Global action on climate adaptation
This article originally appeared on the CharteredBanker.com blog at https://www.charteredbanker.com/resource_listing/cpd-resources/global-action-on-climate-adaptation.html
Road surfaces that don’t melt during hot summers and drought-resistant seeds are the kind of solutions needed as the world adapts to climate change, according to the Global Commission on Adaptation.
The Commission, which is backed by more than 20 countries, including the UK, Germany and China, is running a Year of Action ahead of its Climate Adaption Summit in the Netherlands in October 2020.
Patrick Verkooijen, CEO, the Global Center on Adaptation, and Co-managing Partner of the Global Commission on Adaptation, said the initiative was about “implementing real solutions around the world which show that adaptation is not just the right thing to do but the smart thing to do.”
“Adaptation not only has economic benefits, but it is also essential if we are to avoid climate apartheid — a world in which the wealthy pay to escape from the worst impacts of climate change, while the poor are left to suffer,” Verkooijen added
International support
More than 75 governments, institutions, civil society organisations, and private sector players are helping to advance eight ‘Action Tracks’. These are focused on: finance and investment, food security and agriculture, nature-based solutions, water, cities, locally-led action, infrastructure, and preventing disasters.
As part of the finance and investment stream, the private-sector led Coalition for Climate Resilient Investment has been launched by London-based insurance broker and advisory business Willis Towers Watson in partnership with the governments of the UK and Jamaica, the Global Commission on Adaptation and the World Economic Forum.
It will focus on developing data and analytical tools to better understand the risks posed by climate change and to align investment flows towards infrastructure capable of withstanding a changing climate.
Resilient infrastructure
John Haley, CEO of Willis Towers Watson, said: “Pricing the risks posed by climate change will create opportunities to build a network of resilient infrastructure in high, medium and low-income countries, enabling us to better prevent future human and financial disasters.”
A report on climate resilient infrastructure from the OECD lists a range of impacts to infrastructure from temperature changes, rising sea levels, changing rainfall patterns and storms. These include melting road surfaces and buckling railway lines; damage to bridges; port and airport disruption and disruption of energy supply due to flooding.
The Global Commission on Adaptation is based in the Netherlands and led by Ban Ki-moon, 8th Secretary-General of the United Nations, Bill Gates, co-chair of the Bill & Melinda Gates Foundation, and Kristalina Georgieva, CEO of the World Bank. It is guided by 33 commissioners and 19 convening countries, representing all regions of the globe, and co-managed by the Global Center on Adaptation and World Resources Institute.
The Chartered Banker Institute’s Green Finance Certificate™ is the first global, benchmark qualification for the growing Green Finance sector.
A new dawn for green bonds
This article originally appeared on the CharteredBanker.com blog at https://www.charteredbanker.com/resource_listing/cpd-resources/a-new-dawn-for-green-bonds.html
The green bonds market is expected to reach new highs this year after more than $200bn in green bonds and loans were issued in 2019 – a new global record.
Green bonds – also known as climate bonds – are fixed-income investments issued by governments and corporations as debt capital to fund climate and environmental projects.
“Green bonds are those where the proceeds raised are allocated to environmental projects or uses,” explained Simon Thompson, Chief Executive, Chartered Banker Institute. “They might be used to raise capital for a wide variety of purposes, including renewable energy projects, clean transport infrastructure, sustainable buildings, flood defences, or sustainable forestry and agriculture.”
The Climate Bonds Initiative – which promotes and tracks the green bond market internationally – reported in October that $202.2bn in green bonds and loans had been issued in 2019 – an all-time high for the green market.
The US issued the most bonds, followed by France, China, Germany, Netherlands and Sweden. Energy dominates overall use of proceeds at 33%, followed by low carbon buildings on 29%, low carbon transport 20%, water 9%, with waste and land use each at 3%.
Green trillions
In 2020, the initiative forecasts global annual green bond issuances to hit between $350-400bn. But to make a real impact, ‘green trillions’ is the goal.
“New sovereigns are entering the market and pioneers like France, Poland and Nigeria are now repeat green issuers,” said Sean Kidney, CEO and co-founder of the Climate Bonds Initiative.
