Denmark’s Danica Pension joins UN-Convened Net-Zero Asset Owner Alliance

18 June 2020

Net-Zero Asset Owner Alliance

Danica Pension becomes the 26th member of the UN-convened Net-Zero Asset Owner Alliance (AOA), committing to transitioning its investment portfolio of $68 billion assets under management (AUM) to net-zero greenhouse gas emissions by 2050.

CEO Ole Krogh Petersen said:

“As a pension company, our more than DKK 400 billion ($60 billion) assets under management can make a huge difference for the green transformation. That is our focus already now and will be for many years to come. Having long-term ambitions is a good thing but acting in a timely manner is even more important. That is why we significantly increased our investments in the green transformation in the first quarter this year, and we are going to develop individual milestones for our carbon footprint from our investments towards 2023, 2025 and 2030.”

Becoming a member of the AOA underpins Danica Pension’s ambition to invest $4.5 billion in the green transformation by 2023, $7.5 billion by 2025 and $15.1 billion by 2030. In the first quarter alone, Danica Pension increased its investments in the green transformation by 38% from approximately $1.6 billion to approximately $2.2 billion.

Danica – the fourth Danish asset owner to join the Alliance – said that by addressing climate issues through corporate dialogue and voting at general meetings, it can, as an investor, can help, encourage or require businesses to transform their business on a scale and at a pace consistent with the Paris Agreement’s 1.5°C target. As businesses transition to low-carbon business models, the emissions produced in Danica Pension’s investment portfolio will also be reduced.

About the AOA

Launched in September 2019 during the UN Climate Action Summit, the AOA is an international initiative bringing together investors that are committed to transitioning their investment portfolios to carbon neutrality by 2050. The AOA’s action focuses on implementing the Paris Agreement, the main goal of which is to limit the rise in global average in temperature to 1.5°C.

Total assets under management of the 26 AOA members totals $4.75 billion.

The AOA is part of the  Race to Zero Campaign, launched on World Environment Day (5th June 2020). The UNFCCC and COP26 global campaign – under the stewardship of the UN High Level Climate Champions for the UK and Chile – will rally real economy leaders to join the largest ever coalition of leaders – from countries, businesses, cities, regions, investors, and civil society – all committed to the same overarching goal: achieving net zero emissions by 2050 at the very latest.

More information: unepfi.org/net-zero-alliance

 

BLOG: After the Pandemic, what are the Opportunities and Challenges for the Circular Economy?

3 June 2020

There is growing momentum to ensure the recovery from the global pandemic shifts the economy to a more sustainable model and enables the transition to a circular economy post-2020. In their blog, Jan Raes, a circular economy finance expert who drafted our study Demystifying Circular Economy Finance, supported by Aliyorbek Muminov in UNEP FI’s Secretariat, ask what the circular economy will look like for business after the pandemic. UNEP FI members are invited to take part in a consultation on the draft study, to be published during UNEP FI’s first virtual Global Roundtable on 13-14 October 2020.

 

What does the circular economy look like for businesses after the pandemic?

There is active discussion and speculation about winners and losers during the recovery phase of the global pandemic. While the concerns are gradually shifting from the health-related response to the economic implications, the jury is out on readiness for a circular economy. How will the sudden disruption in supply chains, changed social interactions and reduced consumer spending affect circular economy related behaviours like sharing, recovery of materials, reuse, remanufacturing, recycling and resource efficiency? Will the circular economy suffer or prosper from the post pandemic recovery? We cover six opportunities and challenges in relation to the growth of a circular economy:

  1. The sharing economy: the post-pandemic fear of the second-hand. The sharing economy is recognised as a business model under various circular economy classification schemes for the finance sector. The sharing economy upsets conventional financial services (e.g. insurance coverage policies and loans) due to a change in the relationship between user and owner of the shared asset. For financial institutions, the sharing economy introduces new income flows and collateral agreements, but also new risks due to shared use of assets amongst a multitude of parties. As analysed before the pandemic, the sharing economy offers tremendous opportunity due to the projected growth of sharing services to above USD 300 billion on an annual basis by 2025. Given the highly transmissible nature of COVID-19, there is the so-called “fear of the second-hand” at play for these services. A heightened fear of a disease vector can hurt sharing business models like home, apparel, equipment, ride, car, bike and scooter sharing. The providers will thus have to reassure customers that their shared assets are clean and hygienic upon delivery. This will impose extra transaction cost to sharing business models that thrive on shared physical assets;

