UN, 28 Banks Draft Global Impact Standards

Barclays Bank Fulwell Branch, Seaburn, Sunderland, England, August 4, 2009, Photo by Peter Richmond)

Barclays Bank Fulwell Branch, Seaburn, Sunderland, England, August 4, 2009, Photo by Peter Richmond)

By Sunny Lewis

PARIS, France, November 29, 2018, (Maximpact.com News ) – “The global banking industry is stepping up to the sustainability challenge,” said Satya Tripathi of India, UN assistant secretary-general, UN Environment. “I’m optimistic we’ll see a realignment of business practice – one that embraces the fact that green and socially responsible business is the best business.”

In August UN Secretary-General António Guterres announced the appointment of Tripathi as assistant secretary-general and head of the New York Office of the UN Environment Programme, (UNEP).

A development economist and lawyer, Tripathi has worked for the UN since 1998 in Europe, Asia and Africa on sustainable development, human rights, democratic governance and legal affairs. Since 2017 he has served as senior adviser on the 2030 Agenda for Sustainable Development at UNEP.

Tripathi’s role expanded, at least temporarily, as Secretary-General Guterres last week accepted the resignation of former UNEP head Erik Solheim of Norway whose spending on travel was deemed excessive.

In a bid to define the banking industry’s role and responsibilities in shaping a sustainable future, UN Environment Finance Initiative, UNEP FI) and 28 banks from around the world today launched the Principles for Responsible Banking for global public consultation at its biennial Global Roundtable at thePalais Brongniart in Paris.

The announcement came during the 4th Climate Finance Day and the UNEP FI’s Global Roundtable, which took place in Paris this week from November 26-28.

Finance for Tomorrow and UNEP FI co-organized their two flagship events into a major global rendez-vous this year for mobilizing the financial sector to deliver a sustainable financial system.

By developing the Principles, the 28 founding banks set out a clear purpose for the banking industry. It is intended to enable investors, policy makers and regulators, clients and civil society to compare banks and hold them accountable for their environmental, social and economic impacts.

The Principles require banks to be transparent and accountable. Banks are required to report publicly on the positive and negative social and environmental impacts of their investments, their contribution to society’s goals and their progress in implementing the Principles, and to engage with key stakeholders on their impacts.

The Principles are supported by an Implementation Guidance , which provides details of the rationale for each Principle and practical guidance on how banks can approach the implementation of the Principles.

The 28 founding banks developing the Principles for Responsible Banking are from five continents and 20+ countries:

Access Bank, Nigeria; Arab African International Bank, Egypt; Banco Pichincha, Ecuador; Banorte, Mexico; Barclays, United Kingdom; BBVA, Spain; BNP Paribas, France; Bradesco, Brazil; Commercial International Bank, Egypt; CIMB Bank, Malaysia; First Rand, South Africa; Garanti Bank, Turkey; Golomt Bank, Mongolia; Hana Financial Group, South Korea; Industrial and Commercial Bank of China, China; ING, Netherlands; Kenya Commercial Bank Group, Kenya; Land Bank, South Africa; National Australia Bank, Australia; Nordea, Sweden; Piraeus Bank, Greece; Santander, Spain; Shinhan Financial Group, South Korea; Societe Generale, France; Standard Bank, South Africa; Triodos Bank, Netherlands; Westpac, Australia; YES Bank, India.

Here is an overview  of what will be required of the signatory banks.

By committing to the new framework, banks will be aligning their businesses with the objectives of the UN Sustainable Development Goals, SDGs) and the Paris Climate Agreement.

The British multinational investment bank Barclays  is one of the 28 founding banks and has been part of UNFI for more than 20 years. Said Jes Staley, Group CEO, Barclays PLC, “Barclays exists to help develop sustainable economies and to empower people to build better futures. We are committed to playing our part to deliver the SDGs and we do this by helping our clients to raise billions of dollars of social and environmental financing, upskilling millions of people and helping to drive job creation.”

Hassan Abdalla, CEO, Arab African International Bank, said, “The current environmental and social issues pose a multitude of opportunities and threats for financial institutions. Banks can either seize the opportunities and grow, or ignore the threats and go under. The Principles for Responsible Banking allow banks to generate new revenue streams by genuinely connecting to the environment and the society.”

The Principles now enter a six-month global public consultation period before they will be implemented in September 2019.

To find out how you can take part in the global public consultation, click here.

By signing the Principles for Responsible Banking, banks will commit to being publicly accountable for their positive and negative social, environmental and economic impacts.

They agree to set public targets for addressing their negative impacts and scaling up their positive impacts to contribute to national and international sustainable development and climate targets.

Signing the Principles will be a serious commitment: banks that continuously fail to meet transparency requirements, set adequate targets and demonstrate progress will face removal from the list of signatories.

“The Principles for Responsible Banking align the banking industry with the Paris Agreement and with the Sustainable Development Goals, and they demonstrate a clear commitment from the banking industry to assume its defining role in creating a sustainable future,” said Christiana Figueres, convener Mission 2020  and former executive secretary of the United Nations Framework Convention on Climate Change, UNFCCC).

“This is the only future that is acceptable, and profitable for everyone. Every bank should become a signatory, and all regulators, investors, policy makers and civil society should support the banking industry’s implementations of the Principles,” said Figueres.

Said Daniel Wild, Co-CEO of RobecoSAM, the Swiss international investment company with a focus on sustainability investments, “The Principles for Responsible Banking will drive the banking industry’s alignment with the Paris Climate Agreement and the United Nations’ Sustainable Development Goals.”

“We are integrating part of the requirements of these Principles in the RobecoSAM Corporate Sustainability Assessment, CSA; the leading annual survey of companies seeking to benchmark their sustainability performance and competing for membership in the Dow Jones Sustainability Indices, DJSI;” said Wild.

“Banks that want to be best in class in the CSA and members of the DJSI should therefore seek to align with this new global standard,” he said.

Satya Tripathi, UN assistant secretary-general, UN Environment, speaking at COP21, the 21st session of the Conference of the Parties to the UN Framework Convention on Climate Change, UNFCCC COP21; where the Paris Agreement on climate was finalized unanimously by world leaders. Paris, France December 7, 2015., Photo courtesy Earth Negotiations Bulletin) Used with permission.

Satya Tripathi, UN assistant secretary-general, UN Environment, speaking at COP21, the 21st session of the Conference of the Parties to the UN Framework Convention on Climate Change, UNFCCC COP21; where the Paris Agreement on climate was finalized unanimously by world leaders. Paris, France December 7, 2015., Photo courtesy Earth Negotiations Bulletin) Used with permission.

Martin Skancke, chair of the Principles for Responsible Investment, PRI; said, “The PRI has helped drive the integration of environmental, social and governance considerations into investor decision-making. It is now time for the banking sector to step up in both assessing the risks they are exposed to, and the impacts of their financing activities in realizing the sustainable development goals.”

The Roadmap is available on the UNEP FI and PRI websites, as well as at Fiduciary Duty 21.

Banks and stakeholders around the world are invited to provide feedback and input to guide their further development, and to signal their support by becoming Endorsers of the Principles for Responsible Banking and help shape the future of banking.

Finance in France, the last in a series of market analyses from the Fiduciary Duty in the 21st Century program, was also launched Tuesday at UNEP FI’s 2018 Global Roundtable in Paris. It was presented to Brune Poirson, Secretary of State, Ministry for the Ecological and Inclusive Transition.

After extensive consultation with major French institutional investors, regulators and industry associations, Finance in France sets out recommendations for the French market to build upon its leadership position and achieve further progress in mainstreaming responsible investment.

Environmental, social and governance, ESG) are the three central factors in measuring the sustainability and ethical impact of an investment in a company or business.

While France is recognized as one of the leaders in sustainable finance, obstacles remain to the full integration of ESG issues into investment practice. Regulatory developments in France and Europe require actors in the financial sector to clarify their fiduciary duty and incorporate ESG issues into investment strategies.

“This project, driven by France’s leadership in sustainable finance and recent momentum in responsible investment, builds knowledge and shares experience among policy makers and investors,” said Eric Usher, who heads UNEP FI. “It provides guidance on how to fully integrate ESG factors into investment practice and align investment with the Paris Agreement and the SDGs, including encouraging analysis and measurement of the impacts of investment activities.”

Augustin de Romanet, chairman, Paris EUROPLACE  and Chairman and CEO of ADP payroll and HR services group said, “In this new international context, marked by the withdrawal of the United States from the Paris Agreement and by an increased involvement of Europe and new driving forces – China and India – in favor of the fight against global warming, it is today, more than ever, essential to increase the contribution of the global financial industry to these issues and to consolidate and promote the position of the Paris Financial Center as a world leader in green and sustainable finance.”

Image Source: Euros on a spreadsheet, November 14, 2018, Cologne, Germany, Photo by Marco Verce) Creative Commons license via Flickr


Pioneer Global Blockchain Bond Stirs ‘Huge Interest’

A branch office of the Commonwealth Bank of Australia in Sydney, April 2, 2015 (Photo by Maksym Kozlenko)

A branch office of the Commonwealth Bank of Australia in Sydney, April 2, 2015 (Photo by Maksym Kozlenko)

By Sunny Lewis

SYDNEY, Australia, September 11, 2018 (Maximpact.com News) – Using the Commonwealth Bank of Australia as arranger, the World Bank has launched the world’s first bond to be created, allocated, transferred and managed through its life cycle using blockchain distributed ledger technology.

Named bond-i, or Blockchain Offered New Debt Instrument, the two-year bond has raised A$110 million. The name is also a reference to Bondi Beach, a famous Sydney recreational haven.

This is the first time that investors have supported the World Bank’s development activities in a transaction that is fully managed using blockchain technology.

Blockchain is a distributed ledger technology that enables permissioned sharing of an immutable record among parties to create consensus and trust. It empowers multiple trading partners to collaborate and establish a single shared view of a contract without compromising details, privacy or confidentiality.

The World Bank mandated Commonwealth Bank of Australia (CBA) as arranger for the bond on August 10. The announcement was followed by a two-week consultation period with the market, with key investors indicating strong support for the bond’s issuance.

James Wall, executive general manager of IB&M International, CBA said, “It is clear the market is ready and open to the uptake of emerging technologies and sees the potential evolution of the capital markets. It has been a pleasure to work on such a ground-breaking transaction with a forward-thinking organization like the World Bank.”

Investors in the bond-i include Commonwealth Bank of Australia, First State Super, New South Wales Treasury Corporation, Northern Trust, QBE Insurance Group, SAFA, and Treasury Corporation of Victoria.

The bond is part of a broader strategic focus of the World Bank to harness the potential of disruptive technologies for development.

In June 2017, the World Bank launched a Blockchain Innovation Lab to understand the impact of blockchain and other disruptive technologies in areas such as land administration, supply chain management, health, education, cross-border payments, and carbon market trading.

World Bank Treasurer Arunma Oteh said, “I am delighted that this pioneer bond transaction using the distributed ledger technology, bond-i, was extremely well received by investors. We are particularly impressed with the breath of interest from official institutions, fund managers, and banks. We were no doubt successful in moving from concept to reality because these high-quality investors understood the value of leveraging technology for innovation in capital markets.

“Our painstaking work, over the last year, and in partnership with Commonwealth Bank of Australia, was equally instrumental to the success of the transaction. Commendation also to our other service providers, King & Wood Mallesons, IHS Markit, Microsoft and Toronto Dominion Securities,” said Oteh, who hails from Nigeria.

“We welcome the huge interest that this transaction has generated from various stakeholders,” she said.

The bond-i blockchain platform was built and developed by the CBA Blockchain Centre of Excellence, housed in the Sydney Innovation Lab. This project builds on the leadership and experience of CBA’s dedicated blockchain team, which has taken a lead role in applying blockchain technology to capital markets.

Foundation investors in bond-i contributed to the project through their feedback on the platform structure and functionality.

Derek Yung, COO Group Investments, QBE Insurance Group Limited, said, “We believe there is untapped potential for the application of this product to capital markets and are pleased to be involved as an early investor.”

William Whitford, managing director, Treasury Corporation of Victoria, said, “TCV is proud to play a part in the first global blockchain bond. The opportunity to be involved in innovation like this is a privilege, and both CBA and the World Bank Treasury team are to be congratulated in their leadership in this space.”

Service providers to the bond’s platform include TD Securities as market maker, IHS Markit as independent valuation provider, Microsoft as independent code reviewer, and King & Wood Mallesons as deal counsel.

The World Bank issues between US$50 billion and US$60 billion annually in bonds for sustainable development. It has a 70-year track record of innovation in the capital markets.

Bond-i will come to maturity on August 28, 2020. The Commonwealth Bank of Australia and the World Bank say they will welcome investor interest in the bond throughout its two-year life cycle, as well as inquiries about the platform from other market participants.

