Scots want more responsible finance: GEFI study covered in The Herald, Insider Magazine and Scottish Financial News

Our new study shows that most Scots want finance firms to take the lead and deliver more responsible investment to tackle climate change.

We commissioned YouGov to poll 1,002 adults earlier this month, finding that a quarter thought the pandemic had increased their interest in responsible investment.

54% think it is important that their current or future financial investments reflect their personal concerns about ethical, environmental and social issues, while 38% said this was not important.

Chris Tait said: “Edinburgh hosts a large financial sector, and this is something which financial institutions must address in the wake of COP26."

Read more in Insider, Scottish Financial News or p2 of today's Herald!

https://www.scottishfinancialnews.com/articles/scots-want-finance-firms-to-deliver-more-responsible-lending

https://www.insider.co.uk/news/finance-firms-must-reflect-scottish-27754002

by Sam

Impact Investing: Verification under the Operating Principles for Impact Management

Embedding impact is a challenge and so is its verification. There has been limited guidance on it in the market. To address this challenge, the International Finance Corporation (IFC) launched the Operating Principles for Impact Management (the Impact Principles) in April 2019.

What are the Impact Principles?

The Impact Principles provide a framework of leading market practice for investors for the design and implementation of their impact management systems across the investment lifecycle.

Source: https://www.impactprinciples.org/

The Impact Principles are not limited to specific types of impact investors, sectors, geographies or asset types but are widely applicable and can be adopted for specific funds or vehicles or the portfolio. There are currently more than 150 signatories from more than 35 countries with AUM exceeding $450 million.

Why are the Impact Principles important?

Investors new to impact can use it as the start of their impact journey to design their systems and processes and investors that are already operating in impact can use it to benchmark their practice and look for areas of improvement.

The Impact Principles provide a structure for embedding impact. Each principle has action points and associated guidance, found here.

Becoming a signatory and undergoing verification

An organisation must first submit a Signatory Letter confirming its adoption of the Impact Principles. Within 12 months and annually thereafter, signatories must produce a Disclosure Statement in a standardised format describing their alignment with the Impact Principles. The Disclosure Statement is published on the Impact Principles as well as the signatories’ website.

Alongside the Disclosure Statement the alignment of the impact management systems and processes with the Impact Principles must be independently verified. The frequency of verification is not mandated by the Impact Principles, instead signatories must disclose the frequency of verification along with the reason for their choice.

GEFI’s verification for SIS Ventures

Principle 9 of the Impact Principles requires signatory investors to “[p]ublicly disclose alignment with the Impact Principles and provide independent verification of the alignment”.

In accordance with Principle 9, GEFI has recently completed the verification of the impact management systems and processes for SIS Ventures.  Formed in 2018, SIS Ventures is a part of the Social Investment Scotland Group, a leading Scottish impact investor. SIS Ventures’ aim is to support and grow high impact organisations through access to mission-aligned investment and it became a signatory of the Impact Principles in July 2021.

GEFI reviewed and documented SIS Ventures’ impact management systems and processes in line with each of the Impact Principles in turn. This was done through interviews with staff and review of key documentation. GEFI produced the verification statement and provided SIS Ventures with recommendations on how its impact management systems and processes could be further developed.

Next step for verification methodology

As an independent verifier, GEFI developed its own methodology to complete the verification.

Tideline, an impact investing consultant, has produced a report on investor alignment with the Impact Principles which includes verification methodology and scoring.

Verifiers developing their own verification methodology has both pros and cons. On one hand, innovation and experimentation are needed in this relatively new field. On the other, there is a risk that different methodologies may end up undermining the integrity of the verification process.

Moving forward, the Impact Principles may benefit from releasing methodology guidance and checklists for verifiers to ensure that verifications are completed in a standardised or similar way.

