First region-wide study on how Latin America & Caribbean banks are incorporating climate change into their risk management

7 August 2020

 

Seventy eight banks from 11 countries in Latin America and the Caribbean recently took part in the first region-wide survey on how the banks are incorporating climate change into their risk management. The study sample represents 54% of the total assets of the Latin America and Caribbean market. It showcases the level of knowledge, current commitments and future goals on climate risk management of the banking sector in the region. Chile, Colombia and Mexico were excluded from this analysis, since similar surveys were recently carried out in these countries, the results of which are also presented in this report.

This work was undertaken by UNEP FI and CAF – Development Bank of Latin America, in collaboration with the Latin American Federation of Banks (FELABAN).

The report is available in Spanish with executive summaries also in English and Portuguese. Download here.

The recording of the launch webinar is available to watch here.

News:

(ESPAÑOL)

En el webinar que tuvo lugar el 5 de agosto se presentó el estudio “Cómo los bancos incorporan el cambio climático en su gestión de riesgos – 1a encuesta en América Latina y el Caribe”, realizado por la Iniciativa Financiera de ONU Ambiente (UNEP FI) y CAF – Banco de Desarrollo de América Latina, con la colaboración de la Federación Latinoamericana de Bancos (FELABAN). Este reporte muestra el nivel de conocimiento, compromisos actuales y metas futuras de gestión de riesgos climáticos del sector bancario en la región. Las 78 entidades bancarias que fueron parte de este estudio pertenecen a 11 países de la región. La muestra de estudio representa el 54% de los activos totales del mercado de América Latina y el Caribe (ALC). Quedaron excluidos de este análisis Chile, Colombia y México, ya que en estos países se desarrollaron encuestas similares recientemente, cuyos resultados también se exponen en este informe.

El reporte está disponible en español. Resúmenes Ejecutivos están también disponibles en español, portugués e inglés. El reporte y los Resúmenes Ejecutivos se pueden encontrar en este enlace.

La grabación del webinar del lanzamiento del reporte está disponible en este enlace.

Noticias:

The David Rockefeller Fund joins the UN-convened Net-Zero Asset Owner Alliance

3 August 2020

The UN-convened Net-Zero Asset Owner Alliance welcomes the David Rockefeller Fund to its membership.

The Fund becomes the 28th member of the Alliance, which now has combined assets under management (AUM) of nearly $5 trillion. The Alliance was launched by 12 members with AUM of $2.4 trillion in September 2019.

Nili Gilbert, David Rockefeller Fund Trustee & Investment Committee Chairwoman, says:

“David Rockefeller Fund believes that it is critical for us — as a private, endowed family foundation committed to climate solutions — to align our investment portfolio with science-based targets for climate change mitigation”.

“The vast majority of the 85,000 US foundations are small, but their assets exceeded $1 trillion at the peak of the 2019 market. As the first foundation to join the Alliance, we hope to help pave the net-zero path for climate-concerned foundations to be aligned with the Paris Climate goals. As the third American asset owner to join the Alliance, we also hope to shine a light on climate-aware investing within our country”.

About the David Rockefeller Fund

The David Rockefeller Fund was established in 1989 by David Rockefeller and his wife Peggy to carry out their annual charitable giving in communities where they had homes outside New York City. In 2001, David Rockefeller expanded the Fund and invited his children and grandchildren and their spouses to take a more active role in the Fund with the idea of transferring to them the family’s philanthropic tradition. The Fund’s work provides a learning environment where family members are able to engage in dialogue and grant-making around shared topics of interest.

About the Net-Zero Asset Owner Alliance

The Alliance is an international group of institutional investors committed to transition their investment portfolios to net-zero greenhouse gas (GHG) emissions by 2050, which was launched at the Secretary-General’s 2019 Climate Action Summit. The initiative is centered upon a united investor action to align portfolios with a 1.5°C scenario, addressing the finance goal (Article 2.1c) of the Paris Agreement.

The fund now has 28 members with combined assets under management of nearly $5 trillion.

Signatories to Principles for Responsible Banking agree robust accountability mechanisms involving civil society

16 July 2020

 

In a major step forward for the UN’s Principles for Responsible Banking, its current signatories and members of UNEP Finance Initiative (UNEP FI) have voted for a new governance structure, agreed individual and collective progress review processes, as well as a process for dealing with signatories who fail to deliver on their commitments. The new governance body, to be known as the Banking Board, will oversee the effective implementation of the Principles for Responsible Banking. To ensure the credibility of the new framework, a civil society advisory body will be created to help monitor collective progress, advise the Banking Board on strategic matters and help maintain the relevance of the framework.

“The outcome of the vote reflects the importance that the global banking community places on its role in tackling climate change, contributing to the UN Sustainable Development Goals, and driving a sustainable post-Covid-19 recovery. It sends a powerful signal to stakeholders that the banks take their responsibilities seriously and are truly committed to implementing the Principles for Responsible Banking,” said UNEP FI Head, Eric Usher.

 

With the Individual Review Process, each bank will be held accountable for demonstrating progress in line with the commitments it has made as a signatory. From 2021, UNEP FI will annually review each bank’s reporting against the requirements set out in the official Principles for Responsible Banking Framework documents: the Key Steps to be Implemented by Signatories and Reporting and Self-Assessment Template. The results will enable UNEP FI and the Banking Board to identify which banks need additional guidance and support to successfully deliver on their commitments. If despite the support and guidance provided, a bank is consistently unwilling or unable to address the shortcomings, the Banking Board can decide to no longer list the bank as a signatory.

“Of great value to signatory banks, is the unique opportunity to get customised and expert feedback and advice on the bank’s PRB journey from the individual review process,” said Wendy Dobson, Head of Group Policy, Advocacy and Sustainability in Group Risk, Standard Bank, South Africa and co-Chair of UNEP FI’s Banking Committee.

 

Taking their accountability to society and stakeholders as well as their commitment to “consult and engage” with civil society seriously, signatories have agreed to take a step no other sustainable finance framework has taken to date – establish a Civil Society Advisory Body. The Body will comprise twelve organizations from every region around the globe with expertise in the most relevant social and environmental issues. One of its key roles will be to monitor and provide an independent view on the collective progress of signatories to the Principles for Responsible Banking. The Body’s independent assessment will be published as part of the UNEP FI’s biennial Collective Progress Report on the Principles. Furthermore, the Civil Society Advisory Body will be tasked with helping to keep the framework in step with evolving global sustainability objectives and advising the banks on updates to the Principles for Responsible Banking framework documents and requirements. Later this year, a public call will be issued for applications inviting civil society institutions from around the world to declare their interest in becoming a member of this Body.

“We know that with the challenges we face today, collaboration is essential. Having seen the value of engaging directly with civil society groups in the development of the Principles, we’re now proud to take the step to establish a formal Civil Society Advisory Body, supporting constructive dialogue between banks and civil society, with a shared goal of better sustainability performance,” said Siobhan Toohill, Group Head of Sustainability, Westpac Group, Australia and co-Chair of UNEP FI’s Banking Committee.

 

Complementing robust accountability with support, guidance and collaboration, UNEP FI’s banking members have agreed to provide substantial additional budget for an extensive support structure – this entails individual feedback and guidance for banks, targeted peer learning, and the joint development of tools and guidance in six Working Groups focusing on key aspects of implementing the Principles for Responsible Banking.

 

About the Principles for Responsible Banking

The Principles for Responsible Banking are a unique framework for ensuring that signatory banks’ strategy and practice align with the vision society has set out for its future in the Sustainable Development Goals and the Paris Climate Agreement.

More than 180 banks have now joined this movement for change, leading the way towards a future in which the banking community makes the kind of positive contribution to people and the planet that society expects. These banks represent more than a third of the global banking industry.

For more information go to: www.unepfi.org/responsiblebanking

Contact: Sally Wootton

BLOG: UNEP FI urges the EU to embed sustainability impact into its Renewed Sustainable Finance Strategy

14 July 2020

In July 2020, the European Commission closed its stakeholder consultation on its Renewed Sustainable Finance Strategy, which will be adopted by year-end. The Commission’s proposal recognizes that the scale of investment necessary for a timely, just and sustainable transition goes beyond the capacity of the public sector and needs to include the private sector as well. The consultation sets an ambitious tone and touches on cross-cutting policy areas relevant to the investment, banking and insurance industries.