 

  1. Potential increase of product-as-a-service. The aftermath of the lockdown measures also brings opportunity. The ongoing switch from store-based product to online sales could break ground for product-as-a-service (PAAS). The pandemic has increased consumer demand for services. The growth in the number of users of platforms for food delivery, grocery delivery, entertainment and any form of non-contact based e-commerce, could stimulate the faster adoption of products offered as a service during the economic recovery phase. PAAS offerings are far from a silver bullet, but they offer space for incumbents. The restructuring of traditional product offerings (ranging from camper vans to washing machines to mobility options) along the lines of PAAS offerings has the potential of delivering the same service to a large consumer base at a lower cost, with fewer resources. For the circular economy the important aspect is that fewer resources are in play with the potential of a higher degree of refurbishment, reuse and recycling during and at the end of the lifetime of the goods;

 

  1. Shift in waste volumes, waste collection and waste treatment during crisis. The volume of contaminated medical protective gear has increased tremendously across the globe. This waste is destroyed by incineration due to the concerns of contamination with the virus. The increased success of food delivery and e-commerce platforms unfortunately increases packaging waste. As a result of the stay-at-home orders, consumption is down and many local governments have altered their waste collection schedules. Less waste has entered collection systems for reuse and recycling. These logistical disruptions in waste or resource collection cause downstream supply and demand losses and mismatches. Buyers of raw materials in manufacturing can decide to abandon sustainability measures, lured in by the low price of freshly extracted materials. With less secondary materials on offer, the gap in price between virgin and secondary materials is expected to widen. Collection and deposit schemes generally make consumption less wasteful. The speed at which collection of waste returns to normal, will be crucial as reduced collection rates undermine the ground work for further expansion of the circular economy;

 

  1. Onshoring to areas where waste management policies are stricter. The effects of the lockdown and the lingering uncertainty over longer international distribution channels will make companies automatically focus on shorter supply chains and where possible they will onshore production to be closer to consumers. This onshoring will force companies to redesign their logistics and reverse logistics in light of extended producer responsibility laws and more stringent waste management policies. These laws might be absent or badly policed in the developing countries where they generally manufacture. Re-engineering supply chains could accelerate the shift to  a circular-economy;

 

  1. The overhaul of distribution: the locally integrated economy. In the food and agricultural sector, some farmers are losing income due to disrupted distribution channels. In livestock markets the infection of meat packaging workers has halted processing and packaging operations. While this is mostly negative in highly concentrated markets like the US, independent farmers can themselves reach out to consumers directly via shortened distribution channels. They can differentiate their offering from the mainstream linear food production systems. The Farmer to Fork (F2F) strategy is another example. This was introduced as part of the new EU food policy. F2F can also become a form of insurance policy for farmers to secure their income in the post-pandemic period. In its most positive form, this shortening of distribution channels for food could result in less food waste and production losses and more resilience of farmers, exposed to exclusive off taker contracts – a potential silver lining for the circular economy;

 

  1. Inclusive circular economy. There is no doubt that some countries will cope with the economic recovery in the wake of the global pandemic better and faster than others. If economies start “building-back-better” based on public recovery funding, glimpses of a more circular economy might emerge. Especially in a situation where, under pressure to stimulate local jobs, developed countries are rushed to accelerate the restructuring of their supply chains with onshoring of companies and employment opportunities. This also involves the rebalancing of trade and larger national stockpiles to pre-empt potential future disruption. The flipside of the coin is that many developing countries heavily rely on commodity exports. Altered post-pandemic patterns of trade, tariffs and border control could slow their economic progress, unless they move to higher value production models. Onshoring to build-back-better needs to be done with consideration of those that are at the bottom of the pyramid and potentially out-of-sight. There is a role for both the public and private sector here. If we really want to build back better, the work of government agencies and international organisations, such as the United Nations and the International Labour Organisation, remains essential to guarantee the decency and inclusiveness of policies related to working conditions. In many countries, private financial institutions will be tasked as distribution channels of recovery funding to private parties. A successful recovery will include the individuals most affected.

Please provide feedback here on UNEP FI’s draft study Demystifying Circular Economy Finance by 11pm CET on Wednesday 10 June 2020. 