Australia is moving to establish itself as a blockchain-friendly country with which to do business.

Late last month, the Australian government research agency CSIRO formed a consortium with law firm Herbert Smith Freehills and IBM to build Australia’s first cross-industry, large-scale, digital platform so Australian businesses can collaborate using blockchain-based smart legal contracts.

Known as the Australian National Blockchain (ANB), the new platform represents a new piece of infrastructure in Australia’s digital economy, enabling companies nationwide to join the network to use digitized contracts, exchange data and confirm the authenticity and status of legal contracts.

Blockchain is a public register in which transactions between multiple users belonging to the same network are stored in a secure, verifiable and permanent way. The data relating to the exchanges are saved inside cryptographic blocks, connected to each other in a hierarchical manner.

This creates an endless chain of data blocks – hence the name blockchain – that allows a user to trace and verify all the transactions he or she has ever made.

Blockchain technology enables secure trading without a centralized exchange, making it attractive for cryptocurrency, where it was applied first to bypass banks, and for large decentralized energy systems with a high share of renewable energy.

Once completed, the Australian National Blockchain will enable organizations to digitally manage the lifecycle of a contract, not just from negotiation to signing, but also continuing over the term of the agreement, with transparency and permissioned-based access among parties in the network. The service will provide organizations the ability to use blockchain-based smart contracts to trigger business processes and events.

ANB will provide smart legal contracts that contain smart clauses with the ability to record external data sources such as Internet of Things device data, enabling these clauses to self-execute if specified contract conditions are met.

For example, construction site sensors could record the time and date of a delivery of a load on blockchain and trigger a smart contract between the construction company and the bank that would automatically notify the bank when terms are met to provide payment on that delivery.

Paul Hutchison, vice president and partner, Cognitive Process Transformation, IBM Global Business Services, said, “Blockchain will be to transactions what the internet was to communication – what starts as a tool for sharing information becomes transformational once adoption is widespread. The ANB could be that inflection point for commercial blockchain, spurring innovation and economic development throughout Australia.”

Featured image: Gold metallic blockchain extruding from encrypted code background, March 13, 2018 (Image by QuoteInspector) Creative Commons license via Flickr


I6AFi

Tax Havens Enable Illegal Logging, Fishing

George Town, the capital of the Cayman Islands, is known as a financial hub and a port of call for cruise ships. Dec. 7, 2017 (Photo by Jorge Brazilian) Creative Commons license via Flickr

George Town, the capital of the Cayman Islands, is known as a financial hub and a port of call for cruise ships. Dec. 7, 2017 (Photo by Jorge Brazilian) Creative Commons license via Flickr

By Sunny Lewis

STOCKHOLM, Sweden, August 21, 2018 (Maximpact.com News) – Tax havens such as Singapore, Panama and the Cayman Islands provide financial secrecy for industries associated with environmentally destructive activities on a global scale, new research demonstrates.

The first study to show how tax havens are linked to economic sectors that can have serious global environmental impacts has been published by a team of Swedish researchers.

“Our analysis shows that the use of tax havens is not only a socio-political and economic challenge, but also an environmental one,” says Victor Galaz, lead author of the new study, published in the journal “Nature Ecology and Evolution.”

“While the use of tax haven jurisdictions is not illegal in itself,” he explains, “financial secrecy hampers the ability to analyze how financial flows affect economic activities on the ground, and their environmental impacts.”

The study, titled “Tax havens and global environmental degradation” is part of an on-going research project called “Earth System Finance: New perspectives on financial markets and sustainability.”

Researchers on the study are from the Stockholm Resilience Centre (SRC) at Stockholm University and Global Economic Dynamics and the Biosphere (GEDB), Royal Swedish Academy of Sciences.

The analysis was conducted in collaboration with the nonprofit global research platform Future Earth, which aims to “transform the world toward sustainability” with the participation of thousands of scientists.

Connecting Tax Havens With Illegal Fishing

The new research reveals that 70 percent of known vessels involved in illegal, unreported and unregulated (IUU) fishing are, or have been, flagged under a tax haven jurisdiction, in particular Belize and Panama.

Many tax havens are also flags of convenience states. These are countries with limited monitoring and enforcement capacity that do not penalize vessels sailing under their flag even if they are identified as operating in violation of international law.

The combination of tax havens and flags of convenience allow companies to sail fishing vessels with dual identities – one for legal and the other for illegal fishing activities.

“The global nature of fisheries value chains, complex ownership structures and limited governance capacities of many coastal nations, make the sector susceptible to the use of tax havens,” says co-author Henrik Österblom, deputy science director at the Stockholm Resilience Centre.

The analysis of tax havens’ role in unsustainable and illegal fishing activities was made by combining multiple datasets on fishing vessels and flag information, such as the UN Food and Agriculture Organization’s (FAO) Fishing Vessel Finder, data from Regional Fisheries Management Organizations, and Interpol.

“The absence of a more systemic view is not surprising considering the chronic lack of data resulting from the financial opaqueness created by the use of these jurisdictions,” says co-author Beatrice Crona, GEDB executive director.

This lack of transparency hides how tax havens are linked to degradation of environmental commons that are crucial for both people and planet at global scales, Crona says.

The Amazon rainforest provides for all by stabilizing the Earth’s climate system, while the ocean provides a vital source of protein and income for millions of people worldwide, particularly in low-income, food-deficit countries.

An illegal timber site in the state of Rondonia, Brazil, July 6, 2007 (Photo by Joelle Hernandez) Creative Commons license via Flickr

An illegal timber site in the state of Rondonia, Brazil, July 6, 2007 (Photo by Joelle Hernandez) Creative Commons license via Flickr

Hiding the Flow of Funds to Log the Amazon

The paper features the first quantification of foreign capital that flows into the beef and soy sectors operating in the Brazilian Amazon, two sectors linked to deforestation.

The underlying dataset, based on data from the Central Bank of Brazil, includes “register of foreign capital” for the period between October 2000 and August 2011.

This allowed the researchers to make the first quantification ever of flows of foreign capital from financial actors based outside of Brazil to the beef and soy sector operating in the Brazilian Amazon.

The Cayman Islands turned out to be the largest transfer jurisdiction for foreign capital to these sectors operating in the Brazilian Amazon.

This well-known tax haven provides three benefits to investors: legal efficiency, tax-minimization and secrecy.

Future Governance Can Improve

The authors suggest three issues they believe should be central in future research efforts and governance of tax havens:

1) The loss of tax revenue caused by tax havens should be considered as indirect subsidies to economic activities with negative impacts on global commons;

2) Leading international fora and organizations, like UN Environment, should assess the environmental costs of these subsidies;

3) The international community should view tax evasion and aggressive tax planning as not only a socio-political problem, but also as an environmental one.

Where Are the Tax Havens?

There is no precise definition of a tax haven. The Organisation for Economic Co-operation and Development (OECD) initially listed these features of tax havens: no or low taxes, lack of effective exchange of information, lack of transparency, and no requirement of substantial activity. Other lists have been developed in legislative proposals and by researchers.

Table 1: Countries on Tax Haven Lists

Caribbean/West Indies: Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, British Virgin Islands, Cayman Islands, Dominica, Grenada, Montserrat, Netherlands Antilles, St. Kitts and Nevis, St. Lucia, St. Vincent and Grenadines, Turks and Caicos, U.S. Virgin Islands

Central America: Belize, Costa Rica, Panama

Coast of East Asia: Hong Kong, Macau, Singapore

Europe/Mediterranean: Andorra, Channel Islands (Guernsey and Jersey), Cyprus, Gibralter, Isle of Man,

Ireland, Liechtenstein, Luxembourg, Malta, Monaco, San Marino, Switzerland

Indian Ocean: Maldives, Mauritius, Seychelles

Middle East: Bahrain, Jordan, Lebanon

North Atlantic: Bermuda

Pacific: South Pacific Cook Islands, Marshall Islands, Samoa, Nauru, Niue, Tonga, Vanuatu

West Africa: Liberia

The Tax Justice Network probably has the largest list of tax havens. In addition to the countries listed in Table 1, they include in the Americas and Caribbean, New York and Uruguay; in Africa, Mellila, Sao Tome e Principe, Somalia, and South Africa; in the Middle East and Asia, Dubai, Labuan (Malaysia), Tel Aviv, and Taipei; in Europe, Alderney, Belgium, Campione d’Italia, City of London, Dublin, Ingushetia, Madeira, Sark, Trieste, Turkish Republic of Northern Cyprus, and Frankfurt; and in the Indian and Pacific oceans, the Marianas.

Featured Image: Tuna is trans-shipped from an illegal, unregistered and unlicensed (IUU) purse seine fishing vessel onto a cold storage vessel, on the high seas, close to the border with Indonesia’s Exclusive Economic Zone (EEZ). Greenpeace caught the two vessels breaching international law by trans-shipping large quantities of tuna in international waters. In addition to breaking international law, the fishing of juvenile yellowfin tuna is unsustainable. November 24, 2011 (Photo by Alex Hofford / Greenpeace Australia Pacific) Media use permitted


MAXIMPACT_TRAINING

Energy Intense Digital Currencies Can Disrupt Climate

Bitcoins and other cryptocurrencies, January 1, 2013 (Photo by Zack Copley) Creative Commons license via Flickr

Bitcoins and other cryptocurrencies, January 1, 2013 (Photo by Zack Copley) Creative Commons license via Flickr

By Sunny Lewis

DOHA, Qatar, August 7, 2018 (Maximpact.com News) – Bitcoin, just one of the many digital currencies, such as Ethereum, Litecoin and Ripple, currently consumes enough electricity to power the entire country of Denmark.

Failure to lower the use of energy by Bitcoin and similar Blockchain designs may prevent nations from reaching their climate change obligations under the Paris Agreement, warns a new study published in the journal “Energy Research & Social Science.”

Virtual currency is a digital representation of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money. Today, one Bitcoin equals US$7,036.

The study, authored by Jon Truby, PhD, assistant professor and director of the Centre for Law & Development, College of Law at Qatar University in Doha, evaluates the financial and legal options available to lawmakers to moderate blockchain-related energy consumption and foster a sustainable and innovative technology sector.

Based on Truby’s review and analysis of the technologies, ownership models, and jurisdictional case law and practices, the article recommends an approach that imposes new taxes, charges, or restrictions to reduce demand by users, miners, and miner manufacturers who employ polluting technologies.

It also offers incentives that encourage developers to create less energy-intensive, carbon-neutral Blockchain.

As a digital ledger that is accessible to, and trusted by all participants, Blockchain technology decentralizes and transforms the exchange of assets through peer-to-peer verification and payments.

Dr. Jon Truby is assistant professor and director of the Centre for Law & Development, College of Law at Qatar University in Doha, Qatar. 2018 (Photo courtesy College of Law at Qatar University) Posted for media use

Dr. Jon Truby is assistant professor and director of the Centre for Law & Development, College of Law at Qatar University in Doha, Qatar. 2018 (Photo courtesy College of Law at Qatar University) Posted for media use

Dr. Truby said, “The vast transactional, trust and security advantages of Bitcoin are dwarfed by the intentionally resource-intensive design in its transaction verification process which now threatens the climate we depend upon for survival.”

“Society should not be responsible for the environmental damage caused by digital currency trading and other blockchain entrepreneurs,” he said.

Digital Currency Trades Booming

But digital currency is the wave of the future, regardless of the fact that their resource-intensive design now poses a serious threat to the global commitment to mitigate greenhouse gas emissions.

As of 2016, over 24 countries are investing in distributed ledger technologies (DLT) with $1.4 billion in investments. In addition, over 90 central banks are engaged in DLT discussions.

The chief economist of the Bank of England, the central bank of the United Kingdom, has proposed the abolition of paper currency. In 2016 this bank embarked on a multi-year research program to explore the implications of a issuing digital currency.

In March, the Marshall Islands became the first country to issue its own cryptocurrency and certify it as legal tender; the currency is called the “sovereign.”

There are a growing number of businesses and individuals using Bitcoin. This includes brick-and-mortar businesses like restaurants, apartments, and law firms, as well as online services such as Namecheap, Overstock.com, and Reddit.

While Bitcoin remains a relatively new phenomenon, it is growing fast. As of May 2018, the total value of all existing bitcoins exceeded US$100 billion, with millions of dollars worth of bitcoins exchanged daily.

As the sector grows, Truby wants to encourage more sustainable development of the potential applications of blockchain technologies, which can have significant social and economic benefits.

“Polluting blockchain should be discouraged through taxes and other fiscal intervention tools,” Truby says.

“Digital currency mining is the first major industry developed from Blockchain, because its transactions alone consume more electricity than entire nations,” says Truby. “It needs to be directed towards sustainability if it is to realize its potential advantages.”

Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the block chain, and also the means through which new bitcoins are released.

Anyone with access to the Internet and suitable hardware can participate in mining. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The participant who first solves the puzzle gets to place the next block on the block chain and claim the rewards.

