200 members are now part of the Principles for Sustainable Insurance Initiative

6 December 2021

The Principles for Sustainable Insurance (PSI) serve as a global framework for the insurance industry to address environmental, social and governance (ESG) risks and opportunities. The global collaborative initiative strengthens the industry’s contribution as risk managers, insurers and investors to building resilient, inclusive and sustainable communities and economies on a healthy planet. Launched at the 2012 UN Conference on Sustainable Development (Rio+20), with endorsement from the UN Secretary-General and insurance industry CEOs, the Principles have led to the largest collaboration between the UN and the insurance industry.

“The Principles for Sustainable Insurance provide a global roadmap to develop and expand the innovative risk management and insurance solutions that we need to promote renewable energy, clean water, food security, sustainable cities and disaster-resilient communities.”  Said ex-Secretary General Ban Ki-moon at the launch of the PSI in 2012

Building a community of best practice

As risk managers, risk carriers and investors, the insurance industry plays an important role in fostering sustainable economic and social development. We believe that better management of ESG issues will strengthen the insurance industry’s contribution to building a resilient, inclusive and sustainable society. However, many ESG issues are too big and complex and need widespread action across society, innovation and long-term solutions.

From just 30 organisations as founding signatory companies and supporting institutions when the PSI was launched in 2012, the PSI has steadily grown to 200 members worldwide. The membership is currently made up of 111 PSI signatory companies—representing about 30% of world premium volume—and 89 PSI supporting institutions including insurance associations and initiatives, insurance regulatory and supervisory bodies, civil society organisations, academia and other key stakeholders. By implementing the Principles and working together, PSI members are shaping and amplifying sustainable insurance thinking and practice worldwide.

“The UN Sustainable Development Goals, Paris Climate Agreement, and upcoming Post-2020 Global Biodiversity Framework are shining examples of global policy frameworks to tackle the most pressing global sustainability challenges in order to achieve prosperity for all on a healthy planet. Through their commitment to implement the Principles for Sustainable Insurance, insurers and other market participants from around the world are demonstrating leadership, raising their ambition, and collaborating to tackle global sustainability challenges now—not tomorrow or the day after. Timing is key, and time is non-renewable.” said Butch Bacani, who leads the PSI at the UN Environment Programme

Driving ambition to achieve net-zero economies and the Sustainable Development Goals

The PSI continues to raise the insurance industry’s sustainability ambition with pioneering commitments and initiatives.

Net-zero insurance

Last July, the PSI launched the Net-Zero Insurance Alliance (NZIA) at the G20 Climate Summit in Venice. Members of the NZIA commit to transition their respective insurance and reinsurance underwriting portfolios to net-zero GHG emissions by 2050 at the latest, in line with the 1.5°C target of the Paris Agreement. In just a few months, the NZIA membership has quickly doubled from 8 founding members at the launch last July to 16 members right after COP26. The NZIA builds on the climate leadership by many PSI and NZIA members as investors via the Net-Zero Asset Owner Alliance (NZAOA). The NZIA has been accredited by the UN Race to Zero campaign and is therefore recognised by the UN High-Level Climate Action Champion for COP26 as the gold standard for net-zero insurance. It is also the net-zero insurance pillar of the Glasgow Financial Alliance for Net Zero (GFANZ).

The NZIA, in collaboration with the Partnership for Carbon Accounting Financials (PCAF), is now developing the first global standard to measure and disclose “insured emissions”. This global standard will be launched in 2022, and will be followed by the publication of an NZIA target-setting protocol by January 2023. A global, standardised methodology to measure and disclose the GHG emissions associated with insurance and reinsurance underwriting portfolios will give insurers deeper insight into the risk profile of their respective underwriting portfolios, stimulate innovative approaches to decarbonisation, and create comparability for stakeholders. It will also help insurers understand the climate impact of their underwriting decisions, laying the foundation to decarbonise their insurance and reinsurance portfolios through target-setting, scenario analysis, strategy development, and individually taking concrete actions that have real-world impact through emissions reduction in the real economy.

Adaptation and resilience

At COP26, the Vulnerable Twenty Group of Finance Ministers (V20)—comprising 55 climate-vulnerable economies with a combined population of 1.4 billion people—announced the launch and operationalisation of the V20 Sustainable Insurance Facility (SIF). The project office for the V20-SIF will be hosted and managed by the PSI.

The V20-SIF is the world’s first vulnerable country-led insurance facility of its kind. As a project pipeline development facility, it aims to deliver financial protection to micro, small and medium-sized enterprises (MSMEs) to build their climate resilience and support the transition to net-zero economies. As the backbone of V20 economies, MSMEs contribute 20% to 70% of GDP, make up more than 80% of all businesses, and contribute to countries’ export revenues. With MSMEs constantly threatened by increasing climate risks, insurance can enhance risk management, absorb financial shocks, and de-risk the implementation of cost-saving renewable energy and energy efficiency infrastructure.

Life & health insurance

Another major area of work for the PSI is to shape the global sustainability agenda for the life & health insurance industry. Compared to non-life insurance business, there has generally been less understanding of the key sustainability issues for this branch of the insurance business. This is why in 2022, the PSI will launch a global strategy to address key risk management and insurance challenges and opportunities for the life & health insurance industry. Even more important in a post-COVID world increasingly being impacted by climate change, nature loss, pollution and growing social inequality.

Insurance and the SDGs 

Harnessing insurance products and solutions to achieve the SDGs is a key PSI priority. In this regard, through its Insurance SDGs initiative, the PSI will help define sustainable insurance business and measure how insurance portfolios are contributing to the SDGs.

Developing ground-breaking sustainability guidance for the insurance industry

Since its launch in 2012, the PSI has worked with its members to address key ESG challenges and opportunities – see the full list of PSI publications over the years.

First-ever ESG guide for the insurance business

Recent ground-breaking guidance issued by the PSI includes last year’s launch of the first global guide to manage ESG risks in non-life insurance business. It outlines how insurers can better manage ESG risks, focusing on risk assessment and insurance underwriting. It spans key areas which include developing a company’s ESG approach and risk appetite, integrating ESG issues into an organisation, establishing roles and responsibilities for ESG issues, escalating ESG risks to decision-makers, detecting and analysing ESG risks, and decision-making and reporting on ESG risks.

TCFD and insurance portfolios

Launched last January, the PSI report, Insuring the climate transition: Enhancing the insurance industry’s assessment of climate change futures, captures the key findings of the largest collaborative effort by insurers—22 PSI signatories representing over 10% of world premium and USD 6 trillion in assets under management—to pilot some of the most challenging recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The overall aim of the PSI pilot project is to contribute to the development of consistent and transparent analytical approaches that can be used to identify, assess and disclose climate change-related risks and opportunities in insurance underwriting portfolios in a forward-looking, scenario-based manner. A PSI TCFD Phase 2 work programme will be announced soon.