“Bond size and diversity of issuers is increasing, and noteworthy is the presence of leading European and Chinese banks amongst the largest issuers.
“But $200bn or $400bn a year is not enough to address the climate emergency and provide the capital at the scale urgently required for large scale transition, adaptation and resilience.
“Generating that first $1tn in annual green investment by 2021/22 is now critical. It’s the benchmark from which to measure year on year growth in climate-based investment towards 2030.”
Critical role
In the UK, there are more than 100 green bonds from 16 countries listed on the London Stock Exchange, with the amount raised more than doubling since 2017 from $10.5bn to $26bn.
Globally, green bond issuance has climbed from $45bn in 2015 and $168bn in 2018.
The Institute’s Simon Thompson predicts that debt capital through green bonds will play an increasingly important role in financing the world’s shift to a low carbon economy.
“The scale of investment needed to finance the transition to a sustainable, low-carbon world – $6tn per year – will exceed both the capabilities of the post- financial crisis banking sector and the constrained balance sheets of utility companies,” Thompson said. “This is why the debt capital markets will be significant in facilitating the continued operation of existing projects via refinancing, and the development and construction of a wide range of new projects supporting climate change mitigation and adaptation.”
Alex Edmans: For everyone to receive a bigger slice, capitalism has to grow the pie
As published in Scotland on Sunday on 15th March 2020 as a preview to Prof. Alex Edmans presentation at GEFI’s inaugural Radical Old Idea event in Edinburgh. Please click here to read the original article and click here for details of the event.
The consensus among politicians, citizens, and even executives themselves, is that capitalism serves only to enrich the elites while ignoring ordinary people. Companies are making outsized profits and CEOs are raking in exorbitant salaries, while paying scant attention to – and even exacerbating – the world’s major social problems in 2020. Climate change, income inequality, population growth, resource usage, automation – the list is endless.
So it’s urgent that companies take action. If they don’t, not only may customers and workers walk away, but also politicians may pass regulations that overturn capitalism as we know it – as Bernie Sanders is currently proposing, and winning support for.
But many popular proposals to reform business may not actually be in the best interest of society. Many are based on the pie-splitting mentality. They assume that the value that a company creates is a fixed pie. Then, the only way to increase the slice enjoyed by society is to reduce the slice that goes to business – slash CEO pay, restrict dividends, and donate profits to Corporate Social Responsibility initiatives.
But viewing the relationship between business and society as a fight between “them” and “us” is deeply flawed. Profits don’t just go to nameless, faceless capitalists but pension funds investing on behalf of citizens – not “them”, but “us”. So while it’s critical for companies to take seriously their responsibility to society, they also have a responsibility to deliver profits.
That’s the power of a different approach to business – the pie-growing mentality, which stresses that the pie is not fixed. The implications are profound. For CEOs, the best way to increase profits is not to take from society (cutting wages or price-gouging customers) but to create value for society – higher profits then arise as a by-product. For citizens, high profits need not result from value extraction, but successfully serving a social need. A company may improve working conditions out of genuine concern for its employees, yet these employees become more motivated and productive. A company may develop a new drug to solve a public health crisis, without considering whether those affected are able to pay for it, yet end up successfully commercialising it.
Importantly, the idea that both business and society can simultaneously benefit is not wishful thinking, but backed up by rigorous evidence. On 24 March, I will present this evidence – and the new approach to business underpinned by the pie-growing mentality – at the Global Ethical Finance Initiative’s (GEFI) inaugural Radical Old Idea event in Edinburgh.
The Radical Old Idea is a discussion platform inspired by the historic Scottish Enlightenment. By bringing together business and financial services representatives, it explores innovative ideas that deliver positive economic outcomes for the benefit of society. Indeed, solving the world’s major social problems of 2020 involves working with capitalism, not against it. Successful businesses design products that transform customers’ lives for the better, provide employees with a healthy and enriching workplace and preserve the environment for future generations.
But an idea can’t just remain an idea – it must be put into practice. I will present a framework for implementing responsible business, and tackling the difficult trade-offs that often hold companies back.
Leaders of today’s companies are in a privileged position, as their global scale gives them more power to create social value than ever before. But they’re also in a challenging position, because the world’s social problems are more serious than ever before.