The rewards, which incentivize mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released bitcoin.

“Many developers have taken no account of the environmental impact of their designs,” Truby said, “so we must encourage them to adopt consensus protocols that do not result in high emissions.”

“Taking no action means we are subsidizing high energy-consuming technology and causing future Blockchain developers to follow the same harmful path. We need to de-socialize the environmental costs involved while continuing to encourage progress of this important technology to unlock its potential economic, environmental, and social benefits,” he explained.

Blockchain technology has been proposed as being capable of delivering environmental and social benefits under the UN’s Sustainable Development Goals.

Yet, Bitcoin’s system has been built in a way reminiscent of physical mining of natural resources – costs and efforts rise as the system reaches the ultimate resource limit, and the mining of new resources requires increasing hardware resources, which consume huge amounts of electricity.

Dr. Truby said, “The processes involved in a single Bitcoin transaction could provide electricity to a British home for a month.”

“Bitcoin is here to stay,” he said, “and so, future models must be designed without reliance on energy consumption so disproportionate to their economic or social benefits.”

Dr. Truby’s study evaluates various Blockchain technologies by their carbon footprints and recommends how to tax or restrict Blockchain types at different phases of production and use to discourage polluting versions and encourage cleaner alternatives.

The study also analyzes the legal measures that can be introduced to encourage technology innovators to develop low-emissions Blockchain designs.

The specific recommendations include imposing levies to prevent path-dependent inertia from constraining innovation:

  • Registration fees collected by brokers from digital coin buyers.
  • A “Bitcoin Sin Tax” surcharge on digital currency ownership.
  • Green taxes and restrictions on machinery purchases/imports, such as Bitcoin mining machines.
  • Smart contract transaction charges.

According to Dr. Truby, his findings may lead to new taxes, charges or restrictions, but could also lead to financial rewards for innovators developing carbon-neutral Blockchain.

The article is “Decarbonizing Bitcoin: Law and policy choices for reducing the energy consumption of Blockchain technologies and digital currencies,” Jon Truby, PhD. It will appear in “Energy Research & Social Science,” volume 44 (2018) published by Elsevier.

Featured Image: A Chinese bitcoiner minted a small batch of one-ounce physical coins and the images were posted on the 8btc.com blog earlier this summer. The coin weighs one standard ounce and is made from 24-karat gold. The one BTC coin was supposed to ship pre-funded. The current status of the project is unclear. (Photo by BTC via Coindesk) Posted for media use.


Climate Financing Hits Seven-year High

 Climate Displacement in Bangladesh: The Jamuna River has swollen from heavier than usual monsoon rainfall causing severe flooding on the islands. Women on Dakkin Patil Bariare are forced to wade across waterlogged land. August 2011 (Photo by Stuart Matthews) Creative Commons license via Flickr

Climate Displacement in Bangladesh: The Jamuna River has swollen from heavier than usual monsoon rainfall causing severe flooding on the islands. Women on Dakkin Patil Bariare are forced to wade across waterlogged land. August 2011 (Photo by Stuart Matthews) Creative Commons license via Flickr

By Sunny Lewis

WASHINGTON, DC, August 2, 2018 (Maximpact.com News) – The world’s six largest multilateral development banks (MDBs) increased their climate financing to a seven-year high of $35.2 billion in 2017, up more than 20 percent from the previous year.

The MDBs’ latest joint report on climate financing said $27.9 billion, or 79 percent of the 2017 total, was devoted to climate mitigation projects that aim to reduce harmful emissions and slow down global warming.

The remaining 21 percent or $7.4 billion of financing for emerging and developing nations was invested in climate adaptation projects that help economies deal with the effects of climate change such as torrents of rain, worsening droughts and extreme weather events.

In 2016, climate financing from the multilateral development banks had totaled $27.4 billion.

Climate finance addresses the specific financial flows for climate change mitigation and adaptation activities. These activities contribute to making MDB finance flows consistent with a pathway toward low greenhouse gas emissions and climate-resilient development, in line with the Paris Agreement.

For example, in December 2017, as part of the Global Environmental Facility’s Sustainable Cities Pilot project, the Government of Mexico, assisted by the Inter-American Development Bank as a GEF implementing agency, received a $13.7 million grant for the cities of Xalapa, La Paz and Campeche.

The project will help improve the ability of the three cities to adapt to, and mitigate the effects of climate change. The interventions will benefit more than 600,000 people.

Xalapa will get a biodigester plant to treat the organic component of its solid waste. In La Paz, photovoltaic solar energy plants will be installed to supply seven public buildings and two schools. And in Campeche the project will finance research for a cleanup of the Bay of Campeche, including sewerage and sanitation, storm drainage, recovery of the port area and mangrove conservation.

The latest MDB climate finance figures are detailed in the 2017 Joint Report on Multilateral Development Banks’ Climate Finance, combining data from the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development the European Investment Bank the Inter-American Development Bank Group and the World Bank Group. These banks account for most multilateral development finance.

In October 2017 the Islamic Development Bank joined the MDB climate finance tracking groups and their climate finance figures will be included in reports from 2018 onwards.

 Westmill Solar Park AGM is the largest community owned solar park in the world. Rated at five megawatts it covers 30 acres. June 29, 2013, Watchfield, England, UK (Photo by R.T. Peat) Creative Commons license via Flickr

Westmill Solar Park AGM is the largest community owned solar park in the world. Rated at five megawatts it covers 30 acres. June 29, 2013, Watchfield, England, UK (Photo by R.T. Peat) Creative Commons license via Flickr

Climate funds such as the Climate Investment Funds, the Global Environment Facility Trust Fund, the Global Energy Efficiency and Renewable Energy Fund, the European Union’s funds for Climate Action and others have also played a role in boosting MDB climate finance.

In addition to the $35.2 billion of multilateral development finance, the same adaptation and mitigation projects attracted an additional $51.7 billion from other sources of financing last year.

Of the 2017 total, 81 percent was provided as investment loans. Other types of financial instruments included policy-based lending, grants, guarantees, equity and lines of credit.

Juan Pablo Bonilla, manager of the IDB’s Climate Change and Sustainability Sector explains, “The Inter-American Development Bank Group channelled nearly $800 million principally to increase resilience of water-related operations and other built infrastructure.”

“To seize opportunities afforded by the region’s vast renewable energy resources, the IDB Group made available nearly $3.5 billion in 2017 to deploy solar and wind energy, improve energy efficiency, and support policy shifts towards decarbonized energy,” said Bonilla.

The report contains a breakdown of climate finance by country. Latin America, Sub-Saharan Africa and East Asia and the Pacific were the three major developing regions receiving the funds.

Asian Development Bank Vice-President for Knowledge Management and Sustainable Development Bambang Susantono said, “ADB acknowledges the critical role of external funding and has accessed $265 million in concessional financing from the Green Climate Fund to date. It also continues to establish innovative financing facilities, such as the Asia Pacific Climate Finance Fund, which supports financial risk management products that can help unlock financing for climate investments in clean technologies and that build resilience to climate risks.”

The upward trend in MDB climate financing continues this year. The World Bank Group announced July 19 that in fiscal year 2018, 32.1 percent of its financing had climate co-benefits. This already exceeds the target set in 2015 that 28 percent of its lending volume would be climate-related by 2020.

This amounted to a record-setting $20.5 billion in climate-related finance delivered in the last fiscal year – the result of an institution-wide effort to mainstream climate considerations into all development projects.

The 28 percent target was a key goal of the World Bank Group’s Climate Change Action Plan , adopted in April 2016, and was designed to support countries to deliver on their national goals under the Paris Agreement on climate change.

“Mobilizing private capital in support of climate action is a core priority for us,” said Keiko Honda, executive vice president and CEO of the World Bank’s Multilateral Investment Guarantee Agency. “From wind and solar projects in Africa to green buildings in fragile and conflict-affected situations, we are committed to minimizing the impact of climate change on the most vulnerable.”

The sharp increase in investment came in response to the ever more pressing challenge of climate change. Calls to galvanize climate finance were at the heart of events such as the One Planet Summit in Paris in December 2017, two years after the historic Paris Agreement was adopted.

“Climate change poses an enormous challenge to development,” states the World Bank’s Climate Change Action Plan. “By 2050, the world will have to feed 9 billion people, extend housing and services to 2 billion new urban residents, and provide universal access to affordable energy, and do so while bringing down global greenhouse gas emissions to a level that make a sustainable future possible.”

“At the same time, floods, droughts, sea-level rise, threats to water and food security and the frequency of natural disasters will intensify, threatening to push 100 million more people into poverty in the next 15 years alone,”

warns the Climate Change Action Plan.

Multilateral banks began publishing their climate investment in developing countries and emerging economies jointly in 2011.

In 2015, the MDBs and the 23 national and regional development banks that belong to the International Development Finance Club agreed on joint principles for tracking climate adaptation and mitigation finance.

The multilateral development banks are currently working on the development of more specific approaches to reporting their activities and how they are aligned with the objectives of the Paris Agreement.

Featured Image: The global heatwave and those to come will cost farmers many billions, if not their lives. July 30, 2018, Mülheim an der Ruhr, Germany (Photo by Ingo Vogelmann) Creative Commons license via Flickr


MAXIMPACT_TRAINING


EU Extends Multi-Billion Euro Support to Migrants

By Sunny Lewis

BRUSSELS, Belgium, July 17, 2018 (Maximpact.com News) – While the United States attempts to limit migration through punitive action at its southern border, the European Union is taking the opposite approach to the flood of migrants from Africa and neighboring countries seeking sanctuary.

Internally displaced Nigerians at an IOM displacement camp in Bama in Borno State, Nigeria, 2017 (Photo by Julia Burpee / UN Migration Agency (IOM)) Posted for media use

Internally displaced Nigerians at an IOM displacement camp in Bama in Borno State, Nigeria, 2017 (Photo by Julia Burpee / UN Migration Agency (IOM)) Posted for media use

The EU’s External Investment Plan’s first projects in Africa and the Neighbourhood, approved July 10, aim to promote inclusive growth, job creation and sustainable development in Africa and in this way to tackle some of the root causes of “irregular” migration.

The pace of migration attempts appears to be slowing this year. The International Organization for Migration (IOM), the UN Migration Agency, reports that through July 15 this year, 50,872 migrants and refugees entered Europe by sea. That total compares to 109,746 at this time last year, and 241,859 at this time in 2016.

But many people are still dying en route. The IOM reports that 1,443 migrants have died so far this year fleeing intolerable situations in their home countries.

IOM Rome’s Flavio Di Giacomo reported Monday that 447 migrants, who left aboard a wooden fishing boat July 11 from the Libyan port of Zuwara, arrived in Pozzalo, Sicily, southern Italy on Sunday. The group was rescued Saturday morning by a ship of the law enforcement agency Italian Guardia di Finanza and another from the European Border and Coast Guard Agency, Frontex.

Di Giacomo said they had to wait in the harbor over 24 hours before being authorized to disembark, although the migrants arrived in “severe” health conditions due to terrible detentions experienced in Libya’s informal detention centers.

Migrants arriving at the port of Pozzalo told IOM staff that four travelling companions died last Friday. Witnesses said all were on board the wooden fishing boat, without water or food, when they spotted another vessel, still not identified. Driven by despair, about 30 people jumped into the water trying to reach the ship, which was much too far away. Four drowned, all of Somali origin, including one 17-year-old boy.

To make life in Africa safe and bearable enough to deter such desperate migration, the EU gave its green light to a package of financial guarantee programs worth around €800 million on July 10. This is expected to leverage an estimated €8-9 billion in public and private investment in Africa and the Neighbourhood.

Add this to the €1.6 billion mobilized for blending operations – the mixing of public grants and loans – which is expected to mobilize up to €14.6 billion, and this investment translates into over €22 billion to support sustainable development and decent job creation in Africa.

Overall, the EU’s External Investment Plan (EIP), is expected to leverage €44 billion of investments by 2020 through an EU contribution worth €4.1 billion.

“This plan is about building a new present for many people and for their countries, it is about changing lives, now and for good,” said High Representative of the European Union for Foreign Affairs and Security Policy and Vice-President of the European Commission Federica Mogherini of Italy.

What Will These Investments Support?

The EU has identified five areas of intervention where the External Investment Plan can have the highest impact for sustainable development. The first four are covered by the guarantee programs approved on July 10 by the Strategic Board of the European Fund for Sustainable Development.

They are:

  • financing for small businesses, including ones involved in agriculture
  • sustainable cities
  • sustainable energy and connectivity and
  • access to the internet and digital services.

The Commission will review proposals in the field of agri-business in autumn 2018.

One of the new programs will benefit people who have trouble borrowing money at affordable rates, such as internally displaced people, refugees or returnees, women and young people aged 18-30.