Nature and pollution risks

Over the years, the PSI has developed pioneering guidance for the global insurance industry on nature and pollution risks. These include:

  • The guide developed by the PSI, WWF and UNESCO to protect World Heritage Sites (protected areas, nature reserves, biodiversity hotspots)
  • The guide developed by the PSI and Oceana to tackle illegal, unregulated and unreported (IUU) fishing
  • The guide developed by the PSI to tackle the risks of plastic pollution, marine plastic litter and microplastics

Sustainable insurance knowledge

Members can also take advantage of a range of events and webinars to learn from leaders and experts in the field of sustainable insurance.

These include events such as the PSI COP26 Sustainable Insurance Series, the most comprehensive and ambitious series of events for the insurance industry during COP26, spanning net zero/mitigation and resilience/adaptation, and actions by insurance industry participants, insurance regulators and supervisors, financial policymakers, governments and other key stakeholders.

Equally, the Nature-Positive Insurance Series organised by the PSI and the UN Convention on Biological Diversity (CBD) has set the global agenda for nature-positive insurance, particularly in view of the expected adoption of the Post-2020 Global Biodiversity Framework next year and the work of the Task Force on Nature-related Financial Disclosures.

Members can also access PSI market events and UNEP FI’s regional roundtables which bring together members and their peers in their respective regions.

Coming in 2022: The PSI’s 10-year anniversary event

The PSI will celebrate its 10th anniversary in mid-June 2022.

The event will not only look back at how the PSI created and shaped the sustainable insurance agenda in the past decade. It will showcase how the PSI will amplify sustainable insurance in this decisive UN Decade of Action that aims to cut carbon emissions in half, to halt biodiversity loss and achieve a nature-positive economy, and to realise the SDGs—all by 2030.

Stay tuned for more details!


For more information or to become a signatory of the Principles for Sustainable Insurance, visit the PSI website or contact Diana Diaz.

Good Practice Guide to Climate Stress Testing

Published

UNEP FI’s Comprehensive Good Practice Guide to Climate Stress Testing is a detailed user guide for financial institutions looking to understand climate stress testing and develop plans for effectively executing them. It has been created to assist banks, investors and insurers in their climate stress testing journey and should be adapted to meet the needs of a given firm.

The report covers five major content areas:

  1. Emerging climate stress testing requirements and the landscape of test structures;
  2. Best practices for climate stress testing team organisation and the skills required;
  3. Best practices for climate stress testing data requirements and collection;
  4. Best practices for selecting the scenarios and models to use in climate stress testing; and
  5. How climate stress testing outputs can and should be applied to meet regulatory requirements and produce useful internal insights.

Download here

Driving change – what we learned from the UNEP FI Leadership Council

3 December 2021

In November 2021 the UNEP FI Leadership Council convened 20 CEOs of banks and insurers across six continents to debate how to further mainstream sustainable finance and accelerate the pace and scale of action worldwide.

The wide-ranging discussion focused on disclosure of risks and impacts, and how institutions across the sector can intensify efforts to align with global goals such as the Paris Agreement and the UN Sustainable Development Goals. Download the key takeaways from the discussion. 

Download the key takeaways

UNEP FI’s Evolving Workplan 

As UNEP FI continues to mainstream and deepen the integration of sustainable practice across the financial industry it will be advised and guided by the Council discussion from which it takes on 3 main points of action for the coming year. These are to:  

  1. Support the IFRS International Sustainability Standards Board and mandatory disclosure standards more generally, working towards accelerating integration of sustainability impact management globally. 
      
  2. Develop engagement with regulators to build the bridge between market leadership on sustainable finance and emerging regulatory approaches to create an enabling environment for a more resilient system. 
      
  3. Collectively drive change, fostering inter-sectoral engagement between banks, insurers and investors to strengthen sustainable finance alignment across the financial system. 

In 2022 and beyond, UNEP FI will continue to convene the financial sector and key stakeholders to create systemic change, drive momentum and ambition and help members build and deliver on their commitments to ensure a positive future for people and planet.  

About the Leadership Council 

The UNEP FI Leadership Council is an advisory body, formed in 2021 to further mobilise the financial sector and deepen the integration of sustainability across the industry. Chaired by Inger Andersen, United Nations Under-Secretary General and Executive Director of the UN Environment Programme, the Council brings together leaders of banks and insurers currently represented on one of the three elected UNEP FI governance bodies; the Global Steering Committee, the board of the Principles for Responsible Banking or the board of the Principles for Sustainable Insurance. The Council signals the importance of harnessing the unique partnership between the UN Environment Programme and the financial sector to transform the finance industry, raise the level of ambition, and embed sustainability at the heart of financial practice. 

Key Takeaways from the UNEP FI Leadership Council

Published

Download the key takeaways from the inaugural meeting of the UNEP FI Leadership Council which convened 20 CEOs of banks and insurers across six continents in November 2021 to debate how to further mainstream sustainable finance and accelerate the pace and scale of action worldwide.

The wide-ranging discussion focused on disclosure of risks and impacts, and how institutions across the sector can intensify efforts to align with global goals such as the Paris Agreement and the UN Sustainable Development Goals.

Download the key takeaways

 

 

 

About the Leadership Council 

The UNEP FI Leadership Council is an advisory body, formed in 2021 to further mobilise the financial sector and deepen the integration of sustainability across the industry. Chaired by Inger Andersen, United Nations Under-Secretary General and Executive Director of the UN Environment Programme, the Council brings together leaders of banks and insurers currently represented on one of the three elected UNEP FI governance bodies; the Global Steering Committee, the board of the Principles for Responsible Banking or the board of the Principles for Sustainable Insurance. The Council signals the importance of harnessing the unique partnership between the UN Environment Programme and the financial sector to transform the finance industry, raise the level of ambition, and embed sustainability at the heart of financial practice. 

Sustainable Building Finance: Supporting green mortgage development in Sri Lanka

Published December 2021

With population growth and urbanisation trends, the need for housing is growing globally, with an increase of 19% in the Sri Lankan stock between 2001 and 2012. This growth in demand creates commensurate effects on material usage, energy and water consumption, waste, and carbon emissions, revealing a massive need for capital to be deployed toward green building finance.

This report was developed as a resource to inform and support Sri Lanka’s banking sector on possible approaches to green finance product development, including how modest adjustments to lending practices can result in more credit flows to green buildings. The several chapters of the finance guide provide information on:

  • general green building design principles and technologies;
  • the state of green construction practices and beliefs in Sri Lanka;
  • the barriers and benefits of green buildings;
  • the need for and information gaps in Sri Lanka;
  • strategies for integrating green finance practices; and
  • recommendations for new green building product.

Download here

Net-Zero Asset Owner Alliance calls for scaling blended finance to invest in emerging markets

29 November 2021

Emerging markets may need up to US $1 trillion a year to build a net-zero economy, yet developed nations have so far even struggled to deliver on a target of US$100bn climate finance.

The UN-convened Net Zero Asset Owner Alliance released a Scaling Blended Finance discussion paper investigating obstacles to investing in climate solutions in emerging markets and arguing that blended finance vehicles can provide the necessary structures to close the existing funding gaps in climate investment globally. Moreover, the paper lays out the potential solutions for overcoming barriers to scaling blended finance.

