of a wide range of activities such as readings, discussion forums, case studies and interactive exercises, is delivered over three weeks although participants set their own study times with an average commitment of two hours/day.

  • Up-coming courses in 2010:
    - 12 to 30 April : Spanish
    - 04 to 22 October : Spanish

The CEFI On-line Course is.

For further information, visit: http://www.unepfi.org/training/ecoef_training/index.html or Contact: training@unepfi.org

Spreading Sustainable Finance Across the Globe

Latin America

LATF announces new online energy efficiency financing training

A brand new course on the financing of energy efficiency projects in buildings will be launched in 2010 by the Latin American Task Force (LATF) and its partners, the Basel Agency for Sustainable Energy (BASE), the INCAE Business School and its Ecobanking Project, and InWEnt.

The course, initially to be piloted in Mexico, is expected to be made available throughout Latin America, effectively offering banking sector practitioners the keys they need to unlock green business potential in Latin America. It will incorporate a new energy-savings calculator developed by the Frankfurt School. The training is being made available thanks to the support of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU).

For further information about the LATF and its activities, please visit: http://www.unepfi.org/regional_activities/latin_america/index.html

North America

NATF surveys North American Green Building financing

The role of the financial sector in financing environmentally beneficial practices for new developments and/or retrofits of commercial buildings in the US and Canada was investigated by a NATF research project in 2009.

The resulting report, a Guide to Financing Green Buildings in North America will be launched at an Expert Workshop in Toronto in March.

For further information about the NATF and its activities, please visit:
http://www.unepfi.org/employment/index.html

Climate Change

UNEP FI at 2010 Biodiversity Challenge Conference

UNEP FI reports and activities helped lead discussions at two main sessions of the 2010 Biodiversity Challenge Conference (Jakarta. 30 Nov-2 December 2009), held by UNEP Convention for Biological Diversity (CBD).

The main discussion agenda for the Finance Session was based on UNEP FI’s ““Bloom or Bust?" report, while the Business and Biodiversity Offset Programme (BBOP), which UNEP FI contributed to, was presented at the Biodiversity Offsets and Banking Session.

Around fifty financial institutions participated in the Finance Session, which elaborated the 8 opportunities and challenges in the finance sector directly influencing biodiversity as well as opportunities for financial products and services.

During the Biodiversity Offsets and Banking Session BBOP was identified as a good source to set principles, provide guidance on biodiversity offsets, and share experiences.

UNEP FI members also participated as speakers at Biodiversity Challenge Conference events:

  • Jota Shohtoku, Regional Vice President in Southeast Asia for General Liabilities and Environmental Insurance, Chartis, addressed the risks and challenges in the development of business opportunities and gave recommendations on COP-10.
  • Danielle Welsh, Manager Sustainability Investment, Vic Super, introduced the biodiversity-finance nexus and spoke about past achievements and challenges for the finance sector.

A copy of UNEP FI’s “Bloom or Bust?” report can be downloaded at:
http://www.unepfi.org/fileadmin/documents/bloom_or_bust_report.pdf

COP 15 side-event shows that construction counts for climate

The policy tools needed by national governments to reduce CO2 emissions and save energy in existing buildings and new construction was discussed at a “Buildings and Construction Toolbox for Low Carbon Strategies” side event, organized at COP 15 on 11 December, 2009 by UNEP and SBCI, allowed members and partners to discuss.

Since almost 40 per cent of all energy is consumed in buildings, the potential of the built environment in reducing CO2 emissions is huge. Participants at the side event, who included policy makers and other experts, were able to discuss climate challenges to construction, refurbishment and property management and the role of NAMAs (Nationally Appropriate Mitigation Actions).

Banking

UNEP FI launches Banking Commission

UNEP FI is increasing its work with members from the banking community, by far the Initiative’s largest constituency. The recently created Banking Commission includes 120 banking institutions from over 39 countries and includes a variety of players, from multilateral institutions and second tier banks to local SME-oriented banks and multinational corporations, in order to reflect the sector’s diversity.

The Banking Commission aims to make the mainstreaming of sustainability in the banking industry a reality, by stepping up capacity-building and by positioning itself strategically in relation issues affecting the sector.

For more information, please contact: banking@unepfi.org


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The UNEP FI e-bulletin is a monthly publication of the United Nations Environment Programme Finance Initiative.
United Nations Environment Programme
Division of Technology, Industry and Economics
Economics and Trade Branch
Finance Initiative Unit

Chief Editor: Paul Clements-Hunt
Editors: Jay Dowle, SeulGui Kaitlyn CHOI

Disclaimer:
The views expressed in this publication are not necessarily those of UNEP or UNEP FI, or of its signatories, nor does UNEP FI or its signatories take any responsibility for actions taken as a result of views or opinions expressed in this publication.
Copyright 2010 - UNEP FI