With €75 million EU input and managed by FMO, the Dutch development bank, the NASIRA Risk-Sharing Facility is expected to generate a total investment of €750 million to €1 billion.

Linda Broekhuizen, Chief Investment Officer at FMO, said, “The support of the EU and Dutch government for this new risk-sharing facility NASIRA is a major step forward to ensure that financing reaches the young, migrant and female entrepreneurs that are potentially great job creators in countries where employment is much needed now and in the future.”

Another new program, InclusiFI, will enable over 25,000 small businesses to access mobile accounts and long-term credit, to support the financial inclusion driven by diasporas, migrants’ families and people who have recently returned to their country of origin, in Sub-Saharan Africa and the EU Neighbourhood.

Lead InclusiFI financial institutions are the Spanish Agency for International Development Cooperation; Compañía Española de Financiación del Desarrollo, a joint state-private company also in Spain; and the Italian investment bank Cassa Depositi e Prestiti.

A program to help offset some of the risks that local banks perceive in financing solar power will help bring solar power kits to thousands of homes in Sub-Saharan Africa. With an input of €50 million from the EU and led by the African Development Bank, this guarantee tool will support access to clean electricity to an estimated 3.5 million people in the Sahel region.

A digital transformation platform and a broadband investment program will support rural access to broadband in the EU’s southern and eastern neighboring countries, with an EU input of €70 million and managed by the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD).

This program is expected to bring fast broadband to up to 600,000 homes in rural areas of 17 southern and eastern neighboring countries: Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Kyrgyz Republic, Lebanon, Libya, Moldova, Morocco, Palestine, Syria, Tunisia, and Ukraine.

Finally, the initiative Boosting Investment in Renewable Energy, will receive an EU input of €100 million, and will be managed by the Association of European Development Finance Institutions and the European Bank for Reconstruction and Development.

By supporting investments in renewable energy in Sub-Saharan Africa and EU neighboring countries, this program is expected to:

  • Cut carbon emissions by an estimated two to three million tonnes per year
  • Create an additional 1.5 – 2 Gigawatts of renewable energy
  • Increase power production from renewable energy sources to 4,500-6000 GWh/year.

The EU also welcomed the first major contribution from the Bill & Melinda Gates Foundation, of around €53 million. This is expected to attract further investment to incentivize research and innovation in e-health in less developed and fragile environments.

Mogherini said, “The EU’s External Investment Plan has already started to bring real benefits to the people in our partner countries. These guarantee programs for sustainable investment give now access to affordable loans to people who have been forced to flee their country and those who have recently returned home to rebuild their lives, to start small businesses or to have access to new technologies.”

Later this year, the European Commission is expected sign the first EIP guarantee agreements with partner financial institutions that will then use the guarantees to finance new development projects and attract more private investments.

Financial institutions should start to roll out projects in early 2019.

Commissioner for European Neighbourhood Policy and Enlargement Negotiations Johannes Hahn said on July 11, “We want to see the new EU guarantees that we have announced yesterday translate into concrete, innovative and sustainable projects on the ground, making a real change for the people.”

“More prosperity in the EU’s immediate neighborhood is not only good for our European economies and businesses,” said Hahn. “It is a long-term investment in the stability and security of our partners in the neighborhood and for Europe.”

Featured Images: Displaced Somali woman wears a Little Sun solar lamp, June 2017, Ethiopia (Photo by Rikka Tupaz / UN Migration Agency (IOM)) Posted for media use


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Caption: Internally displaced Nigerians at an IOM displacement camp in Bama in Borno State, Nigeria, 2017 (Photo by Julia Burpee / UN Migration Agency (IOM)) Posted for media use

http://medialib.iom.int/galleries/176/iom-dg-swing-visits-northeast-nigeria

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Caption: Norair, an internally displaced person in the Ukranian city of Zhytomyr, holds his autistic son. “I would like to try a bakery business, to bake traditional Armenian bread,” he says. “If people get some assistance, they can manage.” 2015 (Photo by Varvara Zhluktenko / IOM) Posted for media use

http://medialib.iom.int/galleries/72/joining-hands

Nations Pledge Billions to Protect Planet

Small-scale purse seine fishers catch cuttlefish in Van Phong Bay, central Vietnam, September 11, 2009. (Photo by David Mills / World Fish Center) Creative Commons license via Flickr

Small-scale purse seine fishers catch cuttlefish in Van Phong Bay, central Vietnam, September 11, 2009. (Photo by David Mills / World Fish Center) Creative Commons license via Flickr

By Sunny Lewis

DA NANG, Vietnam, June 28, 2018 (Maximpact.com News) – This is “a critical moment for the future of our planet and its people,” Naoko Ishii, CEO and chair of the Global Environment Facility, told the opening session of the GEF Council Sunday in Da Nang. The GEF is a major impact investor in environmental programs worldwide.

Addressing the Council in advance of the GEF Assembly June 27-28 in Da Nang, Ishii called on governments to take “urgent action to reverse deterioration of the global environment.”

“We know that the global environment continues to deteriorate, and that it is becoming even more urgent for us to take action. So, our ambitions for impact must be even higher. We must aim to do even more,” she said.

The GEF is an international partnership of 183 countries, international institutions, civil society organizations and the private sector that addresses global environmental issues.

Since its establishment in 1991, the GEF has provided over US$17.9 billion in grants and mobilized an additional $93.2 billion in co-financing for more than 4,500 projects in 170 countries.

Reflecting on what the GEF has achieved, she said the experiences “will all help the GEF become even more effective and efficient in the coming years.”

It is “extremely urgent,” Ishii explained, to come together to transform key economic systems, like food and land use, energy, cities and patterns of production and consumption. The GEF will continue to offer “innovative programs” to support countries in doing this,” Ishii told the GEF Council.

This spring, some 30 countries jointly pledged a record US$4.1 billion to the GEF to better protect the future of the planet and human well-being.

With the health of the global environment worsening, the GEF has received strong support for its new four-year investment cycle, known as GEF-7, to help safeguard the world’s forests, land, water, climate, and oceans, build green cities, protect threatened wildlife, and tackle new environmental threats like marine plastic pollution.

The GEF-7 replenishment will be formally concluded at the GEF Assembly June 27-28.

“We are pleased with the outcome of the negotiations; it is entirely in line with government priorities,” said Isabella Lovin, Deputy Prime Minister and Climate Minister of Sweden, who hosted a donors meeting in April.

“Also, the Fund’s working methods have been further strengthened, giving it more of a strategic climate focus and increased resources, including for biodiversity, chemicals and waste,” said Lovin.

“A clear majority of donors have stepped up their support for the GEF, signaling the urgency of the global environmental agenda, and trust in the GEF to help tackle the problem and achieve even greater results,” said Ishii. “We need to forge the partnerships that will help transform the food, urban and energy systems in an integrated way. GEF-7 is designed to do just that.”

Vietnam’s Prime Minister Nguyen Xuan Phuc, who delivered the Welcome Address at the Opening Ceremony on Wednesday, said that the GEF Assembly, “is an occasion for nations as well as individuals to join hands and to act to realize our shared aspirations for a resilient, sustainable and life-affirming planet.”

“Over almost three decades the Global Environment Facility has done exactly that – has joined hands to seize the opportunity to tackle the enormous environmental challenges of our age, and has done so on a global scale, particularly in developing countries, including Vietnam,” said the Prime Minister.

In the final disbursement of GEF-6, agreed at the Council meeting, local communities in Africa will be helped to preserve their tropical rainforests, the world’s second smallest nation will be assisted in switching from fossil fuels to renewable energy and 13 governments will be supported in preparing reports on the progress they are making to combat climate change.

These projects will cost US$64 million, but the GEF is expected to mobilize an additional US$300 million in co-financing.

These projects include 13,000 hectares of tropical moist forest to be put under sustainable communal management in Equatorial Guinea, where forests are being lost and degraded, especially forests whose communities do not feel involved in managing them.

A WWF/GEF project will be the first joint attempt by India and Bhutan to address a growing common risk to the  rich biodiversity of the Manas River basin which straddles the border between the two countries.

The eight nations bordering the Bay of Bengal have joined to develop a program for ocean governance that will conserve a region rich in marine resources on which some 450 million people depend. The project will address the three major pressures facing shared ocean ecosystems: unsustainable fisheries, pollution, and the destruction of habitat, while improving livelihoods and increasing resilience.

For the next four years, the GEF will turn its attention to projects covered under the GEF-7 funding. With an emphasis on addressing the drivers of environmental degradation, gender equality, and stronger collaboration with the private sector, the GEF says it is now “poised to deliver even greater results for the environment, and better value for money.”

The new strategy doubles the target for greenhouse gas emissions mitigated from GEF projects compared to the last funding cycle, and increases by almost 50 percent the targets for the protection of biodiversity and valuable ecosystems.

The health of oceans and fisheries will be a central topic during the GEF Assembly in Da Nang. High-level roundtable discussions on the blue economy, the circular economy and a systematic approach to address marine plastics will help identify options and approaches for integrating efforts across the entire supply chain to mitigate threats posed by plastics in the ocean.

“Over the last 25 years the GEF has been an essential mechanism for addressing environmental challenges at a multilateral level and has made a great difference,” said Axel van Trotsenburg, World Bank vice president, development finance, and co-chair of the replenishment meeting.

“Today, the international community again gave GEF a strong vote of confidence through the endorsement of a $4.1 billion financial support package for the next four years,” he said. “With this renewed mandate, GEF will be able to continue its important role as an impact investor in environmental programs around the globe.”

The new funding will support countries to meet their obligations under various multilateral environmental agreements, including the recently adopted Minamata Convention on Mercury, the three Rio Conventions on Biodiversity, Climate, and Land Degradation, and the Stockholm Convention on Persistent Organic Pollutants.

Also, strong emphasis is given to financing for Least Developed Countries and Small Island Developing States.

“Cote d’Ivoire is pleased to return as a donor in GEF-7. The first major conference of the GEF took place in Abidjan in December 1992 under the leadership of HE Mr. Alassane Ouattara, then Prime Minister of Côte d’Ivoire. Now, as President of the Republic, he has been instrumental in the return of Cote d’Ivoire as a donor in GEF-7,” said Adama Koné, minister of economy and finance for Côte d’Ivoire.

“Cote d’Ivoire welcomes and strongly supports GEF-7 Impact programs and strategies aimed at addressing the concerns of the beneficiary countries while maximizing the global environmental benefits,” he said.

In recent years, the world agreed on the Global Goals of Agenda 2030, and the Paris Agreement, elevating the ambition and action needed to put the world on a sustainable path. GEF-7 is the first replenishment of the GEF after these landmark agreements and a sign that the world is responding.

“The Global Environment Facility’s new focus on transforming food systems, sustainable forest management, and cities is not only good for the planet and human well-being, but an enormous business opportunity,” said Paul Polman, CEO of Unilever.

“This is an exciting moment for the GEF, which is tackling complex problems by inviting stronger collaboration with the private sector,” said Polman. “Business can help innovate, finance and scale solutions for environmental sustainability, which in turn can open up better and more inclusive growth opportunities.”

GEF-7 comes at a critical time for the world, and will help ensure that the hopes and aspirations of millions of people are met without stretching Earth to a breaking point.

“Countries have given a central role to the Global Environment Facility in helping to transform our economies and to safeguard the global commons – the land, seas and atmosphere we share, and the ecosystems they host,” said Nicholas Stern, who chairs the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.

“Protecting and nurturing our global commons and ecosystems is fundamental to sustainable growth and poverty reduction. No other kind of growth can last,” said Stern. “This is the growth story of the 21st century.”

“The next 15 years will decide the future of the world for the rest of the century and beyond,” predicted Stern. “The cost of inaction is immense. Congratulations to the entire GEF partnership for adopting this ambitious new agenda.”

Featured Images: Global Environment Facility CEO and Chairperson Naoko Ishii opens the 54th GEF Council in Da Nang, Vietnam, June 24, 2018 (Photo courtesy GEF) Posted for media use


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Impact Investing Grabs University Attention

Oxford University, England 2014 (Photo by Samuel Musarika) Creative Commons license via Flickr

Oxford University, England 2014 (Photo by Samuel Musarika) Creative Commons license via Flickr

By Sunny Lewis

OXFORD, England, March 6, 2018 (Maximpact.com News) – Many of the world’s most prestigious universities are pooling their wisdom in a new alliance to “help scale-up the green finance sector.” One of their first considerations is impact investing – measuring the social impact of investments alongside business results.

Eighteen major universities, including Oxford, Cambridge, Yale, Stanford and Columbia, have jointly formed the Global Research Alliance for Sustainable Finance and Investment (GRASFI).

Although the Alliance was founded in 2017, it has waited until now to announce its existence, which it made public this week.

The Alliance will undertake a yearly program of academic collaboration and organize an in-depth annual conference that rotates across North America, Europe, and Asia to attract a wide diversity of views.