The paper emphasises the need for Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs), in particular, to better use blended finance mechanisms to mobilise and scale green private capital investment in Emerging Markets (EMs) and Least Developed Countries (LDCs). Other solutions proposed in the report include:

  • Enhancing the universe of investable projects and building capacity among all actors and stakeholders
  • Making private sector investment in funds eligible for official development assistance (ODA)
  • Pooling donor funds and standardising investment
  • Revising the incentives model of DFIs
  • Generating data points to be made available and accessible
  • Establishing ratings methodologies.

Günther Thallinger, Allianz SE Board Member & Chair UN-Convened Net-Zero Asset Owner Alliance explains:

“Financing the transition of the real economy is one of the key working areas of the Alliance both in developed and developing economies. However, the current economic risk-return profiles for some climate solutions and cleantech investments in emerging markets are not fit for purpose for private institutional investors, who must adhere to fiduciary duties and risk-baring capacities. In this context, scaling up the use of blended finance vehicles is a priority.”

The Alliance published a Call to Action to Asset Managers, in February, inviting them to build and work on blended finance vehicles collectively and ensure a climate-friendly and just transition in EMs and LDCs. This Scaling Blended Finance discussion paper contextualizes this Call to Action, and assesses that private sector investment in EMs has faltered due to three main obstacles: elevated risk perception; restricted market access; and lack of data transparency.

Blended finance addresses these factors respectively by: de-risking through the provision of a first-loss tranche; expanding market access through the preferred creditor status of MDBs and DFIs on the ground; and working with these same institutions for better data disclosure to close the gap between perceived and actual risk.

The discussion paper also invites feedback on the engagement questions to help build into future concrete steps around scaling blended finance.

Download the discussion paper here.

About the UN-convened Net-Zero Asset Owner Alliance

The 61 members of the UN-convened Net-Zero Asset Owner Alliance have committed i) to transitioning their investment portfolios to net-zero GHG emissions by 2050 consistent with a maximum temperature rise of 1.5°C above pre-industrial levels; ii) to establishing intermediate targets every five years; and iii) to regularly reporting on progress. The Alliance is convened by UNEP’s Finance Initiative and the Principles for Responsible Investment (PRI). The Alliance is supported by WWF and Global Optimism, an initiative led by Christiana Figueres, former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC).

About UNEP FI

United Nations Environment Programme Finance Initiative (UNEP FI) is a partnership between UNEP and the global financial sector to mobilize private sector finance for sustainable development. UNEP FI works with more than 400 members – banks, insurers, and investors – and over 100 supporting institutions – to help create a financial sector that serves people and the planet while delivering positive impacts. UNEP FI aims to inspire, inform and enable financial institutions to improve people’s quality of life without compromising that of future generations. By leveraging the UN’s role, UNEP FI accelerates sustainable finance.

About the UN Environment Programme (UNEP)

UNEP is the leading global voice on the environment. It provides leadership and encourages partnership in caring for the environment by inspiring, informing, and enabling nations and peoples to improve their quality of life without compromising that of future generations.

Scaling Blended Finance

Published

The UN-convened Net Zero Asset Owner Alliance released the Scaling Blended Finance discussion paper investigating obstacles to investing in climate solutions in emerging markets and arguing that blended finance vehicles can provide the necessary structures to help close the existing funding gaps in climate investment globally. Moreover, the paper lays out the potential solutions for overcoming barriers to scaling blended finance, including:

  • Enhancing the universe of investable projects and building capacity among all actors and stakeholders
  • Making private sector investment in funds eligible for official development assistance (ODA)
  • Pooling donor funds and standardising investment
  • Revising the incentives model of DFIs
  • Generating data points to be made available and accessible
  • Establishing ratings methodologies.

Download here

BLOG: COP26 – The moment private finance promised to lead

25 November 2021

UNEP FI’s Climate Lead, Remco Fischer reviews the outcomes of COP26 and explains why ultimate climate success or failure depends on leadership from the private and the public sectors coming together, synergising, feeding and boosting each other to create a determined drive of economic decarbonisation. He also highlights the important role of the net-zero finance alliances convened by UNEP FI.

Expectations were incredibly high going into COP26. Civil society – from school children to climate activists – was demanding that decision-makers take urgent action to halt the climate emergency. Emotions were running high amidst heavy criticism of governments and the private sector, including financial institutions, who also came under intense scrutiny.

After a short-term COVID-related reduction in global CO2 emissions in early 2020, levels of all greenhouse gases hit record levels by the end of 2020 according to the latest report from UN’s World Meteorological Organization. There is no expectation that the COVID crisis and the ensuing stimulus will reduce emissions. This of course is in stark contrast to what is needed: ensuring global heating does not exceed 1.5 degrees requires an annual reduction of global emissions of roughly 7 percent, starting now – we need to halve emissions by 2030 to avoid the most catastrophic climate impacts.

Ahead of the COP, many countries had submitted their updated short- to medium-term country climate plans (the so-called Nationally Determined Contributions or NDCs), and though many of these contributions were more ambitious than the first generation, they were still not ambitious enough. UNEP’s Emissions Gap Report, launched just ahead of COP, confirmed that current NDCs put the world on track for a temperature rise this century of at least 2.7°C – almost triple the amount of warming that we have now: 1.1 degrees.

However, we do see silver linings; important parts of the global economy at COP stepped up, promising to lead on reducing emissions at the pace and scale required and in line with what the science tells us.

PUBLIC SECTOR LEADERSHIP

Net-zero commitments from national Governments increased during COP to 120 nations

To date, over 120 countries, covering a significant majority of global emissions, have communicated – many of them during COP – their net-zero targets. Most of these carbon-neutrality targets are to be attained by 2050. But some major emerging economies have given themselves more time, such as China whose net-zero target date is 2060, and India whose target is 2070.

If all those net-zero objectives, which are longer-term and hence often vaguer than the more short-term NDCs, were fulfilled, the expected temperature outcome would still be too high, but a lot lower than without those net-zero pledges: 1.9 degrees, according to preliminary and approximate calculations.

The main challenge, however, is that countries’ shorter term, more concrete NDCs are not yet synchronized with those long-term, net-zero objectives, which of course raises questions. Ambitious long-term objectives are commendable, but both their feasibility and credibility are put into question if the nearer-term targets, strategies, and plans do not add up in the long term.

The Glasgow Climate Pact

The formal, political outcome from COP, the Glasgow Climate Pact, was the most important agreement to emerge from the summit. Unlike the last major climate conference, in Paris in 2015, the pact is not a new treaty, but a series of decisions to further and strengthen implementation of the Paris accord. These decisions are legally binding, making this a powerful document agreed by all parties.

The pact delivers, among others, three important outcomes:

  • Specific language around targets and pathways. The Pact contains very strong reference to 1.5°C as the necessary target for limiting global warming – a graduation from the language of the Paris Agreement, which only referenced 1.5°C as an aspirational target. It also contains very strong emphasis on the need to follow the best available science, including the need to reduce emissions by 45% by 2030, relative to 2010 levels.
  • Acceleration of ambition for Nationally Determined Contributions (NDCs) is badly needed. Despite 130 countries committing to ‘net-zero by 2050’, they are not yet consistent with a 1.5°pathway. The Glasgow Pact requests countries to arrive at next year’s COP27 with updated NDCs that are aligned with a 1.5° pathway. This is a vital provision of the Pact – it shortens the delivery date of new NDCs from 2025 to 2022, accelerating countries’ net-zero transition by a few but extremely crucial years.
  • Explicit call for action on coal and fossil fuels. In a departure from previous climate agreements, the Pact specifically refers to coal power and fossil fuel subsidies and calls on countries to accelerate the “phase-down” (though not the “phase-out”) of these sectors and activities.