Yet the idea of serving both business and society is not a too-good-to-be-true pipe dream, but realistic and achievable. We have the evidence to back us, the examples to inspire us, and the tools to put it into practice. Let’s make this vision a reality.
Alex Edmans is Professor of Finance at London Business School and author of the book Grow The Pie: How Great Companies Deliver Both Purpose and Profit.
Path to COP26: Chartered Banker Institute launch Green Finance Essay Competition
The Chartered Banker Institute (CBI) has launched a Green Finance Essay Competition. The professional association, one of the partners of the Global Ethical Finance Initiative’s (GEFI) Path to COP26 campaign, has called for applicants to answer the question of “How can finance professionals actively encourage changes in consumer behaviour to achieve society’s goals on climate change?”, making reference to the UN’s Sustainable Development Goals and the Paris Climate Agreement.
The winner will receive £100 of ethical gift vouchers and have their essay published in the “Pathway to COP26 – the Role of Green Finance” essay series from the CBI and the Social Market Foundation (SMF), as well as receiving the opportunity to present their paper at GEFI’s prestigious Ethical Finance 2020 summit.
“Safe stewardship (of customers’ money) has been a fundamental principle of the Chartered Banker Institute since it was established in 1875. Today, we consider stewardship in its broadest sense – beyond finance to encompass the safe stewardship of our environment and resources.
The transition to a sustainable low-carbon economy is possibly the greatest global challenge for this and future generations, with green finance and green finance professionals playing critical roles.”
Chartered Banker Institute
The competition is open to people of any age in the UK or internationally, and entrants do not need to be members of the CBI. Answers to the question should be no more than 1,500 words and will be judged by a panel including the CEO of the CBI, Simon Thompson. Essays should be submitted, along with a short biography about your career and interest in Green Finance, by Friday 31st July 2020 to the Chartered Banker Institute at this link.
COP26 – FINANCE SECTOR MEETS IN SCOTLAND TO BUILD GREENER ECONOMY
PRESS RELEASE FROM THE GLOBAL ETHICAL FINANCE INITIATIVE
EMBARGO: IMMEDIATE
COP26 – FINANCE SECTOR MEETS IN SCOTLAND TO BUILD GREENER ECONOMY
Leading financial institutions will come together in Edinburgh today (THU) for the start of a ‘Path to COP26’ campaign to build a greener global economy. A round table event will explore the role of the finance sector in the transition to a low-carbon and climate-resilient economy in the run-up to the global climate change summit in Glasgow in November.
To start the process of accelerating the combined efforts of the industry, the event will be addressed by Jonathan Taylor, former Vice President (Environment and Climate Action) at the European Investment Bank, and Gary Lapthorn, the head of sustainability and responsible business at Lloyds Banking Group Commercial Banking.The round table has been organised by the Edinburgh-based Global Ethical Finance Initiative (GEFI), which oversees, organises and coordinates a series of programmes to promote finance for positive change.
As part of the ‘Path to COP26’ campaign, GEFI will also host a series of events in the UK and beyond, ahead of the November summit. The campaign is designed to encourage banks, asset management firms and other financial companies to demonstrate their commitment to the climate agenda. According to the United Nations Environment Programme Finance Initiative, the climate transition will require additional investment of at least $60 trillion from now until 2050 – meaning private sector commitments are vital to tackling the climate crisis.
Bold climate action could deliver at least US$26 trillion in economic benefits through to 2030, compared with business-as-usual, a recent report from the Global Commission on the Economy and Climate found.
Gail Hurley, senior consultant to the Global Ethical Finance Initiative and former senior advisor to the UN, said:
“The eyes of the world will be focused on Scotland when senior politicians from across the globe convene at COP26 in Glasgow in November to negotiate the global response to tackling climate change.
“Climate change is a large, systemic financial risk that will change asset values as investment moves away from high carbon assets towards a low carbon economy.
“For financial institutions to become enablers and catalysts they must therefore understand the commercial risks and opportunities and know how to act on them.
“Finance can be a positive force for change, and we call upon organisations from across the globe to sign up to our Path to COP26 declaration to help us assist the financial sector to commit to practical efforts to tackle climate change.”