Alliance Co-chair Rob Bauer is Professor of Finance, Institutional Investors chair, at Maastricht University School of Business and Economics. (Photo courtesy Maastricht University) Posted for media use

Alliance Co-chair Rob Bauer is Professor of Finance, Institutional Investors chair, at Maastricht University School of Business and Economics. (Photo courtesy Maastricht University) Posted for media use

The Alliance is run by an Organizing Committee consisting of representatives from each member university. The Committee is currently co-chaired by Professor Rob Bauer of Maastricht University and Dr. Ben Caldecott of the University of Oxford.

Caldecott co-steers the new Alliance from his office at Oxford, where he is founding director of the Oxford Sustainable Finance Programme.

“Each of these universities is working on sustainable finance and investment research questions in various ways and this is incredibly exciting,” he told “BusinessGreen,” announcing the new Alliance.

The universities’ common goal is to enable rigorous and impactful academic research on sustainable finance.

“The opportunity is clearly in making all of these individual efforts greater than the sum of their parts,” Caldecott said.

In The Netherlands, Professor Bauer will be at the helm as Maastricht University hosts the Alliance’s inaugural conference in September.

Bauer is Professor of Finance, Institutional Investors chair, at Maastricht University School of Business and Economics. His research is focused on pension funds, strategic investment policy, mutual fund performance, responsible investing, shareholder activism and corporate governance.

He is also director of the European Centre for Corporate Engagement at Maastricht University where the conference will be held from September 5-7.

The conference, entitled “Managing and Financing Responsible Businesses,” will host papers on sustainability, finance, accounting, management, strategy and development economics.

The Alliance’s list of suitable topics for papers to be presented at this inaugual conference gives an idea of the direction in which these universities are heading.

It’s in the direction of impact investing – measuring social impact of investments alongside business results, which is one of the topics suggested by the Alliance for papers to be presented at Maastricht.

Other topics are:

  • The business of business: profit, purpose, and alternative organizational forms
  • Making sustainability an integral part of companies: implications for strategy, management, finance and accounting
  • Climate change: implications for businesses and institutional investors
  • The role of corporate governance mechanisms and active ownership in promoting sustainability
  • Behavioral factors affecting individuals and the sustainability of markets
  • Philanthropy and effective altruism
  • Big data, FinTech and financial innovation for sustainability
  • Sustainable Development Goals

At the conference the professors will listen to Raphael Betti, head of Equity Risk Management with the European Investment Fund, who will speak on managing risk, return and impact investing goals.

The European Investment Fund (EIF) manages the Social Impact Accelerator, the first pan-European public-private partnership addressing the growing need for equity finance to support social enterprises.

The Accelerator operates as a fund-of-funds managed by EIF and invests in social impact funds which strategically target social enterprises across Europe.

As for an overarching target for all this research work on sustainable finance – the Alliance says on its new website that the research pooled by member universities will help “align the financial system with global environmental sustainability, a necessary condition for implementation of the Paris Climate Change Agreement and the Sustainable Development Goals.”

The Alliance consists of the following research universities (listed in alphabetical order):

University of California, Berkeley

University of Cambridge

Central University of Finance and Economics (CUFE)

Columbia University

Frankfurt School of Finance and Management

University of Hamburg

Imperial College London

London School of Economics and Political Science (LSE)

Maastricht University

University of Otago

University of Oxford

Stanford University

Stockholm School of Economics

University of Toronto

Tsinghua University

University College London

Yale University

University of Zurich


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Global Wealth Grows, Inequality Gap Widens

The wealthy enjoy the sun at St. Tropez, a coastal town on the French Riviera known for its beaches and nightlife. (Photo by Vinicius Pinheiro) Creative Commons license via Flickr

The wealthy enjoy the sun at St. Tropez, a coastal town on the French Riviera known for its beaches and nightlife. (Photo by Vinicius Pinheiro) Creative Commons license via Flickr

By Sunny Lewis

WASHINGTON, February 6, 2018 (Maximpact.com News) – “Growth will be short-term if it is based on depleting natural capital such as forests and fisheries. What our research has shown is that the value of natural capital per person tends to rise with income,” says Karin Kemper, senior director, Environment and Natural Resources Global Practice at The World Bank.

“This contradicts traditional wisdom that development necessarily entails depletion of natural resources,” Kemper said, commenting on a freshly minted World Bank report.

Global wealth “grew significantly” over the past two decades but per capita wealth “declined or stagnated” in more than two dozen countries in a range of income brackets, finds the new report.

The Changing Wealth of Nations 2018” tracks the wealth of 141 countries between 1995 and 2014 by aggregating natural capital, such as forests and minerals; human capital, earnings over a person’s lifetime; produced capital, such as buildings and infrastructure; and net foreign assets.

It follows similar World Bank assessments in 2006 and 2011, but, for the first time, this report includes estimates of human capital.

Human capital accounts for two-thirds of global wealth, the researchers calculate.

Using household surveys to estimate lifetime earnings, the researchers measured human capital as the value of earnings over a person’s remaining work life, thereby incorporating the roles of health and education.

Women account for less than 40 percent of global human capital because of lower lifetime earnings. Achieving gender equity could increase human capital wealth by 18 percent, the report finds.

Produced capital accounts for a quarter of all wealth, according to the report.

Natural capital accounts for one tenth of global wealth, and it remains the largest component of wealth in low-income countries (47 percent in 2014).

Natural capital accounts for more than one-quarter of wealth in lower-middle income countries.

The report finds that global wealth grew an estimated 66 percent – from $690 trillion to $1,143 trillion in constant 2014 U.S. dollars at market prices.

But inequality is clearly apparent, as wealth per capita in high-income OECD countries was 52 times greater than in low-income countries.

Another report confirms the inequality. According to the Credit Suisse Global Wealth Report, published in November 2017, the richest one percent of people in the world now own half of the planet’s wealth.

The Credit Suisse study shows how the super-rich have profited from the aftermath of the 2008 global financial crisis, and so are now seeing their proportion of the world’s wealth increase from 42.5 percent in the midst of the crisis to 50.1 percent now.

The wealthiest 10 percent of people, own 87.8 percent of the global wealth.

A report from the Boston Consulting Group last June finds that globally, almost 18 million households control more than $1 million in wealth.

The world’s wealth “gained momentum” last year, Boston Consulting Group report concludes, rising 5.3 percent globally from 2015 to 2016.

The firm expects growth to accelerate to about six percent annually for the next five years, in both the United States and globally.

World Bank Group President Jim Yong Kim said, “By building and fostering human and natural capital, countries around the world can bolster wealth and grow stronger. The World Bank Group is accelerating its effort to help countries invest more – and more effectively – in their people.”

“There cannot be sustained and reliable development if we don’t consider human capital as the largest component of the wealth of nations,” said Kim. A South Korean-American physician and anthropologist, Kim has served as the 12th president of the World Bank since July 1, 2012.

Wealth accounts for countries are compiled from publicly available data drawn from globally recognized data sources and with a methodology that is consistent across all countries.

Some wealth components from natural capital were not tracked in this report, including water, fisheries and renewable energy sources.

The report was funded in part by the Wealth Accounting and the Valuation of Ecosystem Services (WAVES) partnership and by the Global Partnership for Education .

WAVES is a World Bank-led global partnership that aims to promote sustainable development by ensuring that natural resources are mainstreamed in development planning and national economic accounts.

WAVES was launched at the 2010 Convention on Biological Diversity meeting in Nagoya, Japan.

Botswana, Colombia, Costa Rica, Madagascar, and the Philippines were the initial core implementing countries that embarked on programs for natural capital accounting endorsed at the highest level of their governments, with extensive technical support from WAVES.

These countries have established national steering committees, carried out stakeholder consultations, identified policy priorities and designed work plans that are now being implemented.

Guatemala, Indonesia and Rwanda joined WAVES as core implementing countries in late 2013.

These countries are compiling accounts for natural resources like forests, water, and minerals, following the System of Environmental-Economic Accounting (SEEA) Central Framework. They are working on experimental accounts for ecosystems like watersheds and mangroves.

The SEEA Framework integrates economic and environmental data to provide a comprehensive and multipurpose view of the interrelationships between the economy and the environment, and the stocks and changes in stocks of environmental assets, as they bring benefits to humanity.

It contains the internationally agreed standard concepts, definitions, classifications, accounting rules and tables for producing internationally comparable statistics and accounts.

WAVES’ work on developing a methodology for ecosystem accounting is guided by a Policy and Technical Experts Committee that includes experts in environmental economics, natural sciences, and national accounting.

WAVES is funded by the European Commission, Denmark, France, Germany, Japan, the Netherlands, Norway, Switzerland, and the United Kingdom and overseen by a steering committee.

These reports are aimed at policy makers but will interest anyone committed to building a sustainable future for the planet.

Featured Image: World Bank Group President, Jim Yong Kim in Lima, Peru, June 29, 2013. Photo by Dominic Chavez courtesy World Bank) Creative Commons license via Flickr


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Sustainable Finance European Style

At the European Financial Forum 2018 in Dublin, Ireland, Commissioner Valdis Dombrovskis first row center, Raquel Lucas, of Commissioner Dombrovskis' team, on the left, and on the right, Gerry Kiely, who heads the European Commission in Dublin. Feb. 1, 2018 (Photo courtesy European Commission) Posted for media use.

At the European Financial Forum 2018 in Dublin, Ireland, Commissioner Valdis Dombrovskis first row center, Raquel Lucas, of Commissioner Dombrovskis’ team, on the left, and on the right, Gerry Kiely, who heads the European Commission in Dublin. Feb. 1, 2018 (Photo courtesy European Commission) Posted for media use.

By Sunny Lewis

BRUSSELS, Belgium, January 31, 2018 (Maximpact.com  News) – An EU-wide label for green investment funds, a European standard for green bonds, and a classification system to provide market clarity on what is sustainable are recommended in the final report of the High-Level Expert Group on Sustainable Finance, published this week.

The European Commission said it welcomes the report, which sets out strategic recommendations for a financial system that supports sustainable investments.

In 2015, landmark international agreements were established with the adoption of the UN 2030 Agenda and Sustainable Development Goals and the Paris Climate Agreement. The report attempts to put the EU on the path to fulfilling its obligations under these agreements.

The Commission established the independent High-Level Expert Group (HLEG) in December 2016. It is made up of 20 senior experts from civil society, the finance sector, academia and observers from European and international institutions.

HLEG is chaired by Christian Thimann, a professor at the Paris School of Economics and head of strategy, sustainability and public affairs of the AXA Group, based in Paris. He is an external member of the Council of Economic Advisers to the French Prime Minister.

The report by the High-Level Expert Group maps the challenges and opportunities that the EU faces in developing a sustainable finance policy that supports the transition to a more resource-efficient and circular economy.

In its report HLEG advises that reorienting investment flows into long-term, sustainable projects will improve the stability of the financial system.

The HLEG final report proposes:

  • a classification system to provide market clarity on what is sustainable
  • an EU-wide label for green investment funds
  • a European standard for green bonds
  • clarifying the duties of investors in achieving a more sustainable financial system
  • improving disclosure by financial institutions and companies on how sustainability is factored into their decision-making
  • making sustainability part of the mandates of the European Supervisory Authorities

The European Commission says it will now move to finalize its strategy on sustainable finance on the basis of these recommendations.

Delivering an EU strategy on sustainable finance is a priority action of the Commission’s Capital Markets Union (CMU) Action Plan, as well as one of the key steps towards implementing the Paris Agreement on climate and the EU’s Agenda for sustainable development.

To achieve the EU’s 2030 targets agreed in Paris, including a 40 percent cut in greenhouse gas emissions, we need around €180 billion of additional investments a year, says the Commission.

The financial sector has a key role to play in reaching these goals, as large amounts of private capital could be mobilized towards such sustainable investments.

The Commission is determined to lead the global work in this area and help sustainability-conscious investors to choose suitable projects and companies.

Valdis Dombrovskis, EU vice-president responsible for financial stability, financial services and capital markets said, “The signature of the Paris agreement in 2015 marked a milestone for the world and for the global economy. We are now moving towards a low-carbon society, where renewable energy and smart technologies improve our quality of life, spurring job creation and growth, without damaging our planet.”

“Finance has a big role to play in funding a sustainable future,” declared Dombrovskis. “I welcome the outstanding work of the HLEG which is excellent input for our upcoming strategy.”

“I believe this report is a manifesto for far-reaching reform,” Dombrovskis told the European Financial Forum 2018 at Ireland’s Dublin Castle today.

He said the Commission will use the HLEG report to propose an EU strategy on sustainable finance in March, followed by several legislative proposals.

“The future of finance will not only be digital, it will also have to be green,” said Dombrovskis.

