Climate Change

Climate change is referred to by leading economists as the greatest market failure in human history, with potentially disruptive implications on the social well-being, economic development, and financial stability of current and future generations: conservative estimates see unabated climate change leading to global costs equivalent to losing in-between 5 to 20% of global gross domestic product (GDP) each year, now and forever.

As a result, public and private decision-makers around the world are faced with the dual imperative of:

  • Significantly – and rapidly – reducing greenhouse gas (GHG) emissions worldwide, by decarbonizing the global economy, in order to prevent the mean global temperature increase from reaching dangerous levels
  • Adapting global consumption and productions patterns, lifestyles, and the underlying supply-chains, to the physical – meteorological, hydrological – impacts of climate change that are now unavoidable

The finance sector, lying at the heart of today’s global markets, faces the same challenges, but it also is presented with the vast financial opportunities associated with overhauling economies towards climate-compatibility:

  • On the one hand, new risks – recently categorized into transition-, physical, and liability-risks –  need to be understood, identified, assessed, managed, and eventually disclosed on, by institutions across financial industries.
  • On the other hand will the transition to low-carbon and climate-resilient economies require additional investment at an order of magnitude of at least USD 60 trillion, from now until 2050; and that investment will require financing which, in part, will have to be provided by financial institutions: USD 35 trillion to decarbonize, through renewable energy and energy efficiency, the world’s energy system; another USD 15 trillion to adapt manmade infrastructure to changing meteorological conditions; and another 2 USD trillion to reorganize global land-use is ways that meet growing demands for agricultural commodities while stopping tropical deforestation.

For financial institutions to not only weather changing risk landscapes but for them to also become determined enablers and catalysts of the climate economic transition, a number of conditions need to be met: FIs need to understand the commercial risks and opportunities implied, and know how to act on them. Legislators and regulators, including financial regulators, on the other hand, need to understand the roles, potentials, and policy-needs, of financial institutions; they also need to know how they can help steer the finance sector to become an enabler, rather than inhibitor, of the climate economic transition.

As the interface between the financial industry and world Governments, UNEP FI is uniquely positioned to help meet those conditions. Join us.

Please contact Remco (Kai) Fischer  for more information.

Climate Change News

20 January 2021

New report sheds light on sustainable financing in Arab region and provides policy recommendations

A new report provides the first in-depth analysis of  sustainable finance practices in a part of the world most vulnerable to the effects of climate change: the Arab region. Issues such as water scarcity, rising sea levels, drought, land degradation and desertification will have serious repercussions for food, energy and water security in this area. Implementing the Sustainable Development Goals – in particular those that help deal with the interlinked water-energy-food challenges – will be key to build resilient, fairer economies.

7 January 2021

Net-Zero Asset Owner Alliance: Statement on the need for a fully developed IEA 1.5°C scenario

As members of the UN-convened Net-Zero Asset Owner Alliance (AoA), we welcome and commend important advancements in the recently-released 2020 World Energy Outlook – in particular, the first-ever inclusion of a net zero by 2050 case to supplement the Sustainable Development Scenario. To help enable a rapid and smooth global transition to net zero emissions by 2050 it is vital that this scenario is expanded into a more robust, comprehensive and central scenario in next year’s iteration of the WEO.

14 December 2020

How UNEP FI is supporting finance action ahead of COP26

On the fifth anniversary of the Paris Climate Agreement, UNEP FI announced its membership of a group of leading finance coalitions that will coordinate their efforts to secure high ambition commitments from private finance institutions by COP26 in November 2021. The coalition will support the COP26 presidency and the Race to Zero in mobilising action across the finance sector.

10 December 2020

One Earth Climate Model plots possible course for real economy to meet Paris 1.5 °C scenario

COP26 Champions welcome study as enabling rapid net-zero transition Geneva, 10 December 2020 – Based on the 2019 One Earth Climate Model (OECM) by the Institute for Sustainable Futures at University of Technology Sydney (UTS), Sectoral Pathways to Net Zero maps out possible 1.5 °C pathways for five key high-emitting sectors: energy, utilities, materials in…

18 November 2020

U.N.-convened Net-Zero Asset Owner Alliance adds members managing combined $200 billion assets

The United Nations-convened Net-Zero Asset Owner Alliance has added three new members with combined assets under management (AUM) of $200 billion, committing to transition their investment portfolios to net-zero greenhouse gas emissions by 2050. Announced at the 19th November Race to Zero Dialogues Finance Day, the new members are: Denmark’s P+, Pension Fund for Academics;…

6 November 2020

U.N.-convened Net-Zero Asset Owner Alliance publishes Thermal Coal Position

Members of the 30-strong UN-convened Net-Zero Asset Owner Alliance have published their position on thermal coal, calling for the cancellation of all new thermal coal projects, a phase-out of all unabated existing coal-fired electricity generation and a cessation of the financing, development and planning of further thermal coal power plants. In its Thermal Coal Position,…

13 October 2020

Net-Zero Asset Owner Alliance sets unprecedented 5-year portfolio decarbonization targets