UNEP FI welcomes the Commission’s consultation and urges the EU to embed sustainability impact into its Renewed Sustainable Finance Strategy. Elodie Feller, UNEP FI Investment Lead, explains why.

As attention turns to planning for the post-COVID recovery and to preventing future outbreaks, we see a unique opportunity for the European Commission to demonstrate its leadership and commitment to the European Green Deal, by encouraging impact analysis and management by financial institutions, by setting the right sustainability targets, and by establishing a coherent and clear regulatory direction for the finance industry to support sustainable recovery efforts.

The European Commission’s ambitions for a sustainable economy have already led to several constructive developments, such as the EU Taxonomy and the EU Investor Disclosure Regulation. The EU Taxonomy specifies what level of environmental performance an economic activity should have if it is going to contribute to Europe’s environmental objectives. The EU Investor Disclosure Regulation requires financial institutions and financial advisors to publish a statement on how they consider the principal adverse impacts of their investment decisions on people and planet.

These updates demonstrate significant regulatory effort to mandate performance against sustainability targets. This consultation suggests that regulatory frameworks in the EU can continue to improve, notably to fully embed sustainability impact into finance decisions, disclosure rules and (soft or hard) regulatory instruments to support the transition towards more sustainable business models.

UNEP FI strongly supports the European Commission’s proposals, both in terms of the direction being taken and in terms of the specific proposals that are being made for the Renewed Sustainable Finance Strategy. In particular with regards to:

  • Raising the bar and emphasis on sustainability impacts. Within the next decade, assessing and managing the sustainability impact of finance through decision making processes need to be a core part of how finance institutions provide capital to the real economy.
  • The broadening of the Commission’s focus from climate change to a more holistic approach to sustainability, encompassing the full range of positive and negative social, economic and environmental impacts. Finance should align its practices, strategies and capital allocation with the net-zero carbon objective (see the work of the UN-convened Net Zero Asset Owner Alliance), net gain of biodiversity (see our latest report Beyond Business as Usual: Biodiversity Targets and Finance), and inclusively the realization of the Sustainable Development Goals.
  • The explicit focus on the banking sector, given the sector’s critical role in supporting the transition to the low carbon economy and the transition towards more sustainable business models. UNEP FI is supportive of a coherent regulatory framework that incentivizes and mandates the integration of impact in financial decision-making and also that influences the shaping of business models and strategies that have the ability to navigate and achieve the transition. Banks will need the whole economy to walk the talk to be in turn able to deliver all the expected benefits in terms of shifting capital to the transition.

The UNEP FI consultation response shares expertise and knowledge gained from initiatives led by its member institutions, with the objective to provide the Commission with hard evidence and hopefully confidence that the finance industry’s leadership must be reflected in their upcoming Renewed Sustainable Finance Strategy.

In responding to this consultation, UNEP FI also urges the European Commission to use this opportunity to embed investing for sustainability impact into investment frameworks. Investors that integrate environmental, social, and governance (ESG) factors in their investment processes also understand the need to shift their attention to sustainability impacts. Of course, all investments have positive and negative impacts – via the companies they invest in, but now these impacts need to be assessed, measured, managed and reported. The project A Legal Framework for Impact, undertaken collaboratively with the Principles for Responsible Investment (PRI) and The Generation Foundation as well as legal expertise from Freshfields, will produce legal and policy recommendations assessing the extent to which legal frameworks currently enable, impede, or need improvement for investors to drive this shift.

The Principles for Responsible Banking are now supported by more than 180 banks collectively holding USD 47 trillion in assets, or one third of the global banking sector. The signatories to these Principles echo the vision above in that they are required to perform an impact self-assessment of their activities. This year, the UNEP FI Positive Impact Initiative launched a Portfolio Impact Analysis Tool as well as a Corporate Impact Analysis Tool to help banks scrutinize their clients and investee companies’ impacts based on a common methodology. Also, through the UNEP FI and EBF Working Group, 25 major banks are already piloting the EU Taxonomy. A major report in Q4 2020 will present case studies and identify gaps and opportunities for the current EU Taxonomy to apply to banking products.

Despite significant advances, markets and the economy continue to operate beyond sustainability boundaries. For banks and investors to significantly help solve the big societal issues we face requires moving beyond integration of financially material ESG issues alone. We may not have time for those issues to materialize financially anyway.

The next frontier for sustainable finance to tackle is sustainability impact and integrating the consideration of sustainability impact into decision-making processes. Policymakers and regulators, through the frameworks they influence, must also align with this goal.

The UNEP FI consultation response prioritizes 14 questions across 5 themes:

  1. The importance of taking a holistic impact approach, which focuses on the interlinkages between environmental, social and economic factors and the finance value chain (our responses to Questions 6, 8, 52, 82, 83, 89 and 90 focus on this theme).
  2. Climate change (Question 10 in particular).
  3. Biodiversity and ecosystems (Question 11).
  4. The importance of harmonized and consistent disclosures across the value chain (Question 14).
  5. The importance of mainstreaming both risk and impact management, in Europe and globally (Questions 60, 77, 91 and 102).

The full response to the consultation is available here.

For more information about UNEP FI’s response to the European Commission’s consultation, please contact elodie.feller@un.org.

Urgency for Finance Sector to set Biodiversity Targets

30 June 2020

New research published today by the United Nations Environment Programme (UNEP) and the Natural Capital Finance Alliance (NCFA), shines a spotlight on the urgent need for financial sector action on biodiversity. The report, entitled Beyond Business as Usual: Biodiversity Targets and Finance highlights the need for banks, investors and insurers to set firm targets to reduce biodiversity loss, for example ‘net positive impact’ across their activities, starting with nine critical sectors where financial players are exposed through their loans, investments or underwriting activities. Click here to download the report.

  • US$44 trillion of economic value generation, more than half the world’s GDP, is moderately or highly dependent on nature, which is under increasing threat
  • Banks, investors and insurers have made progress on setting climate and sustainability targets, but few have begun to address biodiversity loss
  • The UN-backed group sets out a step-by-step approach for financial institutions to contribute to halting biodiversity loss by setting targets to guide activity
  • Mining, Agriculture and Oil & Gas among the nine high priority sectors, along with Brewers and Apparel, Accessories and Luxury Goods

Biodiversity – the variation of species and genetics among animals, plants, fungi or microorganisms – is fundamental to economic health, yet in less than three generations, human-caused global change has accelerated sharply, altering almost 75% of our planet’s surface, from land to ocean, and posing a considerable risk of changing the Earth’s systems. The continued degradation of these vital ecosystem services represents an annual loss of at least US$479 billion per year.

“The COVID-19 pandemic is a stark reminder of our exposure to and the risks created by the loss of nature. We urgently need all sectors of the economy to create better outcomes for people and nature. This report shows that banks, investors and insurers have a crucial part to play too. By making nature part of its decisions, and setting ambitious targets for biodiversity, the financial sector can reduce its risks and help to build a more resilient economy,” said Corli Pretorius, Deputy Director, UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC)

Eric Usher, Head of UN Environment Programme Finance Initiative (UNEP FI), said, “The emergence of COVID-19 has underscored the fact that, when we destroy biodiversity, we put our lives, livelihoods and economies at risk. This report provides a pathway for financial institutions to build back better and contribute to halting and reversing the biodiversity crisis, enabling them to bring their assets and decision-making in line with global policy developments.”

Policy frameworks, such as the Post-2020 Global Biodiversity Framework, due to be agreed under the Convention on Biological Diversity in 2021, and the European Union’s 2030 Biodiversity Strategy, are placing biodiversity at the heart of a post-pandemic economic recovery.

But, the report argues, these policy goals will be impossible to achieve unless financial institutions consider biodiversity, and urgently set targets to halt, or better reverse, current rates of ecosystem degradation and species loss. While many financial institutions have set climate targets in recent years, few have begun to address the critical issue of biodiversity loss. Significant attention is paid to the financial sector’s consideration of biodiversity, including a recent investigation by the NGO ShareAction, which found that none of the world’s 75 largest asset managers has a dedicated policy on biodiversity.

This may be set to change. The European Commission, for example, is currently reviewing the reporting obligations of businesses under the Non-Financial Reporting Directive, with a view to potentially mandating new disclosures on biodiversity.

Karin Siegwart, Vice-Director of the Swiss Federal Office for the Environment, said, “Improving the understanding of industries’ exposure to biodiversity risks as well as their impact on biodiversity loss allows for better-informed decision-making. This is why we support the development of the enhanced ENCORE tool as it helps align financing and investment decisions with international biodiversity goals.”