Jonathan Taylor, former Vice President (Environment and Climate Action) at the European Investment Bank, said:
“COP26 in Scotland will be a key milestone on the road to a successful conclusion to the fight against climate change.
“Expectations are high that countries should commit themselves to demanding targets to meet the agreed goal of the Paris Agreement to limit global warming to below 2 degrees above pre-industrial levels.
“So we should all think about what we can do to help ensure success, including financial institutions.
“The GEFI round table’s ‘Path to COP 26’ initiative makes an excellent contribution, and I am delighted to be part of it.”
Gary Lapthorn, head of sustainability and responsible business at Lloyds Banking Group, Commercial Banking, said:
“Lloyds Bank Commercial Banking is delighted to support the GEFI round table exploring the role financial institutions are playing in the transition to a low-carbon and climate-resilient economy.
“As part of the UK’s leading financial services group, Lloyds Banking Group, we can make a real difference to tackling climate change by helping to finance a greener future together.
“This will require new ways of living, working and investing for our business and our customers.
“That’s why we’re setting ourselves an ambitious goal to accelerate working with customers, government and the market to help reduce the carbon emissions we finance by more than 50 per cent by 2030, equivalent to removing the emissions produced by almost a quarter of UK homes.”
ENDS
NOTES TO EDITORS
More information is available at www.pathtocop26.com
Broadcast interview opportunities with GEFI are available.
A photo of Gail Hurley is available for download here.
A photo of Jonathan Taylor is avilable for download here.
What is the Global Ethical Finance Initiative?
The Global Ethical Finance Initiative (GEFI) oversees, organises and coordinates a series of programmes to promote finance for positive change. It brings together the world’s business, political, and social leaders to build a fairer finance system for people and the planet. The organisation is based in Edinburgh, and hosts the global ethical finance summit. More information is available at www.globalethicalfinance.org/ethical-finance-2020/
What is ethical finance?
A fairer system of financial management that combines profit with better outcomes for people and the planet. The full working definition of ethical finance: A system of financial management or investment that seeks qualitative outcomes other purely the management of returns. Outcomes sought may reflect ideas from faith, environmental and governance theories.
Why does ethical finance matter?
Although ethical finance is not a new concept the financial crisis has led to a growing interest in sustainability, climate change and social justice. This has seen a collective desire to create a fairer, more inclusive and responsible global financial system. Trust in banks is diminishing and today’s generation of consumers believes that investment decisions should reflect the issues they care about. Ethical finance in the UK is valued at around £40billion, creating thousands of sustainable job opportunities. Today, with the world facing a climate emergency there is a pressing need to develop environmentally sustainable financial solutions.
Launch of 'Path to COP26' to address climate emergency
PRESS RELEASE FROM THE GLOBAL ETHICAL FINANCE INITIATIVE
EMBARGO: IMMEDIATE
LAUNCH OF ‘PATH TO COP26’ TO ADDRESS CLIMATE EMERGENCY
An Integrated Campaign in the run-up to the UN summit in Glasgow has been launched to bring the world’s finance sector together to address the climate emergency. The Global Ethical Finance Initiative (GEFI) will host a series of events in London, the USA, Gulf States and Asia ahead of the pivotal COP26 summit in November. The ‘Path to COP26’ initiative is designed to encourage banks, asset management firms and other financial companies to demonstrate their commitment to the climate agenda. That includes ethical investment decisions which help the environment, financing the clean energy sector, and offering ‘green’ options to clients for assets and pensions.
As well as the flagship Ethical Finance 2020 global summit in Edinburgh in October, a number of events on climate finance will also be held in Glasgow in November alongside COP26.
GEFI has already attracted six major partners – the Scottish Government; the United Nations Development Programme; Baillie Gifford; Royal Bank of Scotland; Chartered Banker Institute; and Shepherd + Wedderburn – and is inviting all organisations with an interest to take part. COP26 will be the largest gathering of world leaders in the UK since the opening ceremony for the 2012 Olympics, and the Prime Minister this week focused on the event at the first Cabinet meeting of the year.
It is widely seen as the most important gathering on climate change since the Paris Agreement of 2015.