 

COVID-19 updates from UN Environment Programme

The transmission of diseases, like the Novel Coronavirus COVID-19, between animals and humans (zoonoses) threatens economic development, animal and human well-being, and ecosystem integrity. The United Nations Environment Programme supports global efforts to protect biodiversity, to put an end to the illegal trade in wildlife, to safeguard the handling of chemicals and waste and to promote economic recovery plans that take nature and the climate emergency into account. Read the latest news and science from UN Environment Programme on these areas.

 

Image: Sergio Souza

BLOG: UNEP FI’s Eric Usher on how responsible banks can advance financial inclusion in the COVID-19 build back

14 May 2020

There is no doubt that the COVID-19 crisis will have a profound impact on the whole world, and for hundreds of millions of vulnerable people, especially low-income individuals, small businesses and workers in developing countries, the impact could be very severe. UNEP FI Head, Eric Usher, in the second of his blogs on how UNEP FI members are responding to the COVID-19 crisis, considers the role of responsible banks in supporting these neglected communities. And how the banking sector can ensure financial inclusion is not forgotten as economies recover from the crisis and build back better.

According to the World Bank, financial inclusion ensures that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way. The last decade has seen significant improvements. World Bank and Findex data reports that a global average of 51% of adults had bank accounts in 2011; compared to 69% in 2017. But this varies by country, with 94% in high-income countries, 65% in medium income countries and only 35% in low income countries. Close to one-third of adults – 1.7 billion – are still unbanked with women particularly underserved in developing countries. Financial inclusion also has a role in achieving several of the 17 Sustainable Development Goals and is an important consideration for banks as they implement the UN Principles for Responsible Banking. The banking sector, often in collaboration with other stakeholders such as governments and NGOs, will play a key part both in the recovery of the economy after the crisis, and in reducing poverty and increasing future financial participation.

In emerging markets, micro-businesses, SMEs and informal jobs are the engine of the economy. Under the lockdown measures around the globe, if measures are not taken to support these sectors and the individuals working in them, their businesses and incomes will be heavily hit. If this section of the population is not supported in the short-term, it is highly likely that the health crisis will worsen as, unable to survive through respecting the lockdown measures, vulnerable workers will start seeking income again. Responsible banks have already acted to mitigate this problem, for example, Latin America’s Development Bank, CAF has set up a credit line to cope with the outbreak, providing funds to each member country to support the local health systems and Barclays in the UK is donating £100m to charities working to support vulnerable people impacted by COVID-19, and to alleviate the associated social and economic hardship caused by the crisis.

Responsible banks can support vulnerable individuals and small entrepreneurs by clarifying how the payment of existing loans will function at this time and how access to new credit in the future will be possible. Other services, such as insurance and receivables financing, have also proved essential for supporting these small businesses. Bancolombia, has introduced a special commercial credit line for SMEs, companies and corporate clients so that they don’t need to make redundancies; Banco Hipotecario in El Salvador, has deferred payments of existing loans up to six months; Standard Bank in South Africa, has given three-month installment relief on home loans, vehicle and asset finance, credit cards and short term loans for customers earning R7,500 or less. And Bankia in Spain is offering bridge financing and long-term financing solutions to businesses that need support to help pay off their long-term borrowing. They have extended their moratorium on interest and mortgage repayments to six months.

In recent years, digital solutions have helped increase financial inclusion and these and new digital strategies will help banks support their vulnerable customers during the build back period – digital financial services, digital transfers and online payments can provide quick, convenient and affordable access to funds. For example, Beneficial State Bank in the USA has waived many transaction and processing fees for customers facing financial difficulties and increased limits on mobile deposits to facilitate online transactions, and Bank of Ireland has put in place a fully online application process for mortgage payment breaks so that customers may apply quickly and easily for a break and has launched a new service to allow self-isolating customers access to cash without having to leave home.

Over the next few months and well into the COVID-19 recovery, new innovations to support the vulnerable public will be of great value. Financial institutions can use their powerful voice and extensive communication channels to help small business owners manage their businesses during this difficult time. Educational videos, tools and other services to help them run their own businesses and financial lives will be a critical solution. Partnering with other stakeholders is also an alternative solution to support customers beyond just focusing on the financial services, whilst also accelerating the recovery. For example, banks can work with their large corporate clients and structure Supply Chain Finance programs (commonly known as supplier finance programs) that offer financial solutions to their small business suppliers across the value chain. They offer access to finance for small businesses at competitive rates by taking into account the risk of their corporate buyers.