Commenting on the HLEG recommendations, he said, “First, we need a unified EU classification system or taxonomy for sustainable assets. We need to define what is green and what is not green. And we need to identify the areas where sustainable investment is most needed and can make the biggest impact. A unified EU classification is fundamental for the development of any green finance policy. We will follow up this recommendation with the first piece of legislation in spring.”

As recommended in the report, Dombrovskis said, “We will present a proposal on fiduciary duty. It will clarify the need to take sustainability into account when managing money for others. Clients have the right to know how sustainable their investments are.”

Third, he said, “We could boost green investments and loans by introducing a so-called green supporting factor. This could be done at first stage by lowering capital requirements for certain climate-friendly investments, such as energy-efficient mortgages or low-carbon cars.

However, said the vice-president, “This exercise would be delicate. Green does not mean risk-free. Any measures would have to be carefully calibrated, and based on a clear EU classification.”

Finally, said Dombrovskis, “Further development of the green bond market can drive the investment that we need. With a unified classification system for sustainable assets, we could establish criteria and labels for green bonds and investment funds. These labels would help investors to easily identify financial products that comply with green or low-carbon criteria. We could extend the existing European Eco-label to financial products.”

The EU has set itself ambitious climate, environmental and sustainability targets, through its 2030 Energy and Climate framework, the Energy Union and its Circular Economy Action Plan.

These commitments, and the growing awareness of the urgency to address environmental challenges and sustainability risks, call for an effective EU strategy on sustainable finance.

Jyrki Katainen, vice-president responsible for jobs, growth, investment and competitiveness, said, “The EU is already at the forefront of investing in resource efficiency and social infrastructure, not least through the European Fund for Strategic Investments and its reinforced focus on climate action.”

“At the same time,” said Katainen, “creating an enabling framework for private investors is crucial to achieving the transition to a cleaner, more resource-efficient, circular economy.”

“The High-Level Expert Group on Sustainable Finance’s final report provides us with a roadmap to do just that, and we welcome their invaluable contribution to this very important issue,” he said.

The group’s report will form the basis of the Commission’s comprehensive Action Plan on sustainable finance that it will put forward in the coming weeks. Both the findings of the report and the Commission’s Action Plan will be discussed at a high-level conference on March 22 in Brussels.

Similar ideas are taking hold at banks across the European Union.

Green Tagging is emerging as the new strategy for Europe’s banks to scale up financing of energy-efficient housing and real estate, finds a report released in Paris in December alongside the One Planet Summit hosted by France’s President Emmanuel Macron.

Green Tagging is a systematic process where banks identify the environmental attributes of their loans and underlying asset collateral as a tool for scaling up sustainable finance.

The report, from the consulting firm Climate Strategy & Partners  and the UN Environment Inquiry into the Design of a Sustainable Financial System, finds that green tagging around real estate and energy efficiency is growing at a critical time.

Nick Robins, co-author and co-director of the UN Environment Inquiry, said, “Green Tagging is in an early stage of development, but the pace of change is now striking. Key banks are now recognizing that they need to understand the environmental performance of their real estate lending book in order to better serve their clients and deliver their sustainability goals.”

This report describes how 10 European banks “are beginning to identify, analyze and promote green finance for housing and real estate through the direct attribution of environmental characteristics in their lending and debt capital markets operations,” said Peter Sweatman, co-author of the report and chief executive of Climate Strategy & Partners.

The 10 pioneer banks are: ABN AMRO Bank in the Netherlands; Banco Bilbao Vizcaya Argentaria in Spain; Berlin Hyp in Germany; HSBC a British multinational bank with roots in Hong Kong; ING Real Estate Finance, a global financial institution of Dutch origin; Lloyds Bank, a British retail and commercial bank; Skandinaviska Enskilda Banken AB, a Swedish financial group; Italian bankds Suedtiroler Volksbank and UniCredit; and Triodos Bank, a Netherlands-based commercial bank.

The Green Tagging of bank assets allows for easier access to green bond markets, better tracking of green loan performance and provides greater transparency of climate risks and portfolio resilience.

“Tagging our commercial real estate and mortgage loans to existing energy and environmental standards enabled our internal transparency and supported our issuance of the first green covered bond,” said Bodo Winkler from Berlin Hyp, currently the largest European commercial bank issuer of green bonds. “The green tagging data provided us valuable insights into the relative credit and economic performance for our loans to green buildings compared to standard ones.”

Joop Hessels from ABN AMRO said, “Identifying and tagging green buildings in the bank systems in a European context was essential for the world’s first green bond to define green real estate, issued by ABN AMRO, and in advising other new green real estate backed bond issuers.”

Featured image:  Euro banknotes and coins, February 19, 2016 (Photo by verkeorg) Creative Commons license via Flickr

Training


One Planet Summit Inspires Climate Action

By Sunny Lewis

PARIS, France, December 12, 2017 (Maximpact.com  News) – Two years to the day after the historic Paris Agreement on climate, more than 50 heads of state, as well as environment ministers and regional leaders, bank and finance executives and celebrities are meeting today to drive action that will finance global efforts to meet the goals of the agreement.

The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees Celsius. The agreement also aims to strengthen the ability of countries to deal with the impacts of climate change.

Today’s invitation-only One Planet Summit, convened by President of France Emmanuel Macron, was attended by British Prime Minister Theresa May, Spain’s Mariano Rajoy, European Commission President Jean-Claude Juncker, and Mexican President Enrique Peña Nieto, among many others.

President Juncker said, “The time has now come to raise our game and set all the wheels in motion — regulatory, financial and other — to enable us to meet the ambitious targets we have set ourselves. This is a necessity dictated by our current living conditions as well as those of future generations. This is the time that we must act together for the planet. Tomorrow will be too late.”

The European Commission released its 10 item Action Plan for the Planet, consisting of: putting the financial sector at the Service of the Climate, investment in Africa and the EU Neighbourhood region, urban investment support, clean energy for islands, support for the transition of coal and carbon intensive regions, youth, smart buildings, clean industrial technology and clean, connected and competitive mobility.

Prime Minister May announced a big increase in UK aid for Caribbean countries devastated by hurricanes as part of a £140 million climate change grant for the world’s least developed countries.

“Tackling climate change and mitigating its effects for the world’s poorest are among the most critical challenges that we face,” said May.

“And by redoubling our efforts to phase out coal, as well as build on our world leading electric car production, we are showing we can cut emissions in a way that supports economic growth,” she said.

U.S. President Donald Trump was not invited to the summit, as he is streamlining fossil fuel exploration and development, even removing U.S. public lands from federal protection so industry can have at them.

Trump has vowed to withdraw the United States from the Paris Agreement, a lengthy process that cannot begin until 2020, after that year’s presidential election. Countries cannot withdraw until three years after the Paris Agreement took effect on November 4, 2016. After that, the rules mandate a one-year notice period. Still, because the accord is non-binding, Trump could choose to just ignore the accord’s terms.

President Macron told NBC News in an interview in June, “I’m pretty sure that my friend President Trump will change his mind in the coming months or years, I do hope. It’s extremely aggressive to decide on its own just to leave, and no way to push the others to renegotiate because one decided to leave the floor.”

Syria last month ratified the Paris Agreement, leaving the United States as the only country to reject the accord.

President Macron unveiled the winners of the first “Make Our Planet Great Again” climate research grants established after Trump announced his intention to pull out of the Paris accord. The French president said that Trump’s decision was a “deep wake-up call for the private sector” to take action.

Thirteen of the 18 multi-year award winners are American scientists; all winners will conduct climate research in France. The three-year to five-year grants are worth up to €1.5 million each. Overall, the program totals about €60 million in direct funding and in-kind support.

Macron told the winners Monday night, “What you are showing here this evening, with your commitment, with the projects that have been chosen … is that we do not want climate change, and we can produce, create jobs, do things differently if we decide to.”

In any case, the One Planet Summit featured dire warnings, rich pledges and actions that two years ago were not even on the horizon.

“Those who fail to bet on a green economy will be living in a grey future,” United Nations Secretary-General António Guterres warned today, calling for greater ambition by governments, civil society, the private sector and finance partners to help tackle the global climate challenge.

“Green business is good business,” the UN chief said, speaking at the opening of the One Planet Summit. “Renewables are now cheaper than coal-powered energy in dozens of developed and developing countries.”

Guterres stressed that for climate action, it is not funding but trust that is lacking. To fix it, he said, first and foremost, rich countries must honor their commitment and provide US$100 billion a year through 2020 for developing countries to mitigate and adapt to the already-changing climate.

It also means that the Green Climate Fund must become an effective and flexible instrument, especially for the most vulnerable countries such as small island states and least developed countries.

“These two conditions are essential for trust between developed and developing countries,” said Guterres.

“Everyone is looking for paths to economic growth that are low carbon,” said World Bank President Jim Yong Kim, as he announced that the World Bank <worldbank.org> will no longer finance upstream oil and gas, after 2019.

In exceptional circumstances, said Kim, consideration will be given to financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within a country’s Paris Agreement commitments.

Alex Doukas, director of the Stop Funding Fossils Program at Oil Change International, said, “The World Bank’s monumental announcement that they are moving out of upstream oil and gas finance after 2019 stole the show in Paris. This move from the World Bank demonstrates real climate leadership, and could help signal a broader shift away from the tens of billions of dollars in public finance that G20 governments and multilateral development banks dump into fossil fuels each year.”

“These institutions still provide $72 billion in public finance to fossil fuels annually,” said Doukas, “which is why a shift away from fossil fuel finance is crucial if we hope to meet the aims of the Paris Agreement.”

“Government commitments to scale up climate finance are important, but they’re not enough. Others need to follow the lead of the World Bank and signal that they will stop funding fossils,” said Doukas.

Kim said that the World Bank Group is on track to meet its target of 28 percent of its lending going to climate action by 2020 and to meeting the goals of its Climate Change Action Plan, developed following the Paris Agreement.

For instance, last week, the World Bank and the Government of Egypt signed a US$1.15 billion development policy loan aimed at reducing fossil fuel subsidies and creating the environment for low-carbon energy development.

The World Bank Group will accelerate energy efficiency in India; scale up solar energy in Ethiopia, Pakistan and Senegal; establish a West Africa Coastal Areas investment platform to build resilience for coastlines there; and introduce the City Resilience Platform with the Global Covenant of Mayors so that up to 500 cities will have access to finance for climate change resilience.

The International Finance Corporation (IFC), a subsidiary of the World Bank Group has pledged invest up to US$325 million in the Green Cornerstone Bond Fund, a partnership with the European asset management company, Amundi, to create the largest-ever green bond fund exclusively dedicated to emerging markets.

“This is a $2 billion initiative aiming to deepen local capital markets, and expand and unlock private funding for climate-related projects. The fund is already subscribed at over $1 billion,” the IFC announced.

European Bank for Reconstruction and Development (EBRD) President Sir Suma Chakrabarti said his bank intends to invest up to US$100 million in “Amundi Planet – Emerging Green One.”

The EBRD joined other global development organizations in stepping up the momentum for global climate action.

Chakrabarti told summit participants that the bank expects to meet its ambitious climate finance goals set at the 2015 Paris Climate Agreement three years ahead of time. The EBRD is already dedicating close to 40 percent of its annual investments to climate finance, a target it had initially set for 2020.

In Paris, Chakrabarti unveiled plans to step up EBRD support for the promotion of green cities, launching the Green Cities Climate Finance Accelerator with the Global Covenant of Mayors for Climate and Energy (GCoM), an international alliance of 7,498 cities and local governments moving towards a low-emission and climate-resilient society.

Under the new partnership, the EBRD and the GCoM are seeking to drive climate action in up to 60 cities, including many that to date have not been a focus for climate support.

At the One Planet Summit, from left, President of Mexico Enrique Peña Nieto, United Nations Secretary-General António Guterres, World Bank President Jim Yong Kim. December 12, 2017 (Photo courtesy Office of President Peña Nieto) Posted for media use

At the One Planet Summit, from left, President of Mexico Enrique Peña Nieto, United Nations Secretary-General António Guterres, World Bank President Jim Yong Kim. December 12, 2017 (Photo courtesy Office of President Peña Nieto) Posted for media use

The World Bank, too, is partnering with the Global Covenant of Mayors and will lend US$4.5 billion to ensure 150 cities have the funds to implement initiatives to increase sustainability and resilience and fight climate change.

Marking the two-year anniversary of COP21 where the Paris Agreement was signed, the Global Covenant of Mayors joined with C40 Cities Climate Leadership Group, ICLEI, and various regional covenant partners, to announce the One Planet Charter – a new commitment campaign that will help cities swiftly implement actions to ensure Paris Agreement goals are met.

Through the One Planet Charter, cities will commit to specific climate action that drives investments, green public procurement, and policy decisions in renewable energy, energy efficiency, electric vehicles, and efforts for zero emission buildings and zero waste.

Cities will bring detailed descriptions of their commitments to the 2018 Global Action Summit in California.