Today’s report – developed by the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC – explores how financial institutions can contribute to halting biodiversity loss. It sets out the nine priority sectors with large financial flows and major potential dependencies or impacts on biodiversity. This enables financial institutions to gain an understanding of where the highest risks lie within their current activities to inform their target setting.

A step-by-step guide outlines approaches to target-setting on biodiversity based on an initial analysis of the nine priority sectors, with example targets including “no net loss” or “net gain” of biodiversity. These can be implemented through measures such as investing in ecosystem restoration, biodiversity conservation, and the sustainable use of natural resources. This approach enables financial institutions to reduce risk exposure and create a more resilient global economy.

“The nature crisis is accelerating. This is an existential threat to us all – and is already creating profound systemic risks for the global finance sector. Establishing evidence-based biodiversity targets is a basic and essential step for any financial institution that does not want to get left behind. This report – and the innovative ENCORE data platform that sits behind it – is an important step towards that,” said Niki Mardas, Executive Director of Global Canopy

The report draws on the science and analyses of the online ENCORE tool – Exploring Natural Capital Opportunities, Risks and Exposure – developed jointly by the NCFA and UNEP-WCMC. It will be followed later this year by a ground-breaking biodiversity module in ENCORE, currently under development in consultation with 27 financial institutions. The module will enable banks, insurers and investors to assess whether their portfolios are in alignment with global biodiversity goals.


About NCFA
The Natural Capital Finance Alliance (NCFA) is a finance sector-led initiative, providing expertise, information and tools on material aspects of natural capital for financial institutions. It works to support these institutions in integrating natural capital considerations into their risk management processes and products as well as helping them to discover new opportunities. The NCFA secretariat is run jointly by the United Nations Environment Programme Finance Initiative (UNEP FI)  and Global Canopy.

About the United Nations Environment Programme
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.

About UNEP-WCMC
The UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC) is a global centre of excellence on biodiversity, operating as a collaboration between UN Environment Programme and the charity WCMC. UNEP-WCMC works on the interface of science, policy and practice to help tackle the global nature crisis.

For more information contact us at: info@unepfi.org

Property sector perspectives on ESG, COVID‑19, and managing crises

6 May 2020

The UNEP FI Property Working Group (PWG) convened virtually for two discussion forums to share information on how institutions are managing the public health and economic crisis from COVID-19, and thoughts on how institutions need to plan and operate for a post-crisis recovery.

There is strong consensus that institutions with deeply ingrained approaches to integrating Environmental, Social and Governance (ESG) considerations and that view sustainability as core to asset value and financial performance will weather the present crisis better relative to peers. They will be better positioned to address a range of societal challenges related to health, environment, social connections and norms, and economic equity moving forward. But ‘business as usual’, and even ‘best practice as usual’ will not be sufficient. ESG integration will surely need to evolve and will be even more critical in investor and lender decision-making.

With input from more than 20 financial institutions and external (non-financial institution) advisors to the Property Working Group, the PWG has published a short thought leadership bulletin on how good ESG integration is helping institutions respond to the present situation and will be critical to institutional structure and operations post-crisis. These PWG forums affirm that the response to COVID-19 and ESG integration are inseparable, and offered views on trends that will shape sustainable practices as institutions move forward into an altered risk and value-creation landscape. For more details, please download the bulletin, or contact the UNEP FI Secretariat, Matthew Ulterino or our PWG co-chairs Anna Murray and Calvin Kwan directly.

Banks share responses to COVID-19 crisis: Call to members to tell us about your company’s experiences

6 April 2020

UNEP Finance Initiative is providing a platform for banks to exchange experiences and ideas as they take responsible action to support society and businesses in this unprecedented crisis. UNEP FI is encouraging its members to share their experiences and contact their regional coordinator to tell us how they are responding. 

To help support their customers and in turn communities in the most effective ways, UNEP Finance Initiative’s coalition of over 200 banks from over 60 countries has been sharing practices, solutions and lessons learned as they respond to the COVID-19 crisis and its economic impacts.

Delivering on their commitments under the global sustainable banking framework, the Principles for Responsible Banking, UNEP Finance Initiative member banks and signatories around the world are playing a crucial role in supporting our societies through the current crisis. They are taking extraordinary measures to support their corporate clients, retail customers, governments and communities and UNEP Finance Initiative is helping to facilitate a global knowledge exchange so that banks can learn from one another and rise to the challenges across the world. We have gathered a selection of examples from Principles for Responsible Banking signatories in every region around the globe of how they are:

  • Supporting companies, large and small, to sustain their business during and beyond this crisis in line with Principle 3 of the Principles for Responsible Banking which commits banks to “work responsibly with clients and customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future generations.”
  • Partnering with governments in managing the economic and social impacts of the measures taken to contain the spread of the virus in line with Principle 4, to “proactively and responsibly consult, engage and partner with relevant stakeholders to achieve society’s goals.”
  • Ensuring access to the key financial services and infrastructure that society relies on for everyday life.

Read the responses here.

Contact your regional coordinator to share the measures your company is taking to respond responsibly to COVID-19.

About the Principles for Responsible Banking

The Principles for Responsible Banking were developed by a core group of 30 founding banks through an innovative global partnership between banks and the UNEP Finance Initiative (UNEP FI). UNEP FI is the UN-private sector collaboration that includes membership of more than 240 finance institutions around the globe. More than 170 banks from around the world have now signed the new framework.

For more information, including infographics and videos, please visit the Principles for Responsible Banking webpages.

UNEP FI Contacts:

Simone Dettling.

Sally Wootton.

 

Wespath joins the UN-convened Net-Zero Asset Owner Alliance

20 March 2020

7th April 2020 – Wespath Benefits and Investments , the largest single pool of faith-based pension assets in the world, has become the 22nd member of the UN-convened Net-Zero Asset Owner Alliance.

The new member, with US$26 billion assets under management (AUM), brings the Alliance’s total AUM to over US$4.6 trillion. Wespath is the second US-based asset owner and second faith-based asset owner after the Church of England to join the Alliance.

The group of pension funds and insurers has pledged to decarbonize their portfolios to net-zero emissions by 2050 to avoid a global temperature increase above the 1.5°C Paris target. This will not be attained through divestment, but rather the Alliance will work closely with portfolio companies to change their business models, adopting climate friendly practices and setting a net-zero target based on what science tells us is necessary in order to strive for a 1.5°C world.

CEO and General Secretary Barbara Boigegrain said: “As the steward for the largest single pool of faith-based pension assets in the world, Wespath has a long history of investing in ways that deliver strong investment returns and pursuing efforts to promote building a sustainable economy. As a prudent fiduciary to our pension participants and institutional investors, we endeavor to align investment activities with efforts to achieve long-term, sustainable economic growth.”

Wespath CIO Dave Zellner said “The Alliance and other similar investor coalitions are essential for influencing the change necessary to achieve a sustainable economy. Together, we can collectively influence the development of stable financial markets, resilient companies and a healthier world for all of us.”

Over the coming months, Alliance members will focus on developing the reporting guidelines and targets aligned with the Paris Climate Agreement required to establish a course for reaching the commitment in the stated timeline. The Alliance is actively recruiting other asset owners to make the net-zero commitment and to collaborate in developing these next steps.

Notes to Editors

Net-Zero Asset Owner Alliance

Convened by UNEP’s Finance Initiative and the Principles for Responsible Investment (PRI), the Net-Zero Asset Owner Alliance is supported by WWF and is part of the Mission 2020 campaign, an initiative led by Christiana Figueres, former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC).

Launched in September at the UN Secretary General’s Climate Action Summit, the Alliance was initiated by Allianz, Caisse des Dépôts (CDC), La Caisse de dépôt et placement du Québec (CDPQ), Folksam Group, PensionDanmark, and Swiss Re, who were joined by Alecta, AMF, CalPERS, Nordea Life and Pension, Storebrand and Zurich as founding members.

In November, AXA, Aviva, CNP Assurances and Fonds de Réserve pour les Retraites (FRR) joined. The Church of England’s investment bodies, Generali joined in January, followed by Munich Re in February, and ERAFP and KENFO in March.

Wespath

Wespath is a non-profit agency of the United Methodist Church, Glenview, Illinois, with US$ 24.9 billion in assets as of 31 December 2019.