SIS Ventures quote

“As signatories to the Operating Principles for Impact Management we need to work with external experts to satisfy the requirements of Principle 9. The team at Global Ethical Finance Initiative were methodical and robust in their verification approach, whilst also highly professional and approachable. The team also provided us with a useful short report on how we could further improve our impact processes and this will help inform our future practice. I would confidently recommend GEFI’s services in this area to others.” Lindsay Wake, Head of Impact, Social Investment Scotland.

Please join us in Edinburgh on 6 September 2022 for our annual ethical finance summit, “ESG in a Volatile World – Profit, Purpose or Politics?”

by Sam

GEFI & UNDP release Guide to Help Malaysian Banks Support SMEs on Sustainability

On Wednesday 29th June 2022 United Nations Environment Programme Finance Initiative (UNEP FI), in partnership with Global Ethical Finance Initiative (GEFI), published a “Guide for Malaysian Banks supporting SMEs in the Sustainable Recovery from Covid”.

The Guide, launched at the inaugural Ethical Finance ASEAN 2022 summit, aims to assist Malaysian banks in helping Small to Medium-sized Enterprises (SMEs) to embed sustainability / ESG practices as business-as-usual and suggests practical steps and examples.

The findings presented in the Guide, as well as the development of a new Framework for banks, are based on the findings of a desk-based review and interviews with 13 Malaysian and international banks that took place earlier this year.

SMEs play a vital role in the Malaysian economy and, as has been the case across the globe, the research found that Malaysian SMEs have been negatively impacted by the COVID-19 (covid) pandemic. As Governments commit to ‘building back better’ the recovery from covid provides an opportunity to align spending and initiatives towards creating a more sustainable future and taking action to combat pressing issues such as climate change.

The Guide found that SMEs in Malaysia are at an early stage of embedding sustainability as, for many, the focus has been on survival during the covid pandemic. While many corporates have made headway on sustainability initiatives, especially around net zero commitments, there is a risk that SMEs are left behind.

Banks are uniquely positioned to support SMEs in taking action on sustainability, both through finance related activities (such as developing sustainability products) and broader activities (such as capacity building). The research found that during the covid pandemic, Malaysian banks primarily supported SMEs through the disbursement of Government funding and ensuring continuity of business through digitalisation. There has been some wider activity to date but, as we recover from the covid pandemic, momentum is building amongst Malaysian banks to further support SMEs on their sustainability journey and further develop areas such as product development, capacity building, offering a one-stop-shop for sustainability initiatives and accelerator programmes.

The Guide provides a Framework for action that Malaysian banks can take in supporting SMEs in the sustainable recovery from the covid pandemic in three key areas:

  • Bank Wide Approach;
  • Supporting SMEs; and
  • Product Development.

The Framework - which is intended to supplement existing sustainability tools, frameworks and initiatives rather than replace them - identifies 19 key suggestions for bank wide approach, supporting SMEs and provides a step-by-step guide for product development. Each of these areas is supported by several practical steps augmented with of work already being undertaken by Malaysian and international banks.

Banks can play a significant role in supporting SMEs on their sustainability journey and the Guide highlights the appetite amongst Malaysian banks to further assist SMEs in progressing their sustainability journey. Further support could be through assisting SMEs in measuring greenhouse gas (GHG) emissions, educating internal staff, capacity building for SMEs, further development of sustainability products and a greater consideration of the social and governance aspects of sustainability.

The Guide concludes that responsibility for assisting SMEs on sustainability should not lie with banks alone and support is also required from Government and other industry players to incentivise action.

Click Here to visit the UNEP FI page to access the Guide.

by Sam

Ethical Finance Global 2022 - summit announced

We are delighted to formally announce the launch of Ethical Finance Global 2022, which will take place as an in-person event on 6th September 2022 in Edinburgh hosted by NatWest Group.

The summit is the premier event in ethical finance, and is themed 'ESG in a Volatile World: Profit, Principles or Politics'. It will tackle three core thematics: climate, nature and social. Confirmed speakers include Rt. Hon. Alok Sharma MP, Sarah Breeden, Saker Nusseibeh and Anshula Kant. Click here to find out more.