Thirty of the world’s largest investors with $5 trillion assets under management have collectively agreed on concrete portfolio decarbonization targets that follow the Intergovernmental Panel on Climate Change (IPCC) 1.5 °C scenario for the next five years. UN-convened Net-Zero Asset Owner Alliance members will implement deep greenhouse gas (GHG) emissions reductions in the 16% to 29%…

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Climate Change Events

25 January 2021 | Webinar

UNEP FI and members at the Climate Adaptation Summit 2021

Join UNEP FI and members for an in-depth discussion on climate-related physical risk and a major announcement from ten financial institutions. UNEP FI is hosting a side event at the Climate Adaptation Summit which will also see leading financial institutions announce their commitment to climate-related physical risk assessment and disclosure, while making a ‘call to action’ to the finance sector and governments around the globe to address the principal obstacles to greater disclosure.

23 September 2020 | Online

Introducing Transition Check, a tool by UNEP FI and Oliver Wyman

Join Oliver Wyman and UNEP FI on 23 September at the launch of “Transition Check”, a web-tool to translate climate scenarios into financial metrics.  As businesses consider the impacts of climate change on their long-term sustainability, it has remained difficult to measure such risks – until now. Introducing Transition Check, a web-tool that takes a…

22 January 2020 | 13.30 - 14.00 in the Media Village at the World Economic Forum, Davos, Switzerland

Press conference at WEF 2020: How are financial giants engaging with investee companies to catalyse shift to a net-zero-carbon economy?

Join us in Davos at the World Economic Forum 2020 for a media briefing via live link which will see the announcement of an important milestone in the development of the Net-Zero Asset Owner Alliance, as the sixteen members welcome another influential and well-known investor to their mission to decarbonize the economy. Find out how the Alliance will be engaging with the companies it is investing into to ensure their portfolios are net-zero carbon by 2050.

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Climate Change Publications

Promoting Sustainable Finance and Climate Finance in the Arab Region

This report analyses the climate change related risks countries in the Arab region are facing such as water scarcity, rising sea levels, drought, land degradation and desertification. It sheds light on the existing strategies and policies on climate adaptation and mitigation in the region, and emphasizes the importance of sustainable finance resources in transitioning to…

Collective Commitment to Climate Action: Year One in Review

The Collective Commitment to Climate Action (CCCA) is the most ambitious global banking sector initiative supporting the transition to a net zero economy by 2050. It brings together a leadership group of 38 banks from across all six continents who have committed to align their portfolios with the global climate goal to limit warming to…

Beyond the Horizon: New Tools and Frameworks for Transition Risk Assessments from UNEP FI’s TCFD Banking Programme

Beyond the Horizon: New Tools and Frameworks for Transition Risk Assessments from UNEP FI’s TCFD Banking Programme Thirty-nine global financial institutions from six continents participated in UNEP FI’s second TCFD banking programme. Through this yearlong engagement, the participating banks collaborated with climate risk experts and each other to improve financial assessments of transition risk. In…

Climate Risk Applications: Guidance and Practices

From Disclosure to Action: Applying TCFD principles throughout financial institutions Recent reports from the Network for Greening the Financial System (NGFS) and the Commodities Futures Trading Commission (CFTC) indicate how the financial sector has increasingly recognized climate risk as a financial risk. Financial institutions must respond to the threat of climate change by identifying, assessing,…

UNEP FI and IIF’s “TCFD Report Playbook”

UNEP FI and the Institute of International Finance (IIF) have developed a TCFD Playbook to serve as a resource for firms at different stages of their TCFD journey, with support from EY. The organisations conducted a joint initiative to assist banks and other financial institutions in their efforts to strengthen climate risk disclosures by convening…

Using hindsight and foresight: Update from the TCFD Pilot Project for Insurers

Using hindsight and foresight: Enhancing the insurance industry’s assessment of climate change futures Over the past eight months, 22 leading insurers and reinsurers from across the globe (“the pilot group”) have been collaborating under the auspices of UN Environment Programme’s Principles for Sustainable Insurance Initiative (PSI) to explore and pilot methodologies that insurers can use towards implementing the recommendations of the Financial…

Charting a New Climate: TCFD Banking Programme Report

Charting a New Climate: State-of-the-art tools and data for banks to assess credit risks and opportunities from physical climate change impacts Charting a New Climate is a report on physical climate risks and opportunities from Phase II of its Task Force for Climate-related Financial Disclosures (TCFD) Banking Programme with climate risk advisory and analytics firm,…

Aligning Finance for the Net-Zero Economy: Thought Leadership Series

UNEP FI has partnered with EIT Climate-KIC to develop a series of thought leadership papers that aims to inspire financial actors worldwide to move from risk to alignment, challenge current assumptions around climate alignment and develop ideas and concepts on how alignment can best be achieved. We hope to encourage stakeholders that a proactive climate…

Cómo los bancos incorporan el cambio climático en su gestión de riesgos

This report aims to present the survey results of “How the Banks of Latin America and the Caribbean (in Spanish, ALC) incorporate climate change in their risk management,” which aligns with the first global initiative exploring what regional banks are doing to integrate dimensions of climate change in their strategy and management.

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