New platform gives MENA-based financial institutions tools and insight to help build resilience to climate change

27 February 2020

Financial institutions based in the Middle East and North Africa can now find the tools and insight to transform the region’s financial system to one that addresses the funding of the Sustainable Development Goals (SDGs). The knowledge platform: “Financing the climate transition in the MENA” is a key deliverable of a new programme, the SDG Climate Facility. It has been initiated by a group of organisations who are working to enhance the capacity of Arab regional and national institutions to effectively integrate climate change into development, crisis prevention and recovery actions. They are also aiming to scale up public and private finance to support solutions that build resilience to climate change and strengthen the capacity of the region to adapt.

The collaboration between the UN Environment Programme Finance Initiative (UNEP FI), UN Development Programme (UNDP), World Food Programme (WFP), UN Habitat, Arab Water Council, the League of Arab States (LAS), and UN Disaster Risk Reduction (UNDRR) aims to engage key financial sector actors in the Arab region where climate change has emerged as one of the most important factors exacerbating poverty and human insecurity. Managing climate risk will be key to maintaining regional financial and political stability. This platform provides the knowledge for financial institutions in the Arab region to better understand the risks and opportunities of climate change and how to address not only the impact but also the transition.

Financial institutions can find news and insight into financing the energy transition, as well as more information on frameworks that can help banks and investors achieve the Sustainable Development Goals and the Paris Climate Agreement such as UNEP FI’s Principles for Responsible Banking and guidance on implementing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Relevant training courses are also listed.

Explore the new platform here.

The SDG Climate Facility is financially supported by Sweden Sverige (SIDA).

High-Level Recommendations on the Voluntary Application of the EU Taxonomy to Core Banking Products

5 December 2019

The European Banking Federation (EBF) and the United Nations Environment Programme Finance Initiative (UNEP FI ) are launching a project to assess the extent to which the EU Taxonomy on Sustainable Activities could be applied to core banking products.

The objective of the project is to:

  1. Provide a high-level feasibility assessment of the EU Taxonomy to selected banking products
  2. Share best practices
  3. Develop use cases where appropriate
  4. Issue recommendations based on the project findings

A Working Group composed of 24 banks, 5 banking associations and 3 observers is working on developing these guidelines. The project is sponsored by BBVA, BNP Paribas, Credit Suisse, Danske Bank, Deutsche Bank, FMO, ING, SEB, Societe Generale, Standard Chartered, UBS and UniCredit.

The Working Group is expecting to issue recommendations around Q3 2020. It may adjust its timeline in line with EC-related Taxonomy developments and processes in 2020.

The Working Group is composed of:

Banks

  • ABN AMRO
  • Barclays
  • BBVA
  • BNP Paribas
  • BPCE
  • CaixaBank
  • Credit Agricole
  • Credit Suisse
  • Danske Bank
  • Deutsche Bank
  • FMO
  • ING
  • Intesa Sanpaolo
  • Jyske Bank
  • KB Financial Group (Korea)
  • OP Financial Group
  • Piraeus Bank
  • SEB
  • Santander
  • Société Générale
  • Standard Chartered
  • Swedbank Group
  • UBS
  • Unicredit

Banking Associations

  • ABI
  • Finance Denmark
  • Finance Norway
  • Finance Latvia
  • Swiss Banking Association

Observers

  • European Commission
  • European Banking Authority
  • EFRAG
  • European Investment Bank / European Investment Fund

Sponsored by:


Contacts:


About the European Banking Federation (EBF)

The EBF is the voice  of the European banking sector, uniting 32 national  banking associations in Europe that together  represent some 3,500 banks – large and small,  wholesale and retail, local and international –  employing about two million people. The EBF  promotes:

  • A thriving European economy underpinned by a stable, secure and inclusive financial ecosystem.
  • A flourishing society where stable and secure financing is available to finance the dreams of citizens, businesses and innovators  everywhere.

About UN Environment Programme Finance Initiative (UNEP FI)

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 300  members – banks, insurers, and investors – and  over 100 supporting institutions – to help create a  financial sector that serves people and planet  while delivering positive impacts. We aim 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. Find out more about UNEP FI’s banking, investment and climate change work.

Guidance developed on an impact-based approach to finance for real estate investors and asset managers

12 February 2019

The UNEP FI Property Working Group, in collaboration with RICS, PRI, and members of the Global Investor Coalition on Climate Change, have produced a practical, action-oriented framework to accelerate a new financing paradigm for the delivery of the global SDGs.

The 25 leading institutional investors and asset managers of the UNEP FI Property Working Group – alongside partners RICS, PRI, IIGCC, AIGCC, and IGCC[1] – have published a new guide for developing and executing an impact-based approach in real estate finance and management. The Positive Impact Real Estate Investment Framework responds to finance sector interest in investment outcomes for productive, equitable, healthy, and resilient economies and societies.

Positive Impact posits a holistic approach to finance, requiring an appraisal of both positive and negative impacts; consideration of all three dimensions economy, society and environment; and transparency and assessment of methodologies and impact achieved. The Positive Impact Real Estate Investment Framework offers a process tool for institutions to identify impact ‘areas of influence’ and corresponding investment opportunities, measure ex-ante and ex-post impact, and ultimately re-orient institutional capacities and capital for intentional delivery of outcomes that support the Sustainable Development Goals (SDGs). It draws upon the UNEP FI Impact Radar, guidance that translates the SDGs into meaningful terms for businesses and financing impact assessment.

For dissemination and uptake of the Positive Impact Real Estate Investment Framework, UNEP FI and its collaborating partners will run a series of webinars and events targeting real estate investors in several global regions in the first half of 2019. Further activities for 2019 will include a call for case studies for investments that have applied the Positive Impact Real Estate Investment Framework. For more information, please contact Matthew Ulterino, Property Investment Project Coordinator at UNEP Finance Initiative: matthew.ulterino@un.org.

Quotes from investors and collaborators:

“The real estate framework is a must-read for all property lenders and investors looking to increase their impact. It’s also a testament to the power of collaboration between institutions advancing sustainable finance.” Eric Usher, Head, UNEP Finance Initiative

“Through impactful investment frameworks real-estate investors can intentionally deliver social and environment outcomes that support the delivery of the UN Sustainable Development Goals’ target. We do this in Hermes by focusing on selected impactful investment themes – place making, climate and resource efficiency, health & well-being. The Real Estate Impact Framework is a useful tool for investors to map and select the most relevant actions they can take to support the SDGs suiting their specific investment strategies.” Tatiana Bosteels, Director Responsibility, Hermes Investment Management and chair UNEP FI Investment Commission

 “The real estate and built environment sector more broadly can absolutely implement the UN Sustainable Development Goals. We will only get results on sustainability if we help the sector prioritise looking at investments by both their positive and negative impacts, and initiatives like this framework are a tangible way we are supporting professionals to do so.” Sean Tompkins, CEO Royal Institution of Chartered Surveyors (RICS)

“As a long-standing member of the UNEP FI Property Working Group, PRI is pleased to have contributed to the development of this report. It provides a useful guide for any real estate investor looking to implement an impact-based strategy. “ Fiona Reynolds, CEO, Principles for Responsible Investment

“We welcome the publication of this guide, which will be an important tool for investors looking to increase the impact of their real estate investments in supporting the implementation of the Sustainable Development Goals and in contributing to a low carbon future.” Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (IIGCC)

“Investors in Asia are increasingly looking to align their portfolios to the SDGs, and this framework is an essential tool helping investors readily identify where they can add impact to their strategies in real estate.” Rebecca Mikula-Wright, Director, Asia Investor Group on Climate Change

“This Framework provides a useful tool for Australian investors looking to better assess the impact of their capital allocation decisions and really drive sustainable outcomes in real estate.  We need new ways of thinking to better tackle the challenges we face. Guides like this will support greater investor action and ambition”, Investor Group on Climate Change (IGCC) Emma Herd, CEO, Investor Group on Climate Change

Notes to Editors

The Real Estate Investment Framework was published alongside other Model Frameworks from the Positive Impact Initiative, covering financial products for corporates with unspecified use of funds, as well as for project-related finance. For more information about the Positive Impact Initiative please contact, Careen Abb or Jérôme Tagger: careen.abb@un.org / Jerome.tagger@un.org

 

About United Nations Environment Programme – Finance Initiative.

