The 3rd session of the CPD-accredited Climate Finance Training Series, delivered jointly by the DIFC Academy and the Global Ethical Finance Initiative (GEFI), provided finance practitioners with valuable insights into global best practices and frameworks for climate finance and setting Net Zero targets and policies.
Through panel discussions and presentations by industry experts, participants gained a deeper understanding of key initiatives and frameworks, the importance of transition planning, and the role of the Task Force on Climate-related Financial Disclosures (TCFD) in managing climate risks, as well as insights into the tools required for developing, implementing, and measuring climate policies and targets. This blog post summarises the key takeaways from the training series.
Global Best Practice Initiatives and Frameworks
During the panel discussion, Jonathan Keyes of HSBC, Mitch Reznick of Federated Hermes, Satya Tripathi of Global Alliance for a Sustainable Planet, and Eline Sleurink of the Principles for Responsible Investment (PRI) shared their perspectives on best practice initiatives and frameworks. HSBC emphasised the need for organisations to assess and adopt global disclosure and investment frameworks that align with their specific requirements as institutions. Internal standards and frameworks were deemed essential for ensuring best practices within financial institutions. Federated Hermes highlighted the transformative power of frameworks in shaping investments, such as ICMA, Social Bond Principles, and green bond frameworks, which enable quantification, measurement, and target setting for decarbonisation and carbon emissions. The PRI emphasised the significance of supporting signatory investors in navigating frameworks and the motivations behind investor participation, including public commitment, collaborative opportunities, and resource availability.
Developing, implementing, and measuring climate policies and targets
David Sheasby of Martin Currie and Sebastian Frederiks of ING discussed the importance of regional initiatives and the need to approach climate change, biodiversity, and the just transition in a holistic manner. They encouraged organisations not to wait for perfection but to move forward transparently, as the journey is forgiving. Sustainable linked loans were suggested as a way to incentivise the market, setting reasonably challenging targets to fail for the right reasons. The availability of open-source carbon footprint tools was highlighted, offering valuable resources for financial institutions. Additionally, it was mentioned that green loans and green trade finance are relatively easier entry points compared to sustainability-linked finance, particularly for small and medium-sized banks.
The speakers also discussed the challenges and opportunities associated with reducing exposure to the oil sector. While acknowledging the need to transition away from fossil fuels, they emphasised the importance of engaging with the sector to drive change. Investing in the oil and gas industry was seen as an opportunity to influence and promote decarbonisation. However, it was stressed that a credible pathway to decarbonisation must be presented, and carbon emissions should be captured and handled responsibly. Profit should not be the sole focus, but rather be augmented by a focus upon sustainability and responsible business practice.
TCFD and Transition Planning
The TCFD presentation from Brian Henderson of Mercer shed light on the TCFD framework’s role in managing climate change risks. The speakers discussed the resource-intensiveness of TCFD reporting and the transition from voluntary to mandatory reporting. They emphasised the importance of asset owners, managers, and companies embracing the TCFD framework to facilitate and inform the integration of climate risks into decision-making processes.
In his Net Zero transition planning presentation Nick Robins, Professor in Practice for Sustainable Finance at London School of Economics, highlighted the importance of transition planning, using data to design effective net-zero transition plans. Engaging with value chains was identified as a critical stage in the transition planning process, enabling organisations to align their products, services, and policies with climate goals.
The Climate Finance Training Series provided finance practitioners with valuable insights into global best practices and frameworks for climate finance. By adopting frameworks, organisations can drive investments, measure progress, and set meaningful targets. Regional initiatives, sustainable linked loans, and the integration of climate considerations into transition planning were identified as crucial components of effective climate finance strategies. Furthermore, the TCFD framework and engagement with value chains were emphasised as essential in managing climate risks and achieving a successful transition to a sustainable future. The knowledge gained from this training series equips finance professionals to navigate the evolving landscape of climate finance and contribute to global efforts in addressing climate change.