As we start to rebuild our economies, responsible banks will analyse their recent data and ask themselves the following questions: What gaps in the economy have affected SMEs most? What areas in different cities are most vulnerable in terms of different crises? Were gender and racial gaps intensified during this crisis? The answers to these kinds of questions affect financial inclusion. Banks which consider people at the base of the pyramid will ensure that the financial sector has a positive impact on society and the economy.

This crisis is teaching the world to look differently at the relationship between the global economy’s stakeholders and how they need to work together closely to be effective. A coordinated response from governments, regulators, the private sector, and civil society is important now, and will continue to be as we build back more resilient societies and economies. COVID-19 has critically challenged communities globally, and it won’t be the last one to do so as the world continues to face environmental and social challenges which exacerbate each other. We should not waste this opportunity to decide what kind of recovery we want for our society and planet, and the role responsible banking plays.

In Eric Usher’s first blog on how the finance industry is responding to the COVID-19 crisis, he highlights the initial measures taken by some of UNEP FI member banks to mitigate the impact of the virus.

Read about more of the measures that UNEP FI banks have been taking in response to the pandemic on our COVID-19 page.

COVID-19 updates from UN Environment Programme

The transmission of diseases, like the Novel Coronavirus COVID-19, between animals and humans (zoonoses) threatens economic development, animal and human well-being, and ecosystem integrity. The United Nations Environment Programme supports global efforts to protect biodiversity, to put an end to the illegal trade in wildlife, to safeguard the handling of chemicals and waste and to promote economic recovery plans that take nature and the climate emergency into account. Read the latest news and science from UN Environment Programme on these areas.

Sources: World Bank, Findex Data(https://globalfindex.worldbank.org/) and Mais Sha’ban, Claudia Giradone & Anna Sarkisyan (2020) Cross-country variation in financial inclusion: a global perspective”, The European Journal of Finance.

 

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.

UPDATED: 16 UNEP FI Member Banks Representing Many Trillions of Dollars are First in Industry to Jointly Pilot the TCFD Recommendations

11 July 2017

31 October, 2017: Update – 16 banks now form the UNEP FI TCFD pilot project.

11 July, 2017

Eleven of the world’s leading banks announced on 11 July, 2017 that they will work together with UNEP FI to develop analytical tools and indicators to strengthen their assessment and disclosure of climate-related risks and opportunities.

Following the late June publication of the final recommendations by the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial Disclosures (TCFD), the banks not only welcome the recommendations but have also declared their intention to jointly pioneer practical approaches to implementing this ground-breaking, forward-looking framework. Increasing the amount of reliable information on financial institutions’ exposure to climate-related risks and opportunities will strengthen the stability of the financial system, and facilitate financing the transition to a more stable and sustainable economy.

Representing over $ 7 trillion, the TCFD pilot group includes the following UNEP FI banking members: ANZ, Barclays, Bradesco, Citi, Itaú, National Australia Bank, Royal Bank of Canada, Santander, Standard Chartered, TD Bank Group and UBS. As part of this UNEP FI-led project, the banks will work together to assess how they can best adopt key elements of the Mark Carney – Michael Bloomberg Task Force recommendations, which were submitted to the G20 in early July.

“The message from financial heavyweights is clear – climate change poses a real and serious threat to our economy,” said Head of UN Environment, Erik Solheim. “At the same time, there are enormous business opportunities in taking climate action. Transparency on how financial institutions mitigate the risks and seize the opportunities of a two degrees pathway is crucial to move international markets towards actively supporting a low-carbon and climate-resilient future.”

The recommendations are welcomed by financial institutions and civil society alike, as the role of the finance sector in meeting the Paris Climate Agreement’s goals becomes increasingly clear. This first mover project to implement the recommendations puts the eleven UN Environment Finance Initiative’s members in the vanguard of this effort. Its results will be made public to encourage banks worldwide to adopt the scenarios, models and approaches developed.

UPDATE: As of 31 July 2017, Norway’s DNB is twelfth leading bank to join UNEP FI’s TCFD implementation pilot project. Read more here.

UPDATE: As of 5 September 2017, Rabobank is the thirteenth leading bank to join UNEP FI’s TCFD implementation pilot project. Read more here.

UPDATE: As of 26 September 2017, BBVA is the fourteenth leading bank to join UNEP FI’s TCFD implementation pilot project. Read more here.