UNEP FI is a partnership between United Nations Environment and the global financial sector created in the wake of the 1992 Earth Summit with a mission to promote sustainable finance. More than 230 financial institutions, including banks, insurers, and investors, work with UN Environment to understand today’s environmental, social and governance challenges, why they matter to finance, and how to actively participate in addressing them.

UNEP FI’s work also includes a strong focus on policy – by facilitating country-level dialogues between finance practitioners, supervisors, regulators and policy-makers, and, at the international level, by promoting financial sector involvement in processes such as the global climate negotiations. For more information, see https://www.unepfi.org/

About the Asia Investor Group on Climate Change.

AIGCC is an initiative to create awareness among Asia’s asset owners and financial institutions about the risks and opportunities associated with climate change and low carbon investing. AIGCC provides capacity for investors to share best practice and to collaborate on investment activity, credit analysis, risk management, engagement and policy. For more information, see http://aigcc.net/

About the Investor Group on Climate Change.

IGCC is a collaboration of 60 institutional investors and advisors, managing over $1 trillion and focusing on the impact that climate change has on the financial value of investments in Australasia. The IGCC aims to encourage government policies and investment practices that address the risks and opportunities of climate change, for the ultimate benefit of superannuate and unit holders. One of IGCC’s streams of work is focussed on climate change risk and opportunities in the built environment, as well as considerations around climate change adaptation and resilience. For more information, see www.igcc.org.au

About the Institutional Investors Group on Climate Change.

The Institutional Investors Group on Climate Change (IIGCC), is the pre-eminent European forum for investor collaboration on climate action and the voice of investors taking action for a prosperous, low carbon, future. It has 153 mainly mainstream investors across 12 countries with over €21 trillion assets under management (including nine of the top ten largest European pension funds or asset managers). IIGCC’s mission is to mobilise capital for the low carbon transition by working with business, policy makers and investors to encourage public policies, investment practices and corporate behaviours that will address the long-term risks and opportunities associated with climate change. Members consider it a fiduciary duty to ensure stranded asset risk or other losses from climate change are minimised and that opportunities presented by the transition to a low carbon economy – such as renewable energy, new technologies and energy efficiency – are maximised. For more information, see www.iigcc.org and @iigccnews

About the Principles for Responsible Investment (PRI).

The PRI works with its international network of institutional investor signatories to put the six Principles for Responsible Investment into practice. Its goal is to understand the investment implications of environmental, social and governance issues and to support signatories in integrating these issues into investment and stewardship decisions. The six Principles were developed by investors and are supported by the UN. There are over 2,100 signatories from over 50 countries representing US $ 81.7 trillion of assets (as of April 2018). The six Principles are voluntary and aspirational, offering a menu of possible actions for incorporating ESG issues into investment practices. In implementing the Principles, signatories contribute to developing a more sustainable global financial system. For more information, see www.unpri.org

About the Royal Institution of Chartered Surveyors (RICS).

RICS promotes and enforces the highest professional qualifications and standards in the valuation, development and management of land, real estate, construction and infrastructure. The RICS name promises the consistent delivery of standards – bringing confidence to markets and effecting positive change in the built and natural environments. For more information, see www.rics.org

 

[1] United Nations Environment Program Finance Initiative; Royal Institution of Chartered Surveyors; Principles for Responsible Investment; Institutional Investors Group on Climate Change; Asia Investor Group on Climate Change; Investor Group on Climate Change

New Guide Launched In Zurich Empowers Banks To Assess Natural Capital Risk

16 January 2019

A week before the World Economic Forum in Davos, where global financial leaders will discuss society’s most pressing issues, the Natural Capital Finance Alliance (NCFA) has launched the world’s first step-by-step guide to help financial institutions conduct a rapid natural capital risk assessment.  The Natural Capital Finance Alliance engaged with PwC to produce the guide.

The guide has already been piloted by five banks, including First Rand in South Africa who said it “enabled us to look at our portfolio in a new way”. It promotes the use of the recently launched ENCORE tool (Exploring Natural Capital Opportunities, Risks and Exposure), which enables financial institutions to understand and assess their exposure to natural capital risks.

The guide aims to fully unlock the power of ENCORE and, as part of the Advancing Environmental Risk Management (AERM) project, helps global banks to better understand how the pollution of oceans or destruction of forests, for example, may affect their financial future. AERM is a wider project by NCFA to help financial institutions understand and integrate the risks they face because of environmental degradation into their risk assessment methods and decision-making tools.

The guide has two core elements:

  • Rapid Natural Capital Risk Assessment, which allows an institution to quickly identify the areas of highest natural capital risk.
  • Sector/Asset Analysis, which uses data on drivers of environmental change and the state of natural capital assets, to assess the likelihood of disruption of relevant ecosystem services. This could help financial institutions in their climate scenario analyses as recommended by the TCFD.

By combining a comprehensive knowledge base with environmental scenarios and location-specific asset data, financial institutions can assess and manage their natural capital risk in qualitative and quantitative terms. This insight can be incorporated into existing risk processes, for example, by combining internal data on client location with environmental data to improve strategic scenario planning and credit risk management.

Attendees at today’s event, held in Zurich and co-organised by Swiss Sustainable Finance (SSF), will receive an overview of ENCORE, as well as an introduction to the broader AERM project, both funded by the Swiss State Secretariat for Economic Affairs (SECO) and the MAVA Foundation. The guide also includes case studies of how financial institutions globally are using the power of ENCORE to assess their dependence on nature.

Liliana de Sá Kirchknopf, Head of Private Sector Development Division, State Secretariat for Economic Affairs in Switzerland (SECO), said:

“The degradation of natural ecosystems poses a material threat to future economic growth. Until now, the financial community was not able to systematically assess and manage such risksThat is changing thanks to our collaboration with the NCFA to create a natural capital framework for financial institutions.  Practical tools like ENCORE define the link between environmental change and economic consequences, so market players are empowered to make sustainable financing decisions.” 

Niki Mardas, Executive Director at Global Canopy, said:

“This timely report sends a powerful message that when financial leaders consider the environment at Davos next week they must consider not just greenhouse gases, but also how to build wider ecosystem resilience from rainforests to coral reefs. If we are to build more sustainable capital markets, financial institutions must be able to easily integrate their dependence on nature into existing risk management. That’s why today’s launch of NCFA’s natural capital risk assessment framework is so important. Using it alongside the ENCORE tool, financial institutions can now systematically identify natural capital risks and act on them.”

Madeleine Ronquest, Head of Environmental and Social Risk, Climate Change at FirstRand Limited, said:

“The South African economy has a deep dependence on nature, and is particularly vulnerable to extreme climatic events, which are becoming more frequent and intense. The severe challenges around the availability and supply of drinking water in Cape Town is just one example of this. The AERM project enabled us to look at our portfolio in a new way, looking at thresholds and exposure, especially in the case of water-related risk. It can help us forecast and has opened up potential new opportunities. It has brought our teams together in a valuable learning journey. We are very happy with the outcomes of the testing phase and got far more out of it than expected.”

Jon Williams, sustainability and climate change partner at PwC UK, said:

Our work with NCFA and its partners makes a further and material advance in environmental and social risk management in banks. The report provides practical guidance and tools for managing natural capital risks, present in many banking portfolios but often hard to identify, assess and mitigate. By piloting the approach with the banks involved in this project, we believe this provides a tested risk management framework that can be adopted by other financial institutions. Given the increasing erosion of natural capital and the increasing risks that businesses and their financiers face, this report is a timely addition to the tools available to risk managers.”

 

Produced by the Natural Capital Finance Alliance (NCFA) in collaboration with PwC, the guide is the second phase of the Advancing Environmental Risk Management (AERM) project. Download the report here.

The report from the first phase can be found here.

 

About NCFA

The Natural Capital Finance Alliance (NCFA) is a finance sector-led initiative, providing expertise, information and tools on material aspects of natural capital for financial institutions. It works to support these institutions in integrating natural capital considerations into their risk management processes and products as well as helping them to discover new opportunities. The NCFA secretariat is run jointly by the UN Environment Finance Initiative and Global Canopy.

About Global Canopy

Global Canopy is an innovative environmental organisation that targets the market forces destroying tropical forests. Our mission is to accelerate progress towards a deforestation-free global economy – through improved transparency, innovative finance and strategic communications. Since 2001, we have catalysed new thinking and action by leading governments, companies and investors worldwide. For more information, see www.globalcanopy.org.