Groups of countries, often together with the private sector, formed ‘coalitions of leaders’ making ambitious commitments on more specific decarbonisation challenges

  • The world’s two largest emitters, China and the US, announced that they would immediately resume close collaboration to reduce emissions on both sides of the Pacific in line with their corresponding net-zero commitments. This is a huge political signal to the rest of the world.
  • On deforestation: over 100 countries, representing about 85% of the world’s forests, promised to stop deforestation by 2030. This commitment was boosted by an announcement by more than 30 financial institutions committing to fully stop investing into activities linked to deforestation.
  • On methane: More than 100 countries agreed to reduce methane emissions by 30% by 2030. The big emitters China and Russia haven’t joined this.
  • On coal: More than 40 countries – which include major coal-users including Poland, Vietnam, and Chile – agreed to shift away from coal. Other countries though who rely on coal, either for their own electricity or for exports, are not a part of this. This includes Australia and China among many others.
  • On the internal combustion engine: 24 countries and a group of car manufacturers committed to ending the era of fossil fuel-powered vehicles by 2040, by starting to sell only zero-emissions vehicles from this time onwards. China, Germany, and the US are not part of this commitment.

PRIVATE SECTOR LEADERSHIP

Private sector stepped up commitments to net-zero, including near-term pledges from the finance sector

More than 4,000 businesses have now committed to align their business models with 1.5 and net-zero emissions by 2050 by signing up to the UNFCCC’s Race to Zero campaign. On finance day at COP, the Mark Carney-led Glasgow Financial Alliance for Net Zero (GFANZ) announced that more than 450 financial institutions representing US$130 trillion in capital are now members of the coalition of coalitions. Three of those groups are convened and facilitated by UNEP FI: i) the Net-Zero Banking Alliance with over 90 members and representing more than US$60 trillion in assets; ii) the Net-Zero Asset Owner Alliance, co-convened and facilitated with the PRI, with 61 members and US$10 trillion; and iii) the newly-launched Net-Zero Insurance Alliance which now has 15 members.

Five key characteristics make these net zero finance commitments ground-breaking and promising:

  • Systemic: Financial portfolios often reflect countries’ full economies. They are not yet backing 1.5°C since the overall system isn’t there. However, the commitments imply that financial institutions will now thoroughly lead, support, and be at the core of the systemic change needed.
  • Comprehensive: Aligning capital with net-zero and 1.5°C goals requires financial institutions to view their portfolios and holdings in a holistic manner – managing their full carbon-footprint, across sectors, geographies and asset types.
  • Science-based & time-bound: Decarbonising financial portfolios does not happen in an random way. It needs to happen based on the scenarios laid out by the Intergovernmental Panel on Climate Change, among others. These scenarios are time-bound, so must be the transition of financial portfolios.
  • Measurable and transparent: The commitments that financial institutions have made will require them to report on progress methodically and periodically. This reporting is particularly important in a world that is increasingly sceptical and concerned with greenwashing.
  • Immediate: Intermediary targets are for attainment by 2025, or 2030 at the latest, only 4 to 8 years from now. This first milestone requires net-zero committed financial institutions to take immediate and concrete action starting from day one. The first step that all net-zero committed stakeholders need to focus on is not making the situation worse by stopping the expansion of infrastructure, technologies, and business models that we well know are incompatible with the commitments at hand.

In conclusion, unlike the net-zero pledges of countries, financial institutions having joined one of these net-zero finance groups have committed to near-term intermediary targets that do add up to the long-term objective of net zero. Notably, two weeks ahead of COP, 29 members of the Asset Owner Alliance had published their science-based, 1.5-aligned portfolio decarbonization targets, to be achieved by 2025 and outlined in the inaugural Credible Ambition, Immediate Action progress report. Setting these near-term targets represents the first tangible and concrete output of the financial institutions’ groups convened by UNEP FI and members of GFANZ.

PUBLIC AND PRIVATE COMING TOGETHER

One of the successes of COP26 was again that an unprecedented number of public and private sector actors stepped forward with a promise to lead.

The next important step now is for all actors who have made promises to translate them, into concrete, consistent and near-term targets for these to then translate into determined, impactful actions.

Another important step is that public and private sector leadership combine and synergise to effectively move the needle at systemic level. Fortunately, we are starting to see this happen through for instance:

  • The Asset Owner Alliance that included a call to all policymakers, national and regional governments, to align policy and actions with 1.5°C compatible pathways in its inaugural Progress Report. Stressing the importance of enabling policy environments and market mechanisms, the asset owners are advocating for strengthened carbon pricing regulations and instruments. The Alliance’s proposal of a legally-binding carbon price corridor was delineated in a discussion paper on Governmental Carbon Pricing and delivered to G7 and G20 policymakers.

With this, and the work of GFANZ and the UN-convened alliances, financial institutions and their stakeholders now have the guidance and support needed to start transforming their portfolios, and with them the real economy. As the Secretary-General reminded us as he made his final remarks at COP, “Success or failure is not an act of nature. It’s in our hands.”

New UNEP FI Leadership Council explores sustainable finance integration and alignment

On the heels of COP 26 and at a critical juncture between crisis and recovery across society, business and the environment, the UNEP FI Leadership Council met for the first time, bringing together CEOs of banks and insurers to help steer faster and deeper sustainability action across the industry. Download the key takeaways.

An advisory body built on UNEP FI’s 3 governance bodies, the Council is designed to shape high-level strategic insights into how the financial sector can fulfil its critical role in driving the economic transformation required to secure a resilient and sustainable future.  

The triple planetary crisis of climate change, nature loss and pollution, combined with social inequalities, pose an enormous threat to human wellbeing. Tackling these interconnected crises requires international collaboration and action across all economic sectors, including the financial sector that cuts across industries through financing. The path that economic actors take now and in this decade will determine the future of our planet and humanity.

Leading financial institutions under UNEP FI’s frameworks, including the UN Principles for Responsible Banking, the UN Principles for Sustainable Insurance and the UN-convened Net-Zero Banking, Insurance and Asset Owner Alliances, are working to align portfolios with a 1.5 degree climate scenario and UN Sustainable Development Goals. This collective action from market actors is imperative to drive the business transformation needed for a stable environment that our economy and society depend on.  Given the scale of the challenge and the costs of delayed action, institutions must act now to accelerate the rate and scale of change and be accountable to stakeholders. 

Download key takeaways from the meeting

The United Nations Secretary-General, António Guterres, told Council Leaders, “We need to act with greater urgency, ambition, and credibility. We need pledges to be implemented, and commitments to turn concrete. We need credible targets and transparent timelines.” The Secretary-General highlighted the role of the new UN High-Level Expert Group to propose clear standards to measure and analyse progress against net zero commitments from non-state actors. This will enhance transparency around how the financial sector contributes climate financing to help implement Nationally Determined Contributions, especially in developing countries. 