Omar Shaikh, managing director of the Global Ethical Finance Initiative (GEFI), said:
“COP26 in Glasgow presents an unprecedented opportunity for the finance sector to come together to address the global climate emergency. “The launch of the Path to COP26 initiative will see events held across the world in the run-up to Glasgow, focused on developing commitments to the climate agenda and how to deliver impact. We already have six major partners and would encourage more to join the programme. “All financial institutions need to enhance transparency and choice by highlighting the impact of what they are financing and offering ethical options to their clients. “There are great opportunities for asset owners to invest in the clean energy sector, and public bodies and individuals are demanding greener pensions.
“We cannot miss this opportunity to deliver for future generations.”
Gail Hurley, senior consultant to the Global Ethical Finance Initiative and former senior advisor to the UN, said:
“All eyes are focused on the UK as this year’s host of what is arguably the world’s most important international conference. “Near the top of the agenda is how to mobilise the trillions needed for international climate financing programmes. “Within the financial services sector, interest has increased significantly over recent years in the ways it can – and should – look beyond short-term profit and shareholder value towards how it can drive positive social, economic and environmental impact. “Finance can be a positive force for change. The Path to COP26 initiative will accelerate the transformation towards a more socially responsible and inclusive financial system which serves both people and planet.”
ENDS
NOTES TO EDITORS
More information is available at www.pathtocop26.com
More information on the Ethical Finance 2020 global summit is available here: www.ethicalfinance2020.com
Broadcast interview opportunities are available.
A photo of Omar Shaikh is available for download here. A photo of Gail Hurley is available for download here.
What is the Global Ethical Finance Initiative?
The Global Ethical Finance Initiative (GEFI) oversees, organises and coordinates a series of programmes to promote finance for positive change. It brings together the world’s business, political, and social leaders to build a fairer finance system for people and the planet. The organisation is based in Edinburgh.
What is ethical finance?
A fairer system of financial management that combines profit with better outcomes for people and the planet. The full working definition of ethical finance: A system of financial management or investment that seeks qualitative outcomes other purely the management of returns. Outcomes sought may reflect ideas from faith, environmental and governance theories.
Why does ethical finance matter?
Although ethical finance is not a new concept the financial crisis has led to a growing interest in sustainability, climate change and social justice. This has seen a collective desire to create a fairer, more inclusive and responsible global financial system. Trust in banks is diminishing and today’s generation of consumers believes that investment decisions should reflect the issues they care about. Ethical finance in the UK is valued at around £40billion, creating thousands of sustainable job opportunities. Today, with the world facing a climate emergency there is a pressing need to develop environmentally sustainable financial solutions.
COP26 – Role of Finance in Tackling the Climate Crisis
COP26 – Role of Finance in Tackling the Climate Crisis
This year’s UN Climate Change Conference in Madrid has wrapped up, and all eyes will now focus on Scotland as next year’s host of what is arguably the world’s most important international conference. Also known (somewhat confusingly) as COP 26, Glasgow will be centre stage between 9 and 20 November 2020 as it welcomes an estimated 30,000 delegates from around the world.
Next year’s climate change conference will be particularly important since it will mark five years since the historic Paris Climate Agreement, which committed countries to strengthening actions to combat climate change and limit the global temperature rise this century to below 2 degrees Celsius. We know however that the world is not on-track to cut carbon emissions which must be halved on today’s levels to restrain temperature increases to just 1.5 degrees Celsius, the upper limit advised by climate scientists. Progress will need to be ratcheted up by next year.
Over 500,000 people marched through the centre of Madrid this month, joined by young climate activist Greta Thunberg, to demand quicker action to tackle climate change, yet many have been left frustrated by the lack of urgency that has characterised this year’s climate conference. Madrid has been dominated by disagreements over carbon emissions trading (where more polluting countries can purchase the right to pollute from countries that have not yet reached their emission limits – seen by many as deeply unfair and a false solution to the climate crisis) and an international push to have rich countries pay poorer countries for “loss and damage” associated with irreversible climate change impacts.
Next year, the spotlight is expected to shine on the thorny issue of how to pay for climate damage, and how to mobilise the trillions needed for international climate financing programmes.