About UNEP FI

The United Nations Environment Finance Initiative (UNEP FI) is a unique global partnership between United Nations Environment and the global financial sector founded in 1992. UNEP FI works closely with over 230 financial institutions who have signed the UNEP FI Statements as well as a range of partner organisations to develop and promote linkages between sustainability and financial performance. Through peer-to-peer networks, research and training, UNEP FI carries out its mission to identify, promote, and realise the adoption of best environmental and sustainability practice at all levels of financial institution operations. For more information, see www.unepfi.org

About SSF

Swiss Sustainable Finance (SSF) strengthens the position of Switzerland in the global marketplace for sustainable finance by informing, educating and catalysing growth. The association, founded in 2014, has representation in Zurich, Geneva and Lugano. Currently SSF unites 108 members and network partners from financial service providers, investors, universities and business schools, public sector entities and other interested organisations. An overview of Swiss Sustainable Finance’s current members and network partners can be found here.

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with over 250,000 people who are committed to delivering quality in assurance, advisory and tax services. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. PwC UK, PwC South Africa, PwC Colombia and PwC Peru were engaged with the Natural Capital Finance Alliance in this work.

 

 

Climate Success at COP24: after intense negotiations new rulebook breathes life into Paris Agreement but much more decarbonisation ambition needed

18 December 2018

 

On Saturday, following two weeks marked by dramatic rhetoric and intense negotiations over legal language, close to 200 Governments bridged a deep global divide and agreed on the set of rules meant to steer countries worldwide in implementing the historic 2015 Paris Agreement on climate change. UNEP FI’s Climate Lead, Remco Fischer gives more detail on the decisions made at COP24 and provides a summary of UNEP FI’s events and inputs including recordings of sessions, which helped facilitate a strong presence from the financial industry.

 

The Rulebook of the Paris Agreement

The finance sector – including over 400 investors –asked for a Paris Agreement rulebook. COP24 in Katowice delivered this. 

By defining nations’ responsibilities for tackling climate change, reporting their progress – both reductions in greenhouse gas emissions as well as in the provision of financial resources – and upping their efforts for decades to come the Rulebook puts the Paris Agreement into action.

Two common threads ran through each of the areas in the Rulebook. First, whether to agree a single set of rules for all countries – with flexibility for those that need it – or to maintain the current and historic divide between rules for developed countries and rules for developing countries. This is commonly referred to as “differentiation”.

Overall, the COP decisions made on Saturday tend towards single sets of rules for all countries, with some latitude for those that lack the capacity to meet them. On finance, the rules are relatively permissive, giving flexibility to developed countries in what and how they report their contributions. More details on the various decisions made on the Rulebook are provided further below.

 

The Ratchetting-up of Ambition

The finance sector – including over 400 investors –  have demanded that countries up their climate ambition to align with the long-term objectives of the Paris Agreement. COP24 in Katowice delivered momentum for more ambition, as well as the mechanisms for more ambition, but no country has stepped up yet.

In addition to the challenge of operationalizing the Paris Agreement through the Rulebook another key theme at COP24 was the climate and decarbonization ambition that countries have shown in their climate pledges to date and – given the persistent lack of collective ambition and, as a result, the still enormous ‘emissions gap’ – the avenues at hand to increase it.

According to UN Environment’s Emissions Gap Report, launched at UNEP FI’s Global Roundtable in Paris, the ‘emissions gap’ is the difference between “where we are likely to be and where we need to be”. As the emissions gap assessment shows, the current level of ambition in countries’ climate pledges needs to be roughly tripled for the 2°C scenario and increased around fivefold for the 1.5°C scenario.

To that effect, and in addition to the Rulebook, COP24 delivered the Talanoa Dialogue Call for Action, as well as dramatic appeals from UN Secretary-General António Guterres, Sir David Attenborough, and Swedish schoolgirl Greta Thunberg.

However, COP24 did not yield any increased country ambition yet. This is an urgent need now and the UN Secretary General’s Summit in September of 2019 will focus on meeting that need.

Financial institutions, as well as their clients and investees, also need to increase their own ambition by phasing out fossil fuels in ways that minimize impacts for workers and communities, scaling-up low-carbon financing, and ultimately aligning their portfolios with the Paris Agreement and a 1.5 degrees-compatible global economy.

 

The COP decisions in detail

In more detailed and specific terms, COP24 agreed:

On NDC guidance – Article 4

  1. That countries’ climate pledges – the so-called nationally Determined Contributions (NDCs) – will be recorded in a public, and ‘searchable’, registry based on the current interim registry.

 

  1. That, in their reporting on NDC progress, all countries shall use the latest emissions accounting guidance from the Intergovernmental Panel on Climate Change (IPCC). This is meant to make it easier to compare pledges, to monitor progress over time, and to add them to global aggregates.

 

  1. That NDCs should cover a common timeframe from 2031, with the number of years included in such a timeframe to be agreed on later on. Some current pledges at the moment cover five years while others cover 10.

On Climate Finance Reporting – Article 9

  1. That developed countries ‘shall’ and developing ‘should’ report on any climate finance they provide, as demanded for developing country Governments, but heavily caveated by loose wording such as: “Enhanced information to be provided […] as available” or “An indication of new and additional resources to be provided”. Also, countries are allowed to report the full value of loans they provide as climate finance, rather than the “grant-equivalent” portion of the total, which is a departure from established practice in development finance & assistance, and as such is being criticized heavily by civil society organizations.

On Transparency – Article 13

  1. That – when it comes to countries’ reporting on their climate efforts including emissions reporting, NDC progress, adaptation to physical climate change, climate finance provided or received – a single set of rules shall apply to both developed and developing countries. This had been a key issue and key red line for the US and EU, which had wanted to hold the likes of China to the same reporting standards that they face. Still, this single set of rules is to be applied with flexibility for “those developing country parties that need it in the light of their capacities”, with developing countries themselves “self-determining” whether they need flexibility, but also with them stating why they need it, how long they expect to continue needing it, and what they plan to do to stop needing it. Despite this flexibility, it is widely recognized that the new rules will translate into a substantial intensification of biannual reporting requirements under the UNFCCC and a key departure from the current practice of only having the 44 developed nations under the Convention report biannually.

 

  1. That these new reporting rules will kick in from 2024, one year after the first global stock-take of progress.

Global stock-take – Article 14

  1. On the ground rules of the Global Stock-takes through which: i) every five years, countries are meant to come together and take stock of progress towards the long-term Paris goal of avoiding dangerous global warming, and then, with this global stock-take in hand, ii) countries go home and return with enhanced climate pledges to fill gaps in ambition.

 

  1. On the structure of the stock-take process which is to be divided into three stages – i) Information collection; ii) Technical assessment: iii) Consideration of outputs – with the technical assessment being key as a step meant to ‘de-politicize’ and ‘objectify’ the stock take deliberations and their outcomes.

 

On Market mechanisms – Article 9

 

  1. To defer most decisions related to Market Mechanisms (Article 6) to 2019, which includes the extent to which countries can ‘trade’ their NDC-related overachievement, the extent to which individual projects can generate carbon credits for sale (in manners resembling the Kyoto Protocol’s Clean Development Mechanisms – CDM) , and related measurers to avoid ‘double-counting’ of emissions reductions.

 

Other matters

  1. To set up an expert compliance committee to enable monitoring of countries’ compliance with their NDCs with this committee being “facilitative in nature…non-adversarial and non-punitive”. The committee will be able to investigate countries that fail to submit climate pledges. Regarding transparency reports covering climate finance or emissions and progress in cutting them, the committee “may, with the consent of the party concerned, engage in a facilitative consideration of issues in cases of significant and persistent inconsistencies of the information”.

 

UNEP FI’s Input and Involvement at COP24

UNEP FI helped facilitate a strong presence from the financial industry through a range of events and inputs, many of which were recorded and can be viewed below.

 

  • Side event hosted by the International Chamber of Commerce on Climate Finance – Next steps for climate action with participation from the German Federal Ministry for Economic Cooperation and Development (BMZ), the ICC, the NewClimate Institute, WWF, and UNEP FI.

 

  • A cross-cutting roundtable convened by the UN Climate Secretariat on Climate-Action and Finance Mobilizing climate-aligned investment

 

 

  • A European Commission-hosted event on Public finance for low-carbon transitions: Changing paradigms, policies and practices in Europe and the G20, with participation from the European Investment Bank, IPEEC, and UNEP FI.