“We need to act with greater urgency, ambition, and credibility. We need pledges to be implemented, and commitments to turn concrete. We need credible targets and transparent timelines.” – United Nations Secretary-General, António Guterres addressing UNEP FI Leadership Council members

The inaugural Council meeting explored two priorities; the importance of integrating and disclosing sustainability risks and impacts, and the alignment of financial portfolios with global goals.  

Integration – mainstreaming ESG risks and impacts 

While integration of Environmental, Social and Governance (ESG) factors in risk frameworks has enhanced understanding of their influence on financial performance, further action is needed to strengthen understanding of how companies are positioned when it comes to climate change, biodiversity loss, pollution and growing inequality.  Standardised reporting is needed to understand related risks and opportunities, as well as to shift towards the double or dynamic materiality lens and capture how businesses can have an impact on these issues.  

Council members emphasised the importance of global convergence around clear, mandated disclosure requirements, and expressed support for the new IFRS International Sustainability Standards Board to establish consistent sustainability reporting standards across industries. “Disclosure can drive action,” said one participant, “if companies are obliged to report according to common metrics, they will start seeing their own impact on the environment and therefore put in place measures to correct it.”  

With Council members tuning in across six continents, they recognised the challenges faced in different regional contexts. Common global standards could facilitate capital flows across jurisdictions, while supporting sustainable transition pathways that take account of regional differences in economic development. 

There was a clear understanding that financiers need to take action and make practical and rapid progress, with one CEO commenting, “there are enough institutions ready to move, and we can’t wait for those who may be hesitating.” A common thread was the view that if banks, insurers and investors work together, speaking with a unified industry voice through the Leadership Council and UNEP FI Frameworks amongst others, then they can drive the necessary changes. “We need a collaborative approach. No bank with a stand-alone approach can deliver this – we need to move as a team, we need to move with a standardised, common, intense, shared vision.” 

Alignment – from green transactions to green institutions 

Disclosure alone is insufficient to deliver the economic transformation needed to tackle global challenges. The finance industry worldwide must continue to work to adjust business models and align underwriting, lending and investment portfolios with societal and environment goals. The Council considered ways in which the insurance and banking sectors can accelerate and mainstream alignment, using robust, ambitious frameworks to raise ambition and deliver results in the real economy.  

The Council discussed what it takes for financial institutions to meet these challenges, from culture changes within organisations to embed sustainability fully into commercial strategy, to engaging with clients – particularly with those unsustainable industries and sectors needing to undergo rapid transformation. As intermediaries, financial institutions such as banks, insurers, asset owners and managers can facilitate and influence real-economy sectors, such as cement, steel, transport and agriculture towards global sustainability goals. The transition of this ‘real economy’ needs to be a just transition, done in an orderly manner. “It’s about helping our clients to change – we need to support their transition, and the focus should be on holistic transition plans of our clients, and investing in those with the ability to change.”

“Companies and financial institutions increasingly recognise that sustainable business is good business,” said Inger Andersen, United Nations Under-Secretary General, Executive Director of the UNEP and Chair of the UNEP FI Leadership Council. “UNEP FI initiatives show the positive impact the financial sector can have when it takes bold action together.”

This meeting was held under Chatham House rules. A summary of the meeting is available here. In the meantime you can download the background paper here.

Download the key takeaways

About the Leadership Council 

The UNEP FI Leadership Council is an advisory body, formed in 2021 to further mobilise the financial sector and deepen the integration of sustainability across the industry. Chaired by Inger Andersen, United Nations Under-Secretary General and Executive Director of the UN Environment Programme, the Council brings together leaders of banks and insurers currently represented on one of the three elected UNEP FI governance bodies; the Global Steering Committee, the board of the Principles for Responsible Banking or the board of the Principles for Sustainable Insurance. The Council signals the importance of harnessing the unique partnership between the UN Environment Programme and the financial sector to transform the finance industry, raise the level of ambition, and embed sustainability at the heart of financial practice. 

New UNEP FI Leadership Council marks a step-change in sustainable finance landscape

18 November 2021

UNEP FI today announces the formation of a new Leadership Council, designed to further mobilise the financial sector and deepen the integration of sustainability across the industry. 

The council brings together leaders of banks and insurers currently represented on one of the three elected UNEP FI governance bodies; the Global Steering Committee, the board of the Principles for Responsible Banking or the board of the Principles for Sustainable Insurance. Chaired by Inger Andersen, United Nations Under-Secretary General and Executive Director of the UN Environment Programme, the Council will take a prominent role in mobilising the global financial industry in support of a more resilient, fair and just future.

The 19 Council members include CEOs and Chairpersons from the following organisations; Aon plc, African Risk Capacity Ltd, Allianz SE, AXA, Banco Hipotecario de El Salvador, BBVA, BNP Paribas, CAF, ICEA Lion, Insurance Australia Group, Nordea, Piraeus Financial Holdings, QBE, Shinhan Financial Group, Standard Bank, SulAmérica, TD Insurance, Vancity and Westpac Group. A full list of Council members can be found here. 

The council will meet annually, providing vision and strategic direction to UNEP FI in orienting its role and that of the UN, in shaping, mainstreaming and deepening sustainability integration across the industry. It will further mobilise the financial community to support a sustainable, resilient and inclusive economy.  

The first meeting will be held at the end of November with the Council considering the mainstreaming and integration of ESG risks and impacts, and the challenges, vision and solutions for aligning financial activities, integrating sustainability, and moving from ‘green transactions’ to ‘green institutions’. A meeting summary will be published following the event. 

Discover the Council

A Comprehensive Guide to Climate Stress Testing

6 December 2021 | Webinar

UNEP FI’s TCFD programme is launching a Comprehensive Good Practice Guide to Climate Stress Testing. The report aims to provide a detailed user guide for financial institutions looking to understand the climate stress testing and develop plans for effectively executing them. The guide covers emerging stress testing requirements from the latest exercises. It features detailed good practices on climate stress testing including on the teams and skills required, the data needed, the scenarios and models to use, and the application of outputs.

This webinar will cover five major content areas from the report:

  • Emerging climate stress testing requirements and the landscape of test structures;
  • Best practices for climate stress testing team organisation and the skills required;
  • Best practices for climate stress testing data requirements and collection;
  • Best practices for selecting the scenarios and models to use in climate stress testing; and
  • Best practices for how climate stress testing outputs can and should be applied to meet regulatory requirements and produce useful internal insights.

Speakers:

  • Remco Fischer, Climate Lead, UNEP FI
  • David Carlin, TCFD Programme Lead, UNEP FI
  • Maheen Arshad, Consultant, TCFD Programme, UNEP FI
  • Vincent Noinville, Independent Expert

Register here

Leading international organisations launch Platform for clarity on improving sustainability impacts

17 November 2021

17 November 2021 – Leading international providers of sustainability standards and guidance have come together to create the Impact Management Platform, a collaboration to mainstream the practice of impact management. As a first product, the ‘Platform’, whose steering committee brings together the IFC, OECD, UNDP, UNEP FI and UNGC, has launched a web tool that outlines the core actions of impact management and links to the resources to help organisations and investors implement them.

