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

 

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.

 

The SDGs won’t be achieved without a holistic approach to impacts by business and finance.

11 July 2019

The world’s governments will gather from 9 July for the High-Level Political Forum, an annual United Nations gathering to review progress towards the Sustainable Development Goals. They will certainly, as they have in the past, flag the high costs of achieving the SDGs, re-iterate their aim to “leave no one behind”, and call on the private sector to step up its contribution.

Leaders and experts from business and finance are now a growing fixture at these events, presenting their new ideas, solutions, products and business models. Not a day passes without news of new sustainable finance products – green, sustainable, social or blue bonds, impact investing products, blended finance solutions, and themed or “Paris-aligned” portfolios and SDG engagement strategies. Policymakers and regulators are equally engaged, as evidenced by EU Sustainable Finance Action Plan and its newly released taxonomy of sustainable economic activities, the push and growing acceptance for climate risk disclosure requirements (TCFD), or the multiplication of sustainable finance roadmaps in countries from China to Canada.

Still, HLPF participants are bound to hear, as they did last year, that we are not on track to achieve the SDGs. Why the disconnect?

Because the private sector has yet to create business models and financing approaches that can get to the required scale.

Yes, the SDGs are a massively complex set of issues. Yes, common sense and common practice dictate to break down complexity into manageable parts, which is often how banks and investors approach the SDGs, hammering away at them one or two Goals or sectors at a time, and in isolation. But the SDGs were designed, signed and declared as “interconnected and indivisible” and need addressing in a more systematic, holistic way.

In the policy world, there is the documented risk that taking the SDGs piecemeal turns into addressing one at the expense of the others. In a way, that’s the story behind the Gilets Jaunes’ protests in France, where a government’s attempt to implement a carbon tax triggered widespread demands for more jobs, better livelihoods and better territorial wealth distribution. In fact, many governments grapple with this: they push for reforms in the face of an acute convergence of economic, social and environmental challenges, from biodiversity loss to job creation, from climate change to growing income inequalities, from gender to tech. When they fail to reconcile these objectives, it sows division, which leads (at best) to the status quo.

Just as policymakers are learning from this, so must business and finance, starting with an acknowledgement that all human and business activity has a mix of positive and negative environmental, social and economic impacts. This broader, holistic, 360 degree view is the only way to properly connect impact with the real economy, because it allows businesses and finance to understand what social and environmental benefits businesses or projects can deliver, how to mitigate their negative impacts, and importantly to understand their business drivers. The biggest challenge in addressing the SDGs today is that companies need to bring positive impacts much closer to the value creation process – and stop looking at them as mere externalities. For those who understand the SDG opportunity, this will lead to a disruption of business models, where impacts drive value creation. The implications should not be underestimated: it means not only that SDG become dramatically more bankable, but also that the actual cost of achieving the SDGs will be decreased, as new efficiencies are created.

Some financial institutions have focused on a limited number of dedicated, investable SDG sectors, such as clean technologies or affordable housing. These efforts are important but, while some industries such as clean energy can be clearly aligned with a specific environmental outcome (less carbon in the atmosphere), many desirable social and environmental impacts – from gender equality to poverty alleviation – are more diffuse in the economy, making a holistic approach crucial.

Some may consider that the financial sector is already doing plenty to measure and manage impact. It does, but there is only too little that is holistic and can touch across all sectors of the economy.  When the financial sector adopts a holistic approach, it can also analyse and manage impacts of non-ring- fenced run-of-the-mill corporate equity or debt financing tools, distinct from typical green or impact finance. In doing so, it can open vast tracts of financial flows to the SDGs as new pathways to achieve impact through mainstream finance are revealed.

The Positive Impact Initiative has advocated for holistic impact analysis from its beginnings, starting with its Principles for Positive Impact Finance. It has developed an Impact Radar to help business and finance identify areas of impact, as well as model frameworks for the holistic analysis of impact in settings such as corporate finance (including public equities and fixed income from an investor perspective).

It currently operates two working groups to take that work into practice. One where banks are experimenting with assessing their own books, another to test the model framework for corporate finance through real case analyses and experience sharing.

What holistic is not: a “flat world” view, where all things are equal in urgency and humans devoid of agency, of opportunities to prioritize economically, environmentally, socially. What it is: an essential need to avoid giving from one hand and taking back from the other. Holistic impact analysis gives us the best chance yet to take a business-driven approach to sustainability. More than the avoidance and mitigation of risks, the reward entails vast new market opportunities, renewed trust between society, government and the private sector, and better environmental and social outcomes for all.

The Sustainable Development Goals have set an ambitious timeline to accelerate shared prosperity while addressing egregious challenges to society and the environment, at a moment when profound transformations are taking place. For mainstream finance, now is not the time to take a piecemeal approach to the SDGs. Only a holistic approach can take SDG finance to scale.

Careen Abb, Programme Leader, Positive Impact Finance, UNEP Finance Initiative

Learn about PI at www.unepfi.org/positive-impact

Reproduced by kind permission of  Environmental Finance