 

  • A side event on Adaptation finance and the TCFD recommendations convened by Acclimatise and the European Investment Bank, with participation from the EIB, the EBRD, the AFD, the IDB, the Global Commission on Adaptation, and UNEP FI. A recording of the session can be viewed here.

 

 

  • A WWF-hosted session focused on Financial regulation as a lever for driving the shift of financial flows. A recording of the session can be viewed here.

For more information contact Remco Fischer.

Visionary solutions to the Sustainable Development Goals’ funding gap from UNEP FI’s Positive Impact Initiative

26 November 2018

Paris, 26 November 2018 – How to achieve the Sustainable Development Goals?

UNEP FI’s Positive Impact Initiative proposes a new approach: social, economic and environmental impacts have an as-yet under explored potential to generate financial revenues: impact-based business models can be developed, with the delivery of positive impacts as a driver of sustainable business growth and long-term enterprise value. This could be game-changing: by making it cheaper to deliver sustainability outcomes, less risky to finance and would stimulate the private sector to create new business solutions that focus on positive impacts. In fact, this shift to an impact-based economy is already under way, and the finance sector has a strategic interest in understanding impacts, not only to meet stakeholder needs, but also to capture new opportunities that support this transformation. Accordingly, it is critical for banks and investors to improve their capacity to understand and analyze impact.

UNEP FI’s Positive Impact Initiative (PI) makes these arguments in “Rethinking Impact to finance the SDGs: a position paper and call to action” –  released on 26 November at UNEP FI’s 2018 Global Roundtable in Paris.

According to Ligia Noronha, Director Economy Division, UN Environment: “Rethinking Impact to Finance the SDGs” is a major contribution to solving the sustainable development puzzle.  It will transform the way we think about business and finance.”

Supporting this release are several game-changing tools for impact analysis and management: The PI Impact Radar translates the SDGs into meaningful terms for business and finance. PI Model Frameworks provide guidance to apply holistic impact analysis across different financing products and asset classes, as a pragmatic application of PI’s Principles for Positive Impact Finance, for decision-making, for the development of financial products, and for the overall review of portfolios.

Download Rethinking Impact to Finance the SDGs

Download the executive summary in German
Download the executive summary in Chinese (Mandarin)
Download the executive summary in French
Download the executive summary in Arabic

Download the PI Radar

Download the Model Framework for unspecified use of funds
Download the Model Framework for specified use of funds
Download the Model Framework for real estate investment

Securities regulators promoting sustainable finance, new UN report

24 October 2018

The latest report from the United Nations Sustainable Stock Exchanges (SSE) initiative outlines an action plan for regulators wishing to support the Sustainable Development Goals. With 35 examples from 19 markets, the report provides a snapshot of what is happening around the world today. The regulators report was released during the SSE Global Dialogue, which was held during UNCTAD’s 2018 World Investment Forum in Geneva, Switzerland on 23 October 2018.

Increasingly securities regulators around the world have demonstrated interest in the relationship between sustainability issues and their core mandates. Although securities regulators’ specific roles, responsibilities and authorities differ across jurisdictions, their objectives are generally to protect investors, to ensure that markets are fair, efficient and transparent, and to reduce systemic risk.

Sustainability issues can create financially material risks and opportunities for investors and may affect the resilience of the financial system as a whole. Because of this, sustainability issues and the policy responses to these issues are of direct relevance to securities regulators’ existing mandates. As an articulation of the world’s most pressing sustainability issues, the SDGs can be seen as an “ESG+” policy framework providing guidance for policy and markets in these areas.

Recognizing that there can be no one-size-fits-all approach, the report aims to facilitate the sharing of experiences, and presents a range of actions that are supplemented by examples of what securities regulators have already done to boost sustainable finance. An advisory group of nearly 70 capital market stakeholders globally – regulators, exchanges, investors – produced the report.

“In jurisdictions around the world, securities regulators are taking actions to support sustainable development, but we are facing the challenge of having to do much more to meet our global goals,” said James Zhan, Chairman of the SSE Board and Director of Investment and Enterprise at UNCTAD. “This report shows how securities regulators are beginning to recognize the urgency in which we must act, and provides an action plan to accelerate momentum.”

“We welcome this area of work from the SSE, as the work of security regulators is critical if we are to create a sustainable financial system that can contribute to the Sustainable Development Goals, while providing beneficiaries with a positive return on their investments. While we have seen a surge in much-needed regulation related to sustainability in recent years, in order for this regulation to be truly effective, we need to set more clear objectives and more integration with broader financial regulation. Through both the SSE and our own policy work at the PRI, we stand ready to support the work of security regulators in helping to create a truly sustainable financial system,” said Fiona Reynolds, CEO of Principles of Responsible Investment (PRI).

The Chair of the SSE Advisory Group on Securities Regulations and Executive Chairman of the Financial Regulatory Authority in Egypt, Dr. Mohammed Omran, said “this new SSE research provides a constructive framework and practical set of illustrative examples to help securities regulators further explore how they can encourage investment in sustainable development.”

“In this guidance, the SSE outlines key considerations for securities regulators and identifies areas in which they can most usefully focus their efforts to uphold their responsibilities as regulators while helping to align capital markets with the needs of the future via the SDGs,” said Mary L. Schapiro, 29th Chair of the U.S. Securities and Exchange Commission.

Learn more here and download the full report here.

Download the SSE 2018 Report on Progress here.

 

About the SSE

The SSE initiative is a UN Partnership Programme organised by UNCTAD, the UN Global Compact, UNEP FI and the PRI. The SSE’s mission is to provide a global platform for exploring how exchanges, in collaboration with investors, companies (issuers), regulators, policymakers and relevant international organizations, can enhance performance on ESG (environmental, social and corporate governance) issues and encourage sustainable investment, including the financing of the UN Sustainable Development Goals. The SSE seeks to achieve this mission through an integrated programme of conducting evidence-based policy analysis, facilitating a network and forum for multi-stakeholder consensus-building, and providing technical assistance and advisory services.

UNEP FI launches Sustainable Finance Roadmap for Luxembourg

1 October 2018

On October 4 2018, the Minister of the Environment, Carole Dieschbourg, the Minister of Finance, Pierre Gramegna and UNEP FI Head, Eric Usher presented the new “Luxembourg Sustainable Finance Roadmap” and its recommendations. These touch on many facets of the financial market, such as the development of financial products for sustainable finance, the development of training and education programs for the needs of the financial sector, or the promotion of innovation to facilitate the financing of sustainable development.

Luxembourg’s Ministry of Finance and the Department of Environment of the Ministry of Sustainable Development and Infrastructure mandated UNEP FI to develop a roadmap to scale up the financial sector’s contribution to sustainable development, the Luxembourg Sustainable Finance Roadmap. The report was drafted with the support of Innpact, a Luxembourg-based impact financing specialist, and in close collaboration with the financial sector and representatives of the civil society, through an open, creative and inclusive process involving various working groups and interview sessions.

The aim of the roadmap is to draw up an inventory of existing initiatives in Luxembourg in the field of sustainable finance, and lay the foundations for a sustainable financial strategy, contributing to the UN 2030 Agenda and the objectives of the Paris Agreement on Climate Change. It also aims to consolidate the leading role of the Luxembourg financial center in the field of sustainable finance. It is ambitious in terms of Luxembourg’s contributions to sustainable development and to European and international climate initiatives and takes a forward-looking approach in terms of identifying future opportunities and challenges.

In response to UNEP FI’s recommendations, the Ministers have established a public-private entity, the “Luxembourg Sustainable Finance Initiative” to undertake further analyses based on the report findings, in order to develop a plan of concrete and adapted measures to be achieved over the coming years. The Initiative, which will bring together relevant actors in the field of sustainable finance, will be co-chaired by the Ministry of Finance and the Department of the Environment of the Ministry of Sustainable Development and Infrastructure. The entity will be the ideal forum for developing the National Strategy for Sustainable Finance for Luxembourg based on the key elements of the Roadmap. It will also serve as a discussion platform for analyzing the feasibility and impact of measures stemming from the recommendations.

Eric Usher, Head of UNEP FI, said: “Luxembourg is setting the course for sustainable finance to fulfil its critical role in achieving sustainable development. Sustainability is increasingly a performance driver, a trillion dollar investment opportunity that needs to be at the heart of the business strategies of banks, insurers and investors. This comprehensive study provides important guidance to Luxembourg, and other countries establishing roadmaps for a sustainable future. Luxembourg is demonstrating leadership by acting on two key recommendations of our report – developing a national sustainable finance strategy and creating a Sustainable Finance Initiative to co-ordinate implementation.”