Financing needs to tackle the climate crisis are estimated in the trillions worldwide, and are especially high in the poorest countries and those particularly vulnerable to climate change, such as small island states. The UN estimates a US$ 3 trillion annual shortfall in investments needed to meet internationally-agreed climate and sustainable development goals.
A decade ago, industrialised countries pledged to jointly mobilise US$ 100 billion annually in climate finance by 2020 to address their needs. Yet only US$ 71 billion was raised in 2017, mostly from public sector aid budgets (and with most provided as loans). There is a consensus that more resources need to be mobilised from private markets for climate-friendly investments and to support a “just transition” to net-zero.
This is where our work to promote Scotland as a leading international centre for ethical and responsible finance comes in. The climate emergency has underscored the importance – indeed urgency – of building a financial system that has better outcomes for people and planet at its heart. Our work at the Global Ethical Finance Initiative (GEFI) headquartered in Edinburgh, builds on Scotland’s proud heritage in ethical finance and financial services, to convene the world’s foremost political, business and civic leaders to define and shape the transition to a sustainable financial system.
Within the financial services sector, interest has increased significantly over recent years in the ways it can – and should – look beyond short-term profit and shareholder value towards how it can drive positive social, economic and environmental impact. Increasingly, investors and consumers want to be more thoughtful about the impact their money can make on the world. This has led to a plethora of new initiatives and financial products, such as ethical investment funds, sustainability bonds (where the proceeds are exclusively applied to finance green or social projects), and the development of UN-led Principles for Responsible Investment. Globally, the impact investment market is increasingly popular and is now estimated at over US$502 billion (impact investments are those that seek a positive social and environmental impact in addition to a financial return).
At this year’s climate conference, the European Union unveiled its “Green New Deal” intended to transform Europe’s economy and eliminate its contributions to climate change by 2050. Scotland is even more ambitious: this year it adopted landmark legislation to become a net zero society by 2045, and to reduce emissions by 75% by 2030. Delivering a green transformation that will support employment creation, build skills, boost wages and trigger technological advances will require building a new generation of infrastructure and industries. In addition to well-planned public expenditure that can crowd-in private investment, banks will need to ensure they are able to provide the kinds of financing needed to support this transformation. Aligning their business strategies with society’s goals will in turn will help them leverage new business opportunities and remain competitive with the emergence of the sustainable development economy.
Our view is that finance can be a positive force for change. As we enter a “decade of action” on climate and sustainable development, COP26 in Glasgow in 2020 provides an opportunity for Scotland to showcase the important work it is doing to accelerate the transformation towards a more socially responsible and inclusive financial system – one that serves both people and planet.
By Gail Hurley: Senior Consultant, Global Ethical Finance Initiative (GEFI)
Gail was formerly a Senior Advisor to the UN
Follow on Twitter: @gailmlhurley
Follow GEFI on Twitter: @Finance4Change
2020 GLOBAL ETHICAL FINANCE SUMMIT ANNOUNCED
PRESS RELEASE FROM THE GLOBAL ETHICAL FINANCE INITIATIVE
EMBARGO: IMMEDIATE
2020 GLOBAL ETHICAL FINANCE SUMMIT ANNOUNCED
The 2020 global ethical finance summit has been announced, bringing hundreds of major investors, asset owners and finance leaders to Scotland.
Supported by the Scottish Government and the United Nations Development Programme, the flagship event will focus on building a more sustainable financial system.
With the COP26 UN climate change conference taking place in Glasgow next year, the summit’s theme will be protecting our future.
There will be a focus on how financial services can support inclusive economic growth without depleting natural resources, and how the sector can help deliver the Paris Agreement and the UN’s Sustainable Development Goals.
It comes after the COP25 climate talks in Madrid ended with a compromise deal on the global response to curbing carbon.
The ethical finance conference, to be held at the Edinburgh headquarters of RBS on October 6 and 7, 2020, is organised by the Global Ethical Finance Initiative (GEFI), which oversees, organises and coordinates a series of programmes to promote finance for positive change.
It follows a hugely successful conference in 2019, which included a keynote speech from First Minister Nicola Sturgeon and video addresses from former Prime Minister Gordon Brown and the Archbishop of Canterbury Justin Welby, and attracted over 350 participants from around the world.