Our in-person events offer a unique ability to forge connections, and over the years our Summits have built capacity, influenced policy, enabled deals, informed new products, driven framework commitments, helped deploy capital to the SDGs and developed lifelong friendships. If you have attended our flagship global Summit in the past, we would love to see you again in September; if not, then now is your chance!

As well as looking at macroeconomic issues impacting global markets, we will have specific sessions on topics including:

  • The growing impact of conflict and geopolitics in ESG
  • Core global challenges in financing climate adaptation and mitigation
  • The role of finance in protecting and restoring nature and biodiversity
  • The emergence of the S in ESG as a core priority
  • The role of financial leaders in defining organisational purpose
  • Financing the SDGs

Sign up now at https://www.eventbrite.co.uk/e/ethical-finance-global-2022-esg-in-a-volatile-world-registration-349512941617?aff=blog, using the code 'EARLY20' for a 20% early bird discount.

by GEFI

The Data Dichotomy: Courage or Caution | Ethical Finance Round Table

Our next Ethical Finance Round Table event, entitled The Data Dichotomy: Courage or Caution, will take place on Tuesday 14 June 2022. It will explore developments in ESG data provision, its limitations and how asset managers are using data to inform long term investment decisions.

Our speakers will respond to some of the toughest questions facing the industry:

  • Is "we need better data" becoming an excuse for inaction from the industry?
  • Are ESG ratings fundamentally compromised by being at least partly based on subjective data?
  • How does the backwards-looking nature of data square with the long-term, forwards-looking view that responsible asset owners should take?
  • As disclosures become more widespread and data improves, is there pressure to avoid sectors or regions with poorer disclosures, even if they might deliver genuine impact?

Confirmed speakers are:

  • Graham Burnside, Co-Founder and Senior Advisor, GEFI (moderator)
  • Dr Richard Mattison, President of S&P Global Sustainable1 and CEO of S&P Global Trucost.
  • Hetal Patel, Head of Climate Investment Risk, Phoenix Group
  • Kate McGrath, ESG Analyst – Fixed Income, abrdn

Sign up now at https://us02web.zoom.us/webinar/register/1716527070480/WN_i9UjoXj0QZm6xbEczOhEKw.

by GEFI

Financing a Shared Future for All Life on Earth: the role of TNFD in a Global Biodiversity Framework - Biodiversity Day interview with Elizabeth Mrema, UN CPD & Lorna Slater MSP

Last week would have seen the crucial biodiversity summit COP15 take place, before it was delayed due to the pandemic. To mark both Biodiversity Day and the original date, and build moment before the rescheduled summit this Autumn, we hosted a discussion on Financing a Shared Future for All Life on Earth: the role of TNFD in a Global Biodiversity Framework.

We were joined by UN Convention on Biodiversity Executive Secretary & Taskforce for Nature-Related Financial Disclosures (TNFD) Co-chair Elizabeth Mrema and Scottish Minister for Green Skills, Circular Economy and Biodiversity Lorna Slater MSP, to discuss why we need to finance nature, the Global Biodiversity Framework, how governments can help and what the Scottish Government is doing in this space.

Despite on-going efforts, biodiversity is deteriorating worldwide and this decline is projected to worsen with business-as-usual scenarios. This session, aimed at global finance practitioners, is intended to raise aware and inspire practical action in relation to the critical need to finance. It will provide an update on global and national initiatives to help drive the action required to finance a shared future for all life on earth.

With the forthcoming Global Biodiversity Framework, the Convention on Biological Diversity is setting the stage for a worldwide re-direction of financial flows away from nature-negative and towards nature-positive outcomes. Market players are speeding ahead with testing the Taskforce on Nature-related Financial Disclosures (TNFD) beta framework, to make it ready to inform and respond to these new international norms around nature, nature-based solutions and finance. As part of the Scottish Government’s National Strategy for Economic Transformation, we have committed to establishing a values-led, high-integrity market for responsible investment in natural capital.