Chakrabarti said, “We are delighted by our new financing initiative and partnership with the Global Covenant of Mayors

for Climate and Energy. … As cities around the world drive climate leadership, we are pleased that this investment will ultimately support the quality of life at the local level and contribute to addressing the global climate challenge.”

Paris Mayor Anne Hidalgo, board member of the Global Covenant of Mayors for Climate and Energy, who also chairs C40 Cities: “C40’s Deadline 2020 research revealed precisely what needs to be delivered by the cities of more than 100,000 citizens around the world, to deliver on the ambition of the Paris Agreement. The decisions being made by mayors right now on investments for sustainable and resilient infrastructure will determine the future of generations to come. The One Planet Charter will make it easier to build the argument for bold climate action and investment in these crucial months and years ahead.”

In a separate initiative, nine of Europe’s largest industrial issuers of green bonds – EDF, Enel, ENGIE, Iberdrola, Icade, Paprec, SNCF Réseau, SSE and TenneT – announced their joint pledge to further develop “one of the most dynamic segments of sustainable finance today, the green bond market.”

Their pledge came on Monday, Paris 2017 Climate Finance Day, the day before the One Planet Summit.

Ten years after the first green bond was issued, this market has turned into “an exciting place,” said the nine companies, who say they are committed to tackling climate change, to a growing awareness to environmental protection, low carbon

transport and buildings, as well as energy efficiency.

Said José Sainz Armada, chief financial officer of the Spanish public multinational electric utility Iberdrola, “Ever since incorporating Sustainable Development Goals to the company’s strategy, Iberdrola has become the largest European issuer of green bonds, the perfect source of long-term finance for projects making an environmental difference. Through independent certification, private investors guided by ethical principles ensure their funds are managed with a sustainable perspective and the strictest social criteria.”

To date, all nine companies have issued a total of €26 billion in green bonds, which accounts for over 10 percent of all the world’s outstanding green bonds.

The nine signatories of Monday’s pledge commit to a long-term presence in the market. They say that green bonds will be at the heart of their project financing and business lines, and that they will implement stringent reporting procedures. The pledge also calls upon other industrial corporations to consider issuing green bonds.

Also announced at the One Planet Summit is Climate Action 100+, a new initiative backed by 225 investors, including nearly 70 North American investors, with $26.3 trillion in assets under management.

Climate Action 100+ is a five-year global effort led by investors to scale up engagement with the world’s largest corporate greenhouse gas emitters to improve governance on climate change, curb emissions and strengthen climate-related financial disclosures.

“Moving 100 of the world’s largest corporate greenhouse gas emitters to align their business plans with the goals of the Paris Agreement will have considerable ripple effects,” said Anne Simpson, member of the Climate Action 100+ Steering Committee and investment director of sustainability at the California Public Employees’ Retirement System, the largest U.S. public pension fund.

“Our collaborative engagements with the largest emitters will spur actions across all sectors as companies work to avoid being vulnerable to climate risk and left behind,” said Simpson.

As part of today’s launch, investors released the list of the first 100 companies that they plan to engage as part of the initiative. The list includes companies in the oil and gas, electric power and transportation sectors that have been identified as the world’s largest greenhouse gas emitters.

But all these actions and promises did not go far enough for the conservationists in the Climate Action Network, a global group of over 1,200 NGOs working to promote government and individual action to limit human-induced climate change to ecologically sustainable levels.

Pointing out that 2017 is likely to be among the five-warmest years since the Industrial Revolution, and that the planet has suffered massive hurricanes in the Atlantic and the Caribbean, devastating floods in south Asia, and out of control wildfires in California, the Climate Action Network is pressing for even more urgent action.

Brett Fleishman, 350.org senior finance campaigner, said, “President Macron and other world leaders, are meeting right now to supposedly discuss shifting capital to climate solutions. But we are here to ring the alarm by bringing attention to the unabated support of the fossil fuel industry. We have research that clearly demonstrates that the French government, through its many agencies, is still invested in the energies sources of the past. This acts as a drag on the climate finance summit. This charade of caring about the planet can’t go on. Every euro and dollar spent on adaptation and mitigation is undercut by even more money spent on the fossil fuel industry.”

“Whatever the outcomes from this summit,” said Fleishman, “the global climate movement will keep on pushing through 2018 to accelerate the transition away from fossil fuels to 100 percent renewable energy for all.”

MOre than 1,000 delegates participated the summit, which will continue Wednesday with various side events.

The One Planet Summit is organized jointly by France, the United Nations and the World Bank, in partnership with the United Nations Framework Convention on Climate Change, the We Mean Business Coalition, the Global Covenant of Mayors for Climate and Energy, the European Commission, the C40 Cities Network, the OECD and Bloomberg Philanthropies.


Featured Image: President of France Emmanual Macron and British Prime Minister Theresa May at the One Planet Summit, Paris, France, December 12, 2017 (Photo courtesy #10 Downing Street) Creative Commons license via Flickr

Maximpact_co

Insuring the Vulnerable in a Warming World

Devastation on the Caribbean island of Dominica after Hurricane Maria, November 19, 2017 (Photo by Tanya Holden/DFID) Creative Commons license via Flickr

Devastation on the Caribbean island of Dominica after Hurricane Maria, November 19, 2017 (Photo by Tanya Holden/DFID) Creative Commons license via Flickr

By Sunny Lewis

BONN, Germany, December 4, 2017 (Maximpact.com  News) – The German government has just contributed €110 million (US$125 million) to bring affordable insurance against climate and other natural disasters to 400 million vulnerable people around the world by 2020.

The contribution from German Federal Ministry for Economic Cooperation and Development, BMZ, made in November follows a £30 million (US$39 million) commitment from the Government of the United Kingdom in July.

These contributions are earmarked for the InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions, headquartered in Bonn.

Between 1980 and 2015, more than 60 percent of the people who lost their lives as a result of climate-related extreme weather events had an income of less than US$3 a day, according to the reinsurance company Munich Re in a 2016 statement.

The effects of extreme weather events force some 26 million people into poverty every year, according to a World Bank study published this year entitled “Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters.”

Although absolute economic losses are much higher in high-income countries, they only account for 0.2 percent of GDP, as compared to five percent in low income countries.

To close this protection gap, the G7 countries: Germany, France, Italy, Japan, Canada, the UK and the United States, launched the InsuResilience initiative for climate risk insurance at their summit in Elmau, Germany in June 2015.

The initiative aims to offer insurance against climate risks to an additional 400 million poor and vulnerable people in developing countries by 2020.

At the start of the initiative, only around 100 million poor and vulnerable people in Africa, Asia and Latin America were insured against climate-related risks.

At the climate negotiations in Paris in 2015 (COP21), the G7 partners made a commitment to provide US$420 million in funding for InsuResilience as a first step.

One year later, at COP22 in Marrakesh, two new partners joined the initiative: the European Union and the Netherlands. Together, the InsuResilience partners confirmed their commitment and increased their financial contributions for InsuResilience to US$550 million.

More progress on insuring the world’s most vulnerable people was made this year. The Insuring Resilient and Sustainable Cities Summit held on May 5 in Bonn was convened by the UN Environment Principles for Sustainable Insurance (PSI) Initiative and ICLEI – Local Governments for Sustainability.

Gino Van Begin, ICLEI’s Secretary General, said, “Cities are on the front line of sustainable development challenges such as climate change and natural disasters. That’s why cities are working more and more with the insurance industry to better manage risk.”

The PSI, the largest collaborative initiative between the United Nations and the insurance industry, and ICLEI, the global network of more than 1,500 cities, towns and regions, joined forces in December 2016 to create the largest collaboration between the insurance industry and cities for resilience.

The Summit was sponsored by Munich Re, a founding PSI signatory, and supported by other PSI signatories such as Allianz and Risk Management Solutions, as well as by city mayors and officials from ICLEI’s global network – from Iloilo in the Philippines and Honiara in the Solomon Islands, to Copenhagen, Denmark and Oslo, Morway.

Dr. Michael Menhart, head of Economics, Sustainability and Public Affairs at Munich Re, and a PSI Board member, said, “We are committed to implementing the UN Principles for Sustainable Insurance in our core business activities. By supporting the push for more resilient and sustainable cities, we can help turn the PSI into practice and make a contribution through our risk and resilience expertise. This is a great example of how the insurance industry can promote economic, social and environmental sustainability.”

Resilience is not only about climate. The main outcome of the PSI-ICLEI Summit was the “Bonn Ambition”, which aims to achieve three goals by June 2018, when ICLEI hosts its World Congress in Montréal, Canada.

The Bonn Ambition is strategically linked to the 17 UN Sustainable Development Goals (SDGs).

The Bonn Ambition seeks to create “Insurance Development Goals for Cities,” which would harness the insurance industry’s triple role as risk managers, risk carriers and investors in the context of the SDGs, focusing on SDG 11 – “Make cities inclusive, safe, resilient and sustainable.”

The idea is for the PSI and ICLEI to convert SDG 11’s stated targets into Insurance Development Goals that would set the long-term global agenda for the insurance industry and cities.

Participants plan to organize the first-ever roundtable of insurance industry CEOs and city mayors at the 2018 ICLEI World Congress to accelerate global and local action. The Congress is held every three years and assembles hundreds of local governments and key stakeholders to set the course for globalizing urban sustainability.

Butch Bacani, who leads the PSI at UN Environment, and who conceptualized and chaired the PSI-ICLEI Summit, said, “The Bonn Ambition clearly supports the PSI’s vision of a risk-aware world, where the insurance industry is trusted and plays its full role in enabling a healthy, safe, resilient and sustainable society. We need ambitious and decisive action now – not in 2020 or 2030 – to make the transformation to resilient and sustainable cities a reality. Time is non-renewable.”

The PSI-ICLEI Summit showed how the insurance industry could support cities as risk managers, risk carriers and investors. It explored various ways to close three key gaps in cities:

  • Closing the disaster risk reduction gap – through catastrophe risk modelling, ecosystem-based adaptation, insurance loss data sharing, land-use planning, loss prevention, and disaster preparedness
  • Closing the insurance protection gap – through insurance solutions for low-income people, SMEs, local governments and green technologies, including index-based insurance and usage-based insurance
  • Closing the financing gap – through investments in sustainable infrastructure, energy, buildings and transportation, and instruments such as green bonds and catastrophe and resilience bonds

Jed Patrick Mabilog, mayor of Iloilo City in the Philippines, said, “To survive and thrive, we need a whole-of-society approach to climate change adaptation and mitigation and disaster risk reduction. I fully support the Bonn Ambition and look forward to its implementation.”

Andrew Leonard Mua, mayor of Honiara City in the Solomon Islands, one of the most climate and disaster-vulnerable countries, said, “No man is an island. Honiara needs to work with other cities and key stakeholders such as the insurance industry in shaping a resilient and sustainable urban future. We need to act urgently—the future is happening now.”


Featured image: Strong winds brought by Typhoon Haima toppled electric poles, damaged homes and flooded fields in the Isabela and Cagayan provinces of the Philippines, October 20, 2016 (Photo by International Federation of Red Cross and Red Crescent) Creative Commons license via Flickr.

China Seizes Global Green Finance Leadership

ChinaFloatingSolar

In May 2017, Sungrow Power Supply China switched on the world’s largest floating solar energy plant. The solar panels float on water that flooded a defunct coal mine near the city of Huainan in China’s eastern Anhui province. China has pledged to invest hundreds of billions of dollars in renewable energy by the year 2020. (Photo courtesy Sungrow Power Supply) Posted for media use.

By Sunny Lewis

SINGAPORE, November 17, 2017 (Maximpact.com News) – Trillions of dollars will need to be deployed each year to finance climate action and sustainability, and China is leading the way toward raising these funds, finds new research released Thursday. “China has become a new growth driver in the global green bonds market,” states the report by the United Nations‘ environment agency and the Beijing-based International Institute of Green Finance.

The report, “Establishing China’s Green Financial System: Progress Report,” reviews China’s development in green finance, and makes recommendations for future development.

The researchers found that China has established itself as a “global leader on green finance,” both domestically and internationally, but the country still faces serious challenges to mobilize its full potential.

The country’s leaders have acknowledged that the rapid growth of their economy, second-largest in the world after the United States, has brought expensive health and environmental problems to China – outdoor and indoor air pollution, water scarcity and pollution, desertification, soil pollution and biodiversity loss.

Speaking at the 19th National Congress of the Communist Party of China in October, President Xi Jinping said the construction of “ecological civilization” and the maintenance of ecological security are the keys to China achieving stable and sustainable development.

“Green finance is essential to realizing China’s national strategic objectives in green development and ‘ecological civilization,'” said co-author Wang Yao, professor and director-general at the International Institute of Green Finance, a think tank established at China’s Central University of Finance and Economics in September 2016.