Over the past decade, there has been significant growth in demand for organisations to improve their impacts on people and the planet, and to contribute to achieving the Sustainable Development Goals by 2030. Core to making this possible is effective impact management. However, the growing number of initiatives supporting different aspects of impact management have been difficult for enterprises and investors to navigate. With the climate crisis and COVID-19 pandemic demonstrating the fundamental interdependencies between markets and sustainability issues, the urgency to build a coherent and complete system of principles, standards and guidance for how to improve sustainability impacts has never been greater.

“Mainstreaming impact management across business and finance is critical for achieving the SDGs and essential to future-proofing business.  UNEP FI is delighted to be joining forces with its peers to work towards a complete and coherent system of norms and resources for impact management” – Eric Usher, Head, UNEP FI

Through the Platform, partnering organisations will work together to identify opportunities to consolidate existing sustainability resources, collectively address gaps, and coordinate with policymakers and regulators to support the mainstreaming of impact management. This effort represents the next phase of a global collaboration that, until now, was facilitated by the Impact Management Project (IMP), a five-year consensus-building forum designed to run until 2021. Earlier work included facilitating sustainability disclosure initiatives to agree a shared vision for corporate reporting, and supporting the consolidation of the investor-focused disclosure initiatives into the IFRS Foundation and its new International Sustainability Standards Board (ISSB). The Platform, whose Steering Committee of multilaterals will also advise the ISSB, provides a complementary forum for the broader task of supporting practitioners to manage their sustainability impacts.

The Impact Management Platform website can be accessed at www.impactmanagementplatform.org

Launch event

A joint launch webinar at 4pm CET on Tuesday 23 November will share the vision and future of the Platform with representatives of the Platform Partners. This will include a keynote dialogue with Mathias Cormann, Secretary General of the OECD, and Inger Andersen, Under-Secretary-General of the United Nations and Executive Director of the UN Environment Programme.

Click here to view full agenda and register for the event.

About the Impact Management Platform

The Impact Management Platform (‘Platform’) is a collaboration between leading providers of public good standards and guidance for managing sustainability impacts. Through the Platform, partnering organisations aspire to:

  • clarify the meaning and practice of impact management;
  • work towards interoperability and fill gaps as needed; and
  • have coordinated dialogue with policymakers.

The Impact Management Platform website supports practitioners to manage their sustainability impacts – including the impacts of their investments – by clarifying the actions of impact management and explaining how standards and guidance can be used together to enable a complete impact management practice. The website can be accessed at https://impactmanagementplatform.org/

About the founding Partners

The Platform’s founding Partners comprise B Lab, Capitals Coalition, CDP, Climate Disclosure Standards Board (CDSB), Global Impact Investing Network (GIIN), Global Reporting Initiative (GRI), Global Steering Group for Impact Investment (GSG), the World Bank’s International Finance Corporation (IFC), Impact-Weighted Accounts Initiative at Harvard Business School (IWAI), Organisation for Economic Co-operation and Development (OECD), Principles for Responsible Investment (PRI), Value Reporting Foundation, Social Value International, United Nations Department of Economic and Social Affairs (UN DESA), UN Development Programme (UNDP), UN Environment Programme – Finance Initiative (UNEP FI), UN Global Compact (UNGC) and World Benchmarking Alliance (WBA).

Descriptions of all founding Partner organisations and logos can be found here.

Contact

Workshops: Climate Risks and TCFD for banks and regulators in Tunisia – Phase II

17 November 2021 | Online

Focused Climate Risks and TCFD Workshops for Tunisian Banks and Regulators under the SDG-Climate Facility Project

UNEP FI, the Union of Arab Banks (UAB) and the Tunisian Professional Association for Banks and Financial Institutions (APTBEF) have partnered to deliver a series of workshops on climate risks, opportunities, and disclosures focusing on the Tunisian Banking industry. They will explore regionally specific physical and transition risks for the Arab region. Then, participants will discuss common approaches and good case practices for assessing climate risks and opportunities from a regulatory perspective. Finally, institutional and regulatory representatives will be invited to discuss the integration of climate risk insights into strategic decision-making and the way forward. A certificate of attendance will be handed to participants who complete the workshop.

Date: Wednesday 17 November, 13:00–16:00 CET

For more information or to register, please send an email to dina@uabonline.org or lassoued.faten@apbt.org.tn

Workshop produced by:

                              

Climate risk regulation in Africa’s financial sector and related private sector initiatives

Published November 2021

This report highlights the state of climate risk regulation in Africa’s financial sector and presents an analysis of the financial stability architecture and climate risk initiatives in 12 selected deep-dive countries. It also highlights challenges hindering the integration of climate risk by financial sector authorities in Africa and offers potential areas of support for the key stakeholders in the finance ecosystem (authorities, private sectors, other institutions).

The publication was commissioned by the AfDB/AFAC in partnership with the GCA and UNEP FI, with analytical support from McKinsey & Company.

Greening the SMEs: Improving SME Access to Green Finance in Mauritius

Published November 2021

This report offers a timely assessment of the access to, and the use of, green finance by SMEs in Mauritius. The study by extension evaluates the integration of sustainability in the business operations of SMEs in Mauritius, and explores applicable good practices and lessons from other countries and regions. The study also identifies key barriers to green financing, and proposes recommendations and potential solutions to scale up green finance opportunities for SMEs in Mauritius.

Download here

Investor Climate Action Plans (ICAPs): Opportunities for African Investor Leadership

30 November 2021 | Webinar

As Africa’s largest investors, banks and insurers seek to achieve climate-aligned portfolios, what will be required to ensure systematic and meaningful progress across the continent? Join this UNEP FI webinar to discuss how African investors and their global partners can begin to use the Investor Climate Action Plans (ICAPs) Expectations Ladder to start the decarbonisation process and jumpstart a green recovery.

Find out:

  • How climate-aligned portfolios can enable adaptation and resilience efforts
  • What investors can do to start aligning their portfolios to clean energy and low-carbon opportunities
  • How the ICAPs Expectations Ladder can be used to benchmark progress towards climate targets
  • What’s next for African investors beyond COP26

Speakers

  • Reuben Wambui, Africa Regional Coordinator, UNEP FI (Moderator)
  • Rahnuma Chowdhury, Investor Climate Action Lead, UNEP FI
  • Melanie Janse van Vuuren, Group Climate and Sustainable Development Goals (SDGs), Investec
  • Maria Tapia, Program Lead, Climate Finance from the Global Center on Adaptation

Register here

Net-Zero Banking Alliance at COP 26

5 November 2021

On the heels of COP 26 Finance Day, banking industry leaders met in Glasgow to discuss the leadership role of the banking sector towards net-zero under the UN-convened Net-Zero Banking Alliance (NZBA) – a game-changing commitment through which the banking sector is joining forces and mobilising capital at scale to tackle climate change, the defining issue of the 21st century.