UPDATE: As of 17 October, 2017, at UNEP FI’s Europe Regional Roundtable, it was announced that BNP Paribas and Société Générale are joining the TCFD pilot project.

 

Read the UN Environment press release on the TCFD Pilot Project here.

Read the UN News Centre article here.

Read the ONU Brazil article here.

Read the UBS news article here.

Read the ONU Meio Ambiente note here.

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The Task Force on Climate-Related Financial Disclosures (TCFD) was set up in 2015 by the Financial Stability Board to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders. The Task Force is mandated by Mark Carney, the Governor of the Bank of England and Chairman of the FSB, and chaired by Michael Bloomberg. The final recommendations were published in late June 2017 and submitted to the G20 in early July 2017.

Visit the TCFD website here and read the Final Recommendations Report here.

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Background Material

Read UNEP FI’s Remco Fischer on collaborating on climate disclosure in Responsible Investor’s ESG magazine here. The publication is now free to air, just register to read the magazine online.

For more information on the TCFD initiative including relevant UNEP FI reports, please view our December 2016 post here.

Read UNEP FI’s key recommendations to the Task Force from February 2017 here.

In addition, UNEP FI members have access to past webinars on the Task Force’s recommendations available on the members’ extranet.

Regional Roundtables on Sustainable Finance: Join Us in Africa & Middle East and Asia Pacific

5 September - 21 December 2017 | All Regions
 

REGIONAL ROUNDTABLES
ON SUSTAINABLE FINANCE

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UNEP FI is establishing Regional Roundtables to provide an opportunity for members and actors in the sustainable finance community to come together locally to discuss the latest trends and innovations, and share good practice. 2017 marks UNEP FI’s 25th anniversary, and in this landmark year, our first ever Regional Roundtables will be the focus of our celebrations.

Learn about UNEP FI’s 25 Years Journey Here!

Choose your region:

                       

Register now!

Region Country City Date
Latin America and the Caribbean Argentina Buenos Aires 5-6 September 2017
North America United States New York 18-20 September 2017
Europe Switzerland Geneva 16-18 October 2017
Africa and Middle East South Africa Johannesburg 27-29 November 2017
Asia Pacific Japan Tokyo 11-12 December 2017

Building on over two decades of successful Global Roundtables, these regional events are designed to create rich opportunities for UNEP FI members to connect with one another and to raise awareness of sustainable finance work in progress across banking, investment, and insurance.

Why participate?

  • Gain insights into emerging knowledge and best practice in key environmental, social and governance (ESG) areas and inspirational market leadership
  • Showcase and learn about leading-edge sustainable finance practice and the future direction of the industry
  • Get connected with leaders in sustainable finance
  • UNEP FI members will have exclusive opportunities to participate in networking activities and workshops to engage key stakeholders and collaborate on initiatives aimed at changing finance and financing change

 Who will be there?

The 2017 UNEP FI Regional Roundtables are expected to attract 100-200 sustainable finance leaders from each of the regions:

  • Financial institutions
  • Industry associations
  • Government
  • Civil society
  • Regulatory bodies
  • Academics
  • General public

Participation in the Roundtable is free of charge, but participants from across the regions are expected to cover their own travel costs.


Carbon Offset results of the Regional Roundtables

UNEP FI collaborated with Eco Act to reduce the carbon emissions generated by the 2017 Regional Roundtables and even successfully achieved carbon neutrality by offsetting 535 tCO2. The carbon offsetting project was dedicated to ‘’the Sustainable Deployment of the LifeStraw Family in rural Kenya’’ and allows to avoid around two millions GHG emissions each year. This project distributes innovative water filters to local populations, granting access to potable water and diminishing wood consumption. The program has provided access to potable water to 4.5 million people, as well as enabling them to save time and improve their health conditions. For more information read here, view UNEP FI Certificate here.


Partners & Sponsors

Media Partners

                

 

 

Green Partner

 

 

 

 

 

Partnership & Sponsorship Opportunities 

Showcase your brand at the UNEP FI Regional Roundtables – key agenda-setting events on sustainable finance in your region – bringing together hundreds of leaders from all parts of the financial system as well as from civil society, academia, government and the United Nations.

Download the following partnership brochures or contact Geneva Damayanti (geneva.damayanti@un.org) for more information on partnership opportunities.

Latin America and Caribbean (Spanish)

 

 

 

Latin America and Caribbean (English)
Europe
Africa and
Middle East
Asia Pacific

 

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