The announcement of the 2020 summit was made today (MON) at GEFI’s latest ethical finance round table event in Edinburgh, hosted by Baillie Gifford, which addressed responsible investment and more sustainable models for the banking sector.
Omar Shaikh, managing director of the Global Ethical Finance Initiative, said:
“The 2019 ethical finance summit attracted major international attention, bringing global leaders together to discuss key challenges including products, culture, system change, regulation and maintaining returns in financial services.
“A new way requires holistic thinking which is why the summit uniquely convenes the banking and investment ecosystem, addresses the big challenges we face that rethink capitalism, and connects people to enable partnerships to produce ethical financial solutions.
“To build on this desire for positive change, we’re bringing the finance world back to Scotland in 2020 for our next global summit in October.
“With COP26 taking place in Glasgow just a few weeks later, it significantly enhances the global prominence of this year’s summit and provides an excellent opportunity to focus on climate finance.
“Moving from talk to action, our theme will be protecting the future for everyone.”
Kirsty Britz, director of sustainable banking at RBS, said:
“We are looking forward to once again hosting the Global Ethical Finance Summit next year.
“The conference will be an important milestone in an exciting year for Scotland, with world leaders set to come to Glasgow for the UN’s COP26 climate talks in November.
“As a founding signatory to the UN Principles for Responsible Banking, RBS has committed to further align our strategy with the Paris Climate Agreement and Sustainable Development Goals.
“The global ethical finance summit provides an excellent opportunity for us to work collaboratively with stakeholders, peers and partners who are leading the agenda.”
Andrew Cave, head of governance and sustainability with Baillie Gifford, said:
“Following the success of this year’s event we are delighted to be supporting Ethical Finance 2020 in Edinburgh next year.
“The global summit is an important platform for facilitating collaborative and insightful discussions that challenge and inspire asset owners and financial institutions to invest responsibly and take practical actions to deliver positive impact for people and the planet.”
ENDS
NOTES TO EDITORS
More details on Ethical Finance 2020 can be found here: https://www.globalethicalfinance.org/ethical-finance-2020/
A 2019 event summary can be found here:
https://www.globalethicalfinance.org/wp-content/uploads/2019/11/EF19-Summary.pdf
A photo of Omar Shaikh can be downloaded here
UN PRB Insights: Teething Issues
Teething Issues
The UNEP FI has begun a public consultation period, which is open until May 2019. It acknowledges that there are areas of weaknesses and invites suggestions. It also provides case studies of several institutions already practicing specific behaviours in accordance with the global goals, making it easier for practitioners to benchmark and contextualise how their institution can embrace the SDGs.
1. Over Encouragement
It encourages any change towards reducing negative impact and increasing positive impact however unprecedented or imperfect, giving an example of a bank that “does not yet have all the answers” (who does!) that has set an ambitious goal and linked it to targets. It also provides references to expertise that can support a bank’s journey towards responsibility. The materiality map by the sustainability accounting standards board (SASB) is a useful taster.
The UNEP FI goes further to encourage greater adoption of sustainability practises by making it easy for even the least prepared banks in the world to sign up. Although the ability to self-declare as a starter or intermediate when becoming a signatory will greatly reduce expectations for the first two to four on early stage banks, the UNEP FI team must ensure this mechanism is not abused by advanced banks trying to manage expectations.
Furthermore, this four-year honeymoon for some means that there may be a disproportionate number of signatories who only begin contributing significantly to the global goals from 2023 onwards. Given the timebomb ticking on our planet just now is that going to be soon enough? The Intergovernmental Panel on Climate Change (IPCC) report produced in October says we have “a little over a decade” from now (Maitland AMO Green Monitor).
C-Level Responsibility
Founding members must ensure seamless alignment within their organizations as they gear up for the signing ceremony later this year. It is easy to plug a team of junior sustainability professionals in the back office while bankers tap away on the trading floor working in silos from each other. Half of the heads of sustainability at a GreenBiz Conference Board meeting in the US in 2016 reported half an hour or more of face time with the CEO three times or less in a year. Really?