“Through approaches in practicing green credit, green bonds, green insurance and industrial funds, as well as implementation at local levels, China’s green finance development has contributed significantly to social and economic structural reforms and gained widespread recognition internationally,” said Wang.

The report finds that China, which put green finance on the G20 agenda during its 2016 presidency, is following through on its political commitment to boost the financing required to do this.

Ratings agency Moody’s predicts that, globally, green bonds could exceed US$200 billion this year, driven by the Paris Agreement and reform in China.

Let’s look at China’s recent activities as a way of gauging the country’s progress.

In the first half of 2017, China issued 36 green bonds worth RMB77.67 billion (US$11.7 billion).

In one year, China’s green bonds grew in number by 278 percent and in value by 28 percent, according to the report.

There are 7,826 green and low-carbon projects, at investment of RMB6.4 trillion (US$0.96 trillion), are listed in the public-private partnerships catalogue, and 121 new green regional development funds were set up in 2016, the report states.

The green and low-carbon projects account for 57.7 percent of all the projects and 39.3 percent of the investments in that catalogue.

In addition, many Chinese provinces and cities have established regional green development funds.

By the end of 2016, 265 green funds were registered with the Asset Management Association of China; of these 215 were green industry funds, and 121 of these were established in 2016.

China has demarcated five distinct green finance pilot zones to explore different development models for the local green financial system against different backgrounds.

The Chinese government and the business community have started to attach great importance to developing a green industry chain for outbound investment.

With the Guidelines on Promoting Green Belt and Road, the APEC Green Supply Chain Network, and the Initiative on Environmental Risk Management for China’s Outbound Investment, China is going global in its green investment practices, according to the report.

The Bank of China plans to issue its third set of green bonds in the offshore markets in the near term. The bank states, “…all the net proceeds of its offshore Green Bonds issuances will be used to fund new and existing green projects with environmental benefits.”

Dr. Ma Jun, who chairs China’s Green Finance Committee and serves as special advisor to UN Environment on sustainable finance, said, “China has made huge strides through government leadership to create a domestic green finance market, and has inspired many other countries in developing a green finance policy roadmap. However, to keep this momentum going, China still needs to overcome some challenges.”

The green finance progress report pinpoints where the work needs to be done for China to establish a fully functioning green financial system.

It recommends that China clearly define the term “green.” This would lower the costs of identifying truly green projects and preventing “greenwashing,” the report states.

In this critical recommendation, the report says authorities should clarify lenders’ responsibilities, litigation eligibility, and liabilities by improving laws and regulations on environmental protection. The authors say this would urge commercial banks to incorporate environmental risk analysis into the loan application process.

The authors recommend that China set up statistical systems for green finance, and construct performance evaluation systems for local green development.

Efforts should be made to improve the green finance database and expand channels for international investors to access information about China’s green finance market to help boost their confidence, the authors recommend.

And finally, they recommend that green indexes aligned with the international market should be developed as benchmarks to attract international investors to invest in green bonds and stocks in China.

The report is coauthored by the International Institute of Green Finance of the Beijing-based Central University of Finance and Economics, and UN Environment’s Inquiry into the Design of a Sustainable Financial System.

The Inquiry was launched by UN Environment in January 2014 to improve the financial system’s effectiveness in mobilizing capital for sustainable development.

In October 2015, the Inquiry published the first edition of “The Financial System We Need,” with the second edition launched in October 2016.

The Inquiry has worked in over 20 countries and produced many briefings and reports on sustainable finance. It serves as secretariat for the G20 Green Finance Study Group, co-chaired by China and the United Kingdom, as well as for the Sustainable Insurance Forum of regulators.

In its 2017 Leaders Declaration, the G20 countries committed themselves to sustainable development, declaring, “A strong economy and a healthy planet are mutually reinforcing. We recognise the opportunities for innovation, sustainable growth, competitiveness, and job creation of increased investment into sustainable energy sources and clean energy technologies and infrastructure. We remain collectively committed to mitigate greenhouse gas emissions through, among others, increased innovation on sustainable and clean energies and energy efficiency, and work towards low greenhouse-gas emission energy systems.”

The UN Environment Inquiry and its partners this week launched another report on the state of play in green finance and upcoming investment opportunities.

On November 13, at the UN climate negotiations in Bonn, they issued “Roadmap for a Sustainable Financial System,” with the World Bank Group. This report is aimed at helping governments and the private sector design a global financial system for the era of sustainable development.

It finds that the transition toward a sustainable financial system is already taking place through the interaction of market-based, national and international initiatives.

“Sustainable growth must be the only growth option for the planet and will require sustainable financial systems that are inclusive, deep, and sound,” said Hartwig Schafer, World Bank vice president for Global Themes.

This report makes three key points:

  • Policy and regulatory measures targeting sustainability have grown 20 percent year on year since 2010
  • Climate action has opened up initial investment opportunity of US$22.6 trillion from 2016 to 2030
  • The next 24 months are crucial to build on existing initiatives and finance sustainable development

“The financial system has enormous transformative power, and has the potential to serve as an engine for the global economy’s transition to sustainable development,” said UN Environment head Erik Solheim. “The roadmap tells us who needs to do what, and when, for this to happen. Here we can see the very real potential to improve the lives of billions of people around the world.”


Featured Image: All three Chinese note-issuing banks are in this shot: Bank of China, HSBC (Hongkong and Shanghai Banking Corporation), and Standard Chartered Bank, at dusk in Hong Kong, July 27, 2010 (Photo by Brian Sterling) Creative Commons license via Flickr

Faith in Finance

Buddhist statues Yangon, Myanmar, February 2015 (Photo by J. Durok) Creative Commons license via Flickr

Buddhist statues Yangon, Myanmar, February 2015 (Photo by J. Durok) Creative Commons license via Flickr

By Sunny Lewis

ZUG, Switzerland, October 27, 2017 (Maximpact.com News) – First the numbers. Financial investors and leaders of more than 30 faith traditions representing over 500 faith investment groups from eight religions with some three trillion dollars in assets, will meet in Zug this month. They are gathering with representatives of the United Nations and some key ethical impact investment funds, for a unique meeting on faith in finance.

These faith groups are using their investment funds to create what they see as a better and fairer world. In a shift from the faith tradition of saying, for ethical reasons, what they will not invest in, they have all agreed to set out and make public their priorities for positive investment.

The meeting on October 30-31 at Lassalle Haus, Zug, marks a radical shift in how pension funds, governments, foundations and individuals might in the future make their money work for good, while it is still bringing in the returns they need.

Participating in the Zug meeting will be Daoist leaders, Buddhists, Christians, Hindu, Jewish, Muslim, Sikh and Shinto investors.

Trillions of investment dollars will be represented by delegates, including:

  • the Presbyterian Church USA (around $11 billion) * – EKD – German Protestant Churches (11-figure investments)
  • the Oikocredit Ecumenical Development Cooperative Society (around $1.4 billion)
  • JLens, a network of hundreds of Jewish institutions and individuals
  • the Interfaith Center on Corporate Responsibility, representing over 300 faith investment groups

The new movement was sparked in part by the UN’s 17 Sustainable Development Goals, launched in 2015, to bring government and civil society together to make a world free of poverty, discrimination, with affordable, clean energy, clean water, good education and a planet that everyone aims to protect.

“The UN’s Sustainable Development Goals are a huge, and inspiring vision, one shared by many faiths,” said Martin Palmer, secretary-general of the Alliance of Religions and Conservation (ARC), which is hosting the meeting.

“They cannot be achieved by government tax money alone, or by charity donations. They can only be achieved by investment in environmental and sustainable development projects and financial products,” said Palmer. “But they are just the start for value-driven investment for a better world.”

St. Michael's Church, Zug, Switzerland, September 2014 (Photo by Patrick Nouhailler) Creative Commons license via Flickr

St. Michael’s Church, Zug, Switzerland, September 2014 (Photo by Patrick Nouhailler) Creative Commons license via Flickr

ARC is a secular body founded by HRH Prince Philip that helps the major religions of the world to develop their own environmental programs, based on their own core teachings, beliefs and practices. It is the main partner for the UN in working with the faiths on the Sustainable Development Goals.

It is sponsored by the Charles Stewart Mott Foundation, the Pilkington Foundation and WWF-UK as well as impact fund managers: Earth Capital Partners, Hermes Investment Management, Linius Capital, Rathbone Greenbank Investments, Resilience Brokers, Sarasin & Partners, Tribe, Triodos Investment Management, WHEB.

On October 18, the New York-based Interfaith Center on Corporate Responsibility (ICCR) announced the formation of the Investor Alliance for Human Rights, a new initiative designed to expand collective investor action on a range of critical human rights issues.

The Alliance, the first of its kind, builds on ICCR’s long-term shareholder engagements on business and human rights and invites active participation and collaboration from the larger investment community.

ICCR membership is made up of nearly 300 organizations, including: faith-based institutions, socially responsible asset management companies, unions, pension funds, colleges and universities that collectively represent over $200 billion in invested capital.

The primary objectives of the Investor Alliance for Human Rights are to:

  • Build a collective action platform that allows for the quick mobilization of a broad group of investors to advocate on urgent business and human rights issues.  Alliance members will address both critical public policy challenges, and emergent human rights risks arising from corporate operations and supply chains;
  • Coordinate strategies with relevant stakeholders that can help amplify investor efforts, and;
  • Expand the current shareholder engagement agenda on human rights.

Participation in the Alliance is open to all institutional investors both inside and outside the ICCR membership. The Alliance will be housed and staffed at ICCR’s headquarters in New York City.

“ICCR members have been engaging companies on human rights and supply chain risks for more than four decades, focusing on the impacts of corporate practices on workers and communities,” said David Schilling, ICCR’s senior program director for human rights.

“In the face of policy and regulatory rollbacks that would forestall progress on these critical issues we know this work grows ever more urgent to the investment community and to impacted people and communities. We are excited by the prospect of partnering with other concerned investors and by the promise of the meaningful change this new alliance could bring to the field of business and human rights,” said Schilling.

The United Nations estimates that religious institutional funds make up around US$10 trillion of the world’s invested funds, making them, as a bloc, the fourth largest investment groups in the world. A further US$30 trillion is owned by members of the major faiths as individuals or family foundations.

At Zug, for the first time, eight major faiths will set out their own Guidelines on what they will invest in to help fund and create a better world for all.

The Zug Guidelines on Faith-Consistent Investing give an overview of where religious investment is placed now, what principles each tradition calls upon when it decides its investment priorities, and a statement that the money should, where possible, be invested in environmental and sustainable development.

The Guidelines will be launched with a colorful procession with banners through the medieval town of Zug, on October 31, the 500th anniversary of the priest Martin Luther nailing his 95 theses onto the door of a chapel in Wittenberg, Germany.

In their very different way, the guidelines represent an equally radical, though more peaceful, shakeup in the impact of religions on the world’s future.

Keynote speakers at Zug include:

  • Cardinal Peter Turkson, who in 2008 following the global economic crisis, co-created a proposal to reform the international financial system. He has been one of Pope Francis’ special envoys for peace. He is head of a new department in The Vatican on the integrity of human development and is outspoken about the role of finance in creating a better world.
  • Elliot Harris, Assistant Secretary-General of the United Nations and head of the New York office of the United Nations Environment Programme. He was previously the International Monetary Fund’s Special Representative to the UN, involved closely in the areas of social protection, the green economy and fiscal space for social policy.
  • Gunnela Hahn, Church of Sweden, which has around 8 billion SEK (US$935 million) of assets, and in 2010 brought in the Church Order that financial assets “are also to be managed in an ethically consistent manner, in accordance with the fundamental values of the Church.”
  • Martin Palmer, ARC, who has been a key force behind making this meeting happen.

The event takes place at the same time as, and in collaboration with, the annual Swiss Impact Investment Association (SIIA) Summit in the city of Zug, which has as its theme this year the subject of Faith-Consistent Investing.


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Phone Route to Wealth for the Unbanked

MobilePhone

Customers in many Indian villages no longer need to go get cash to make purchases. They can access digital payment machines, making buying convenient in the many places without a bank. (Screengrab from video courtesy ITU News)

By Sunny Lewis

GENEVA, Switzerland, August 10, 2017 (Maximpact.com News) – Imagine being without a bank account, having no means of carrying out formal financial transactions, storing money, sending and receiving payments. That is the case for roughly 40 percent of the world’s working-age adults, about two billion people. They are often residents of developing countries, often living in rural areas, and many are women.

Today, the unbanked may be excluded from financial systems, but many do have mobile phones that in the near future could serve as a route to financial inclusion.

A new global program to accelerate digital financial inclusion in developing countries has been initiated by the World Bank Group, the International Telecommunication Union (ITU) and the Committee on Payments and Market Infrastructures (CPMI), with support from the Bill & Melinda Gates Foundation.

The first step is the Financial Inclusion Global Initiative, a three-year program focused on three very different developing countries – China, Egypt and