Addressing the climate crisis requires drastic transformation of the world’s real economy – including food production, energy generation, transportation and infrastructure – and replacement of outmoded technology with low-emissions alternatives. This systemic change requires investment at an order of magnitude and speed that is unparalleled, with an estimated US$ 100 trillion of investment needed over the next 3 decades for a clean energy future.

The NZBA brings together over 90 banks with a collective US$ 66 trillion in assets, representing 43% of banking assets worldwide to support this rapid transformation of the global economy. Banks in the Alliance commit to using robust, ambitious, science-based targets to decarbonise their lending and investment portfolios on a 1.5 degree climate trajectory to achieve net zero emissions by 2050.

Right here is where private finance draws the line,” said Mark Carney on Wednesday, as he announced the US$ 130 trillion in assets across 450 financial institutions which are now firmly committed to net zero under the Glasgow Financial Alliance for Net Zero (GFANZ) – which includes the Net-Zero Banking Alliance. “We now have the essential plumbing in place to move climate change from the fringes to the forefront of finance so that every financial decision takes climate change into account.”

“This will go down in history as one of the most significant outcomes from this COP – that massive wave of capital in the Glasgow Financial Alliance for Net Zero’ – Nigel Topping, UN High Level Climate Action Champion for COP26

Participants on Thursday’s banking panel spoke to the strength of the Net-Zero Banking Alliance, highlighting how it enables banks to join forces to take a consistent, international approach to net zero, promoting alignment on key issues such as measurements and disclosures. By working together, banks can build a common language and share best practices on technical developments such as carbon accounting, offsets, target-setting and scenario use.

Critically, the panelists noted that the NZBA convenes a common voice of the industry, enabling them to collectively engage with regulators and policy makers for the supportive environment that the banking community requires to implement net zero across jurisdictions. Banking leaders drew attention to the need for an enabling policy environment at the national and international level, calling on governments to set frameworks and public policies that incentivise green financing and bring clarity on the pathway ahead for the real economy.

Banks and regulators both noted the tension between the need to consolidate approaches and reduce fragmentation while still needing to experiment as the financial system learns and builds capacity together to seek best-practice, for example on how climate change risks can be reflected in the capital framework, with careful consideration given to stress testing scenarios. The Bank of England highlighted their recent PRA report on climate-related financial risk management and the role of capital requirements, which sets down their current thinking on the topic as well as their strategy and planned future work.

Several panellists highlighted the need for a just, orderly transition of the global economy – a transition which is not simply about divesting, but instead fully engaging with corporate and retail clients to accelerate the transition, making it affordable and simple to help people and businesses prosper even as the economy undergoes a rapid, seismic shift. The panel also spoke to emerging markets, one of the key themes at COP26 this year, highlighting the need to ensure a healthy flow of capital to those areas that need it most, a view echoed in the G20 Policy Call to Action, recently issued by the GFANZ Principals group.

“If banks are serious about net zero it is quite clear they can no longer finance the expansion of infrastructure, technologies and business models that we know are incompatible with the 1.5°C climate goal.”  Inger Andersen, Under-Secretary-General of the United Nations and Executive Director of UNEP in a speech delivered by Remco Fischer, Climate Lead at UNEP FI


Walking the Talk

Credibility, transparency and delivery are critical components of any commitment to ensure trust is maintained and strengthened between financial institutions and the societies they serve.

Speakers highlighted how the Net-Zero Banking Alliance guides banks along a steep emissions reduction pathway, in line with scientific, credible low/now overshoot climate scenarios, including those laid out by the Intergovernmental Panel on Climate Change (IPCC). These scenarios are time-bound, and so dictate to some degree the transition timeline of financial portfolios. The commitment includes annual, public reporting requirements on both absolute emissions and emissions intensity – a transparent and robust pathway to absolute reduction in order to achieve the net-zero future the world needs.

“[Sustainability and climate] has now gone mainstream […] but the question is now pace. It’s not enough to make commitments, you have to follow through as well.” Alok Sharma, President for COP26 in an address to both member states and non-state actors.

Immediacy of action is also baked in, with banks setting their first targets in high emissions sectors within 18 months of signing. These targets are for 2030 at the latest, so a maximum of 8 years from today, leaving only a short window for banks to react to reach their first milestones. “We need to walk the talk, and the sooner, the better”, said one panelist, urging peers who are not yet part of the NZBA to join and, critically, to get started as soon as possible. “It takes time [to implement] – it’s a journey, clients need to be engaged, capacity built, emissions need to be measured and more. It’s not just an investing exercise, it’s really about helping clients.”

Remco Fischer, Climate Lead for UNEP FI echoed this sentiment, saying: “the task won’t be easy, but it is necessary. For a stable climate. For a thriving, safe and biodiverse natural world. For a planet free of pollution. All of which we need for human health, prosperity and peace.”

The NZBA COP26 event was generously supported by Banco Santander
A replay of this event is available here | Learn more about the Net-Zero Banking Alliance

5 examples of best practice to sustainably finance the marine renewable energy sector

4 November 2021

COP26 today focuses on accelerating the global transition to clean energy. The blue (ocean) economy offers many opportunities for private finance to lend and invest in a sustainable and nature-positive way. Here we look at some of the leading examples of best practice in social and environmental sustainability across the marine renewable energy sector which banks, insurers and investors can seek out. Marine renewable energy includes a broad range of possible sub-sectors, including offshore wind, wave, tidal, floating solar, ocean thermal energy conversion (OTEC) and a number of other more conceptual technologies. Of these, offshore wind is the most mature.

For offshore wind, key drivers of impact are the planning, construction, operation and decommissioning stages of offshore wind farms. Across these drivers, pressures exerted on society and the environment include seabed disturbance and disruption of habitat, pollution, disruption of wildlife and social conflict.

To bolster interest in marine renewable energy development, we have listed 5 examples of innovative best practice in marine renewable energy – specifically offshore wind – that you might not know about.

Check out Turning the Tide, UNEP FI’s detailed guidance on financing for the sustainable blue economy for more examples and how they may be material to your institution. The guide also includes an overview of activities to challenge or to avoid financing altogether, based on their sustainability credentials and overall risk. The recommendation may be to challenge certain activities, even where best practice is present in other areas.

1. Lifecycle approach

While still an emerging energy sector, end-of-life for offshore wind is a growing topic where opportunities for best practice exist. Seek out developers taking a lifecycle approach to wind farm development, particularly those including a plan for decommissioning the wind farm at its end-of-life in a way that minimises impact or disruption.

2. Spatial planning

As the blue economy develops, coastal zones and marine spaces will become increasingly crowded, putting marine habitats at risk. Carefully planning new developments through marine spatial planning (MSP) offers a way for renewable energy to be developed in a way that minimises impacts on habitat and other users of the marine environment like the fishing industry. Seek out financing opportunities in wind farm developments that are part of a more systemic understanding of the marine space in which they will operate.

For example, Danish energy company Ørsted places particular emphasis on wind farm siting and stakeholder consultation during the planning phase and has developed an approach to stakeholder engagement in the context of wind farm development as an activity to limit and mitigate their impact on marine biodiversity.