GEFI has a long history of supporting finance for nature, from a programme of collaboration between UNDP, GEFI and the Scottish Government, to the COP26 launch of an exclusive, commercial platform showcasing financial products that are directly aligned to the SDGs, and nature-focused sessions at our annual summits and COP26.

by GEFI

Scottish Financial Centres Climb in Global Green Finance Rankings

Edinburgh and Glasgow have both risen in the 9th edition of the widely respected Global Green Finance Index (GGFI), from prominent City thinktank Z/Yen.

Edinburgh climbed 4 places to 35th, while COP26 host city Glasgow rose 2 places to 51st; the only UK financial centres outside London to place on the list.

Glasgow ranks ahead of financial centres such as Milan, Istanbul and Tel Aviv, with Edinburgh leading Osaka, Hong Kong, Toronto, Chicago and Rome.

The rankings show that Scotland is well-placed to build upon the legacy of COP26 with its new Scottish Taskforce on Green and Sustainable Financial Services.

Led by the Scottish Government, Global Ethical Finance Initiative (GEFI) and Scottish Financial Enterprise, the Taskforce brings together prominent financial institutions, policymakers, professional bodies, academic institutions, and industry representatives to coordinate the Scottish financial sector’s approach to financing a net zero economy.

Elsewhere in the rankings, London, Amsterdam, and New York retained their 1st, 2nd and 3rd places respectively, while New York jumped 8 places to move into the top 10 for the first time, at 5th place.

Chris Tait, Chief Operating Officer of GEFI said “The rise of both Edinburgh and Glasgow in the latest Global Green Finance Index shows the knowledge and expertise of Scotland’s green finance cluster. By bringing together stakeholders from across the sector, we will leverage our intellectual capital and financial history to deliver finance for net zero.”

Speaking at the Taskforce launch, Mark Carney, UN Special Envoy for Climate Action and Finance and former Governor of the Bank of England, said “This Taskforce presents a unique opportunity, at the national level, for stakeholders active in one of the world’s oldest financial centres to work together to demonstrate leadership in defining and implementing the steps required to align with a net-zero future.”

by GEFI

Agenda Announced: Ethical Finance ASEAN 2022

The Global Ethical Finance Initiative (GEFI) and the Asian Institute of Chartered Bankers are delighted to announce the launch of the agenda for our inaugural Ethical Finance ASEAN 2022 summit.

Taking place virtually on Wednesday 29 June 2022, the summit begins at 10am MYT (GMT+8), with a full replay taking place later at 10am BST (GMT+1). The summit starts with an overview of sustainable finance in the ASEAN region, before exploring the topic further in sessions centred around three core thematics: climate, nature and social. The summit then explores practical pathways to action with a session on the SDGs and concludes with an interview between prominent corporate and financial sustainability leaders. Click here to view the agenda.

Speakers include:

  • Komi Rajdev, Head of Business Development ASEAN, Moody’s ESG Solutions
  • Suraya Sani, Senior Supervisor, Financial Conglomerates Supervision Department, Bank Negara Malaysia
  • Shahril Azuar Bin Jimin, Chief Sustainability Officer, MayBank
  • Raja Amir Shah Raja Azwa, CEO, HSBC Amanah
  • Yuki Yasui, Regional Director, GFANZ APAC Network
  • Rafe Haneef, CEO, Group Transaction Banking and Group Chief Sustainability Office
  • Rizal Il-Ehzan Bin Fadil Azim, CEO, Alliance Islamic Bank Berhad

Sign up now at https://www.eventbrite.co.uk/e/ethical-finance-asean-2022-tickets-299068761717?aff=agenda

by GEFI

EVENT ANNOUNCED | Ethical Finance ASEAN 2022

Following the success of our South East Asia regional showcase at Ethical Finance Global 2021, the Global Ethical Finance Initiative (GEFI) is delighted to co-host the inaugural Ethical Finance ASEAN 2022 with the Asian Institute of Chartered Bankers (AICB).