Let’s not read a report ten years from now that says what E3G’s Briefing Paper said in March 2017 of the UN PRIs: “Our analysis finds that 33% of signatories directly employ no ESG staff and a further 20% employ just one. This means over 500 PRI signatories, representing $6.9 trillion, directly employ one or fewer ESG staff. On an asset under management (AUM) basis, the average PRI signatory hires one ESG specialist per $14bn of assets managed.”
Change of leadership can also dilute the process if sustainability is not properly plugged into the C-suite. Take the example of Yes Bank in India. It’s share price plummeted 34% when news surfaced in September that Rana Kapoor, its CEO, would be forced to leave (by the Reserve Bank of India) by January 2019. The fact that it has a dedicated Chief Sustainability Officer, who in fact sits on the Global Steering Committee of UNEP IF, provides comfort that this will not derail the bank from its UN PRB drive.
There have been many peer to peer initiatives that have worked hard to transform specific areas of the banking industry by producing results such as the Soft Commodities Compact that supports the reduction of deforestation, or the Equator Principles used as an environmental risk management barometer in project finance. However, an international initiative to infuse sustainability into every vein and artery of a bank across business lines indicative of the UN PRBs has rarely come to market. We welcome the boldness of the UN PRBs in spirit and urge those involved to ensure even bolder results.
UN PRB Insights: The Cost of Deliverance
The Cost of Deliverance
The UN PRBs are meant to align banks with the SDGs and the Paris Climate Agreement through a single framework that “embeds sustainability at the strategic, portfolio and transactional levels and across all business areas” (UNEP FI). The principles make goal setting a priority, steering the focus towards high impact issues consistent with each particular organization’s materiality map and encouraging reporting that integrates the impact on all stakeholders. It goes further, something rarely done in initiatives like these, to declare it will delist a signatory if it does not step up. UNEP FI will need to bravely follow through with this threat for the UN PRBs to deliver past the semantics.
The UN PRBs are not perfect, but they are a desperately needed paradigm shift that will see a more innovative approach to a weary and disconnected financial system. Some of the enormous challenges include “being transparent on the scale of your contribution to targets”. Unless more work like the science-based targets initiative is done in a wider range of areas than climate change, other hair-raising issues will tend to fall off the agenda. In addition, sustainable impact takes often years to bear fruit complicating matters. The implied costs of integrating sustainability into the heart of each bank and the skillset of each banker, and spending yet more on technology after a booster year of tech spend is concerning. Who will eventually foot the bill? Banks will need to provide confidence especially to its skeptical retail customers that they won’t.
Banks have already had their share of margin erosions over the last ten years. Costs are still 25% above 2008 levels. Litigation expenses peaked to $137bn in 2014. They are now falling in line with legacy conduct improvements but that signals the expected peak of related restructuring costs (EY Global Banking Outlook 2018). Banks are also spending more on technology transformation and cybersecurity. Other risks such as reputational and conduct remain high as is “improving culture” and remaining relevant in an increasingly regulated environment with market uncertainties and socio-political differences not seen before, certainly not by the generations that make up the armies of bankers in suits today, all infringe on optimal performance of these institutions. So how will they cope with the additional pressure that embracing the UN PRBs will come with in the short term?
Banks will also need to do further stress testing against a wide range of scenarios to understand the impact of embracing sustainability goals within the organizational or business context and the greater marketplace and external forces that will result from potential wide spread adoption on their financial performance and hence their credit ratings. The impact of change on the health of their corporate clients across sectors will need to be considered as well. For example, high greenhouse gas emitters can be found in not only the energy, steel or cement sectors but also the glass, agriculture, real estate, transportation and glass sectors. Stricter environmental standards can lead to higher operating costs, which in turn can impact a client’s probability of default and hence a bank’s non-performing loan ratio, in contrary to the lower default risk UNEP FI seems to suggest.
Following the UN PRBs will require not only a change in the types of services and products offered by banks, but – if implemented in its holistic glory – drastic reformation of a bank’s belief system, its purpose of existence, its brand and communication strategy, its day to day operations, its client base, its risk management system and its approach to remunerating its people amongst other things. This is incredibly brilliant given the potential extinction of the world as we know it that we face today, but equally daunting. Everyone in the ecosystem – governments, NGOs, institutions, service providers, and community leaders – will need to help banks that are willing to work towards these reforms get there. We must see ourselves as stakeholders now and not victims.