The Minister of Finance Pierre Gramegna commented: “This roadmap builds on the strong collaborative spirit that exists here in Luxembourg between the financial center, the government and the civil society in the field of sustainable finance. It is thanks to the efforts of all these actors that Luxembourg has established itself as one of the European leaders in this field and continues to shape the future of sustainable finance”

The Minister for the Environnement Carole Dieschbourg added: “Implementing the Paris Agreement and the UN 2030 Agenda requires fundamental changes in the global financial architecture. I am convinced that the recommendations contained in this roadmap will contribute to rapidly shifting from high-carbon investments towards energy and resource efficient alternatives, based on renewable energy technologies.”

Download the full report

Executive Summary in English

Executive Summary in French

Download the press release

UPDATED: 28 UNEP FI banking members working together to redefine how the banking industry delivers a sustainable future

29 May 2018

Go to the main Principles for Responsible Banking page for more information and to find out how you and your organisation can get involved.

Update as of 30 September: 28 banks are now collaborating to develop the Principles for Responsible Banking.

29 May, 2018

Twenty-six leading banks from 5 continents representing USD 16 trillion in assets are re-defining banks’ purpose and business model to align the sector with the UN Sustainable Development Goals (SDGs) and the Paris Climate Agreement.

Both the UN Sustainable Development Goals (SDGs) and the Paris Agreement on climate change have set ambitious targets to deliver a sustainable future for all. As two thirds of worldwide finance is provided by banks, the global banking system will be instrumental in achieving these goals.

Twenty-six of UN Environment Finance Initiative’s banking members are leading an initiative for banks worldwide to reaffirm their purpose and align their business practices with these objectives. Convened by the UNEP FI secretariat, the banks are developing global Banking Principles that will:

  • direct banks’ efforts to align with society’s goals as expressed in the SDGs, the Paris Agreement, as well as national and regional frameworks
  • set the global benchmark for sustainable banking
  • drive ambition by requiring signatory banks to set goals for and report on their contribution to national and international social, environmental and economic targets
  • ensure accountability and transparency on banks’ impacts
  • challenge the banking industry to play a leading role in creating a more sustainable future

Similar to the role the Principles for Responsible Investment (PRI) play for asset managers and the Principles for Sustainable Insurance (PSI) for insurance underwriters, these standards will address the longstanding need for an umbrella framework to cover all aspects of sustainable banking.

The process of developing the Principles will include consultation with a wide range of stakeholders, such as civil society organizations, banking associations, regulators and UN bodies. The first in-person meeting of the participating banks took place in London on 19th and 20th April. We plan to launch the draft Principles for global consultation during the UNEP FI Global Roundtable 2018 on 26 November at Palais Brongniart, Paris, France.

Members of the Core Group (in alphabetical order):

Access Bank (Nigeria), Arab African International Bank (AAIB) (Egypt), Banco Pichincha (Ecuador), Banorte (Mexico), Barclays (United Kingdom), BBVA (Spain), BNP Paribas (France), Bradesco (Brazil), Commercial International Bank (CIB) (Egypt), First Rand (South Africa), Garanti Bank (Turkey), Golomt Bank (Mongolia), Hana Financial Group (South Korea), Industrial and Commercial Bank of China (ICBC) (China), ING (Netherlands), KCB Group (Kenya), Land Bank (South Africa), Nordea (Sweden), Piraeus Bank (Greece), Santander (Spain), Shinhan Financial Group (South Korea), Societe Generale (France), Standard Bank (South Africa), Triodos Bank (Netherlands), Westpac Group (Australia), YES Bank (India)

Please find the press releases from the Core Group here:

Connecting Finance and Natural Capital: Launch of a tool for financial institutions to assess their impact and dependence on the natural world

23 April 2018

Launched today, in Hong Kong, ‘Connecting Finance and Natural Capital: A Supplement to the Natural Capital Protocol’ is a tool for financial institutions to assess how their business is impacted by, and depends upon the natural world.

The Natural Capital Protocol has created a globally recognized and standardized framework for business. This supplement to the Protocol, aims to connect finance and natural capital in the same way, and to create a common language across business, government, civil society and finance on this important topic. The Finance Sector Supplement (FSS) has been developed in partnership with the Natural Capital Coalition and VBDO, and provides a framework for financial institutions to assess the natural capital impacts and dependencies of their portfolios. It explains why financial institutions should undertake this assessment, what the impacts and dependencies are, and what techniques to use, and is aimed primarily at ESG analysts, environmental managers, responsible investment managers, due diligence specialists, risk managers, analysts, and portfolio managers.

 

Download the Finance Sector Supplement here.

Read Anders Nordheim’s blog on the importance of treating nature as a form of capital here.

Leading investors partner with UN to boost climate transparency by piloting Task Force for Climate-related Financial Disclosures recommendations

15 March 2018

 

 

 

 

 

 

UN Environment Finance Initiative (UNEP FI), together with nine investors representing close to US$ 3 trillion have formed a leadership group to promote action on climate transparency by the investor community. They will work with UNEP FI towards a first set of climate-related investor disclosures in alignment with the recommendations of the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial Disclosures (TCFD).

The investors joining the group are Addenda Capital, Aviva, Caisse de Dépôt et Placement du Québec, Desjardins Group, La Française Group, Nordea Investment Management, Norges Bank Investment Management, Rockefeller Asset Management, and Storebrand Asset Management.

“The message from these investment leaders is clear – climate change is real and it is the single largest threat to our economy,” said UN Environment Head, Erik Solheim. “At the same time, there are endless business opportunities in climate action. Transparency on how investors mitigate the risks and seize the opportunities of a climate-compatible pathway is crucial to move international markets towards actively supporting a low-carbon and climate-resilient future.”

The outputs and conclusions of this group will encourage and ease the adoption of the TCFD’s recommendations by the wider industry. The group will also closely coordinate with, and make its insights and outputs available to, the bigger networks of climate-savvy investors such as the Principles for Responsible Investment and the Institutional Investor Group on Climate Change whose new Investor Practices Programme is structured around the TCFD recommendations. It will also support and inform the global Investor Agenda through which the global investor community will display its ambition and determination to act on climate change.

Michael Bloomberg, Chair of the Task Force and newly appointed UN Special Envoy for Climate Action said, “The more information investors have about the climate risks and opportunities facing companies, the smarter decisions they will be able to make, and the more efficient our markets will become.” He continued, “This investor-led working group is an important step in that direction, and it’s great to see that it’s consistent with our Task Force’s recommendations”.

The initiative follows a pilot project with 16 of UNEP FI’s banking members, launched in 2017 and also convened and facilitated by UNEP FI, that will conclude its work and deliver its outputs in the second quarter of 2018. UNEP FI will also be working with a group of its members who are signatories to the Principles for Sustainable Insurance on a project piloting the recommendations for insurance companies. More information on this ground-breaking project will be available soon.

Read the full press release here.

Find out more about the pilot project for investors here.

Find out more about the pilot project for banks here.

Christiana Figueres challenges UNEP FI’s banking members and wider industry to cut high-carbon investing

10 November 2017

Former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), Christiana Figueres, laid down a challenge to the banking industry during UNEP FI’s recent Europe Roundtable when she joined as a surprise guest via live video conference.

Christiana, who was one of the architects of the Paris Agreement reached at COP21 in 2015, reminded everyone present that, “We have run out of time for anybody at the table to have a you-first attitude”. She emphasized that “by 2020 we have to be able to demonstrate that the world has reached a climate turning point, that we have reverted the tendency of increasing our emissions, to a tendency of decreasing our emissions”. To achieve this, and avoid a 2 degrees scenario, she urged banks to invest a ratio of 2:1 in favour of low-carbon investments over high-carbon investments, with high-carbon ones to be rapidly phased out, and to reach this goal by September 2018 when leaders from governments, cities and businesses around the world meet at the Global Climate Action Summit in San Francisco, USA.

She also encouraged banks to look at creating principles for sustainable banking – an option which UNEP FI banking members will be considering as part of a project already underway: a review of the UNEP FI Statement of Commitment.

Watch Christiana’s pre-recorded message, filmed ahead of the conference in the video below.

Read more about the highlights from the Europe Roundtable here.