3. Minimising pollution

Although renewable energy has a low carbon footprint, there may still be pollution associated with the development of marine renewables. For example, wind turbines generate noise pollution both above and below the water line, and service and repair vessels may emit pollutants into the atmosphere and the water. Seek out developers that are working to implement best practice approaches to minimising pollution of any form associated with offshore wind life cycles, including sharing of best practice and transparency in approaches and their impacts.

4. Avoiding wildlife disruption

Like pollution, the operation of marine renewable energy installations can disrupt wildlife, as well as habitats. Operation of wind farms in areas frequented by birds and bats may, for example, lead to avoidable collisions that harm wildlife as well as the wind farm. Fortunately, best practice is emerging on ways to avoid or mitigate disturbance or injury to wildlife. Seek out developers actively looking to understand the environmental impacts of floating offshore wind better, featuring approaches that include marine species monitoring and thresholds for limiting harm to species, especially ETP species.

5. Sharing knowledge

Marine renewable energy remains an emerging sector, especially for technologies beyond wind, such as wave and tidal energy. The best way to encourage the sector’s sustainable growth is to share knowledge on best practice with others. Seek out developers that are proactively sharing best practice and experiences in mitigating, managing and minimising pollution associated with offshore wind, as well as those that are transparent with their baselining and monitoring data for impact.


DISCLAIMER: This list does not represent investment advice nor is it an endorsement of any specific investment opportunities. Due diligence should continue to apply in addition to consideration of opportunities enabled by applying the Turning the Tide guidance.

Net-Zero Banking Alliance reaches milestone with over 90 banks committed

3 November 2021

Leading the 1.5 Degree Journey: Aligning the Banking Sector

Climate change is the defining issue of the century; an existential risk and a code red for humanity. A rapid decarbonisation of our economies with global emissions decreasing by 7.6% every year is required to keep the Paris Agreement’s 1.5 degree goal within reach.

To achieve this goal will be incredibly challenging. We need an all-of-society approach to get there, with both public and private finance mobilising capital at scale to finance the transition. Estimates of how much the net zero ambition will cost range from around $100 to $150 trillion USD, cumulative over the next 30 years.

Mobilising capital on this scale is one of the core objectives at this year’s COP 26, which aims to keep 1.5 degrees within reach by unleashing the trillions in private and public sector finance required to secure global net zero.

This is also the drive behind the industry-led, UN-convened Net-Zero Banking Alliance, the banking element of the Glasgow Financial Alliance for Net Zero, which is designed to raise standards, and drive ambition across the financial sector using the criteria of the UN’s Race to Zero.

Through the Net-Zero Banking Alliance, a rapid, pivotal mobilisation of the banking sector is already underway with 92 banks representing US$ 66 trillion – over 43% of banking assets worldwide – now standing together and firmly committed to a net zero future. This includes the top 10 largest banks by assets in Europe, the 10 largest in North America and 6 of the 10 largest in Latin America and the Caribbean. In Asia Pacific 3 of the 10 largest are committed, and 2 of the 10 largest from the Middle East & Africa, with member banks headquartered in 39 different countries.

Banks are a vital part of enabling the decarbonisation of the global economy. Through lending and investment decisions, banks can accompany and prompt their clients to accelerate the transition. The Alliance provides a global leadership community of banks that have committed to catalysing the decarbonisation of entire industries and sectors – from energy, agriculture and transport, to real estate and production of raw materials – in a transparent, credible and consistent way, in line with science.

At the core of the Alliance is its commitment statement, which provides a robust, ambitious and science-based framework to reinforce, accelerate and support banks’ decarbonisation plans. By becoming signatories to the Alliance’s commitment, banks agree to target a temperature outcome of 1.5 degrees, using no or low-overshoot climate scenarios. This means that the transition pathway cannot be heavily reliant on unproven negative emissions technologies, and must have a low or no overshoot of the global 1.5 degree temperature level.

Immediacy of action is generated by the commitment’s clear timeline, with banks prioritising carbon-intensive and high emitting sectors and setting their initial 2030 and 2050 targets within 18 months of signing, which will cover a significant majority of their financed emissions.

The commitment is also designed for full transparency and accountability. Each time a target is set, the signatory must report against those targets within 12 months, covering both absolute emissions and emissions intensity in their publicly-available reports. Within the same timeframe, members will publish a high level transition plan providing an overview of the actions expected to be undertaken to meet the targets and an approximate timeline.

The commitment is grounded in the UN-backed Race to Zero which has a robust entry process led by an independent group of academics and climate action experts, who review applications to check their level of rigor and robustness against the Race to Zero entry criteria.

What’s next?

COP 26 is only the beginning. The Alliance is now focused on supporting members on implementing their commitments and achieving their targets, providing a forum for banks to come together on technical developments such as carbon accounting, offsets, target-setting and scenarios. It will also focus on producing capacity-building pieces including sectoral guidance and position papers and developing common approaches by assessing tools, methodologies and best practice.

Join the Net-Zero Banking Alliance Events at COP 26 on November 4th 2021
Register for the 08:30 GMT event | Register for the 13:00 GMT Event

More on the AllianceMore on GFANZ and Race to Zero

“Climate action tops the list of people’s concerns, across countries, age and gender. We must listen, we must act, and we must choose wisely.” António Guterres, UN Secretary General, COP 26 opening ceremony

COP26 event: Funding the Sustainable Blue Economy

11 November 2021 | Virtual

To keep 1.5 degrees within reach, we need a healthy ocean. As the earth’s largest natural carbon sink, the ocean has already absorbed 1/3 of total anthropogenic CO2 emissions since the 1980s – however this has come at a cost, leading to rising acidification, warming and damage to this critical ecosystem.

The ocean is at the nexus of the triple planetary crises; climate change, nature loss and pollution, but it’s time that the ocean was seen not as part of the problem, but as part of the solution. A healthy ocean means an oxygenated planet. It means abundant marine life and food security for billions of people. It means a functioning carbon sink to help sequester greenhouse gasses, even as our economies transition to a low-emissions energy future.

By ensuring human activities which directly impact and depend on the ocean are sustainable, we can rebuild ocean prosperity and restore biodiversity. Activities such as shipping, fishing, coastal tourism, ports, marine renewable energy and more – need to rapidly transition into a sustainable blue economy, which remains exceptionally underfunded.

This session focuses on how we can mobilise both public and private financial flows from banks, insurers and investors, towards a sustainable ocean industry that offers an immense potential for climate change mitigation and adaptation, using key frameworks and initiatives, including the Sustainable Blue Economy Finance Principles – to rebuild, renew and replenish the ocean – for people and planet.

Speakers:

  • Mr Peter Thomson, UN Secretary General’s Special Envoy for the Ocean 
  • Mr Dennis Fritsch, Sustainable Blue Finance lead, UNEP FI
  • Ms Gabriella Kossmann, Senior Adviser, Norwegian Agency for Development Cooperation
  • Mr Justin Mundy, Strategic Advisor, Willis Towers Watson, Chairman, SLM Partners
  • Ms Piera Tortora, Coordinator of Sustainable Ocean for All Initiative, OECD
  • Mr Chip Cunliffe, Biodiversity Director, AXA XL
  • Ms Louise Heaps, Head of Sustainable Blue Economy, WWF

Register here