This virtual event, to be held on Wednesday 29 June 2022, will present a unique opportunity to hear from experts on sustainable and responsible finance in the ASEAN region and beyond. The summit is themed “ESG in a Volatile World – Profit, Purpose or Politics?”

As well as looking at macroeconomic issues impacting global markets, we will have specific sessions on topics including:

  • How the megatrends of 2022 are affecting ASEAN economies
  • Financing nature and biodiversity in ASEAN: sustainable palm oil and deforestion
  • The role of the SDGs as a coordinating framework, and progress on financing the 2030 goals
  • Core priorities on the S in ESG for ASEAN economies
  • Perspectives from local and international finance leaders

For more information, click here.

by GEFI

Responding to the War in Ukraine: Ethical Finance at a Time of Crisis

Finance sector experts discussed the role of finance in responding to the war in Ukraine in a special joint event hosted with the CFA UK's Scottish Committee, focusing on the need to respond to the energy supply shock, the "economic war" being waged against Russia and the options open to investors.

On Wednesday 16th March, Lord John Alderdice, a key figure in the Northern Ireland Peace Process and Director of the Centre for the Resolution of Intractable Conflict, Jeremy Lawson of abrdn, Helen Thomas of Blonde Money and Graham C. Cook, CFA of the Environment Agency Pension Fund joined our event 'Responding to the War in Ukraine: Ethical Finance at a Time of Crisis'.

Lord John Alderdice opened the event by emphasising the need for finance to play a role in securing a just - and peaceful – world: a sentiment all the more acute in the context of the ongoing war in Ukraine. The shadow of the conflict underpinned Jeremy Lawson, Chief Economist at abrdn’s opening intervention, where he explained that the conflict has highlighted that central banks are behind the policy curve: they have few policy levers left with which to respond to the conflict and the resultant energy supply shock.

Helen Thomas of Blonde Money echoed these sentiments, as she proceeded to unpack the finance (and UK’s) policy response to the conflict in Ukraine. She explained that the last few weeks had, in fact, laid bare two wars that are happening in parallel: a land war, and an economic war that goes beyond mere sanctions. Finance has become another front on a complex war, and no investor can truly be neutral as a result. This was a position that was echoed by Lord Alderdice, who cited the difficulties of aligning private financial flows with broader geopolitics and policy as the conflict in Ukraine unfolds.

The question remains, however: what investors can therefore do in response to the conflict? Whilst there might be pressure to divest, as Graham Cook commented, the market isn't necessarily there. In fact, for many investors, their Russia-based holdings had been relatively low due to existing governance concerns - many of those with robust sustainability and governance policies were simply not deeply invested in Russia, in contrast with some of the kneejerk divestments of recent weeks.

Jeremy Lawson suggested that the conflict is ultimately symbolic of a tendency towards fragmentation that has been in place for a decade, but could end up strengthening the NATO alliance: the decrease in globalisation over the past decade has been underlined by the conflict but its impact is not linear. We could, for example, see climate change policy undermined by return to coal, or see the flexibility of EU ETS promote renewables as source of energy security as the war unfolds.

As Helen Thomas ultimately argued, when thinking about the war in Ukraine we need to be mindful of longer term history when we think about the moral and practical steps the finance sector needs to take during this crisis. Both Helen Thomas and Jeremy Lawson were keen to point to political economy as a fundamental driver of investing, with formal modelling a crucial potential aid to decision-making. There was broad agreement that China is key, not just in terms of the effectiveness of the economic war now being waged against Russia, but on climate action and the shape of any reshuffle of the geopolitical order provoked by this war.

John Alderdice was interviewed about the event on BBC Radio Scotland following the event; you can listen here.

We would strongly encourage you to make to make a donation to the Red Cross Ukraine Appeal.

by Ellen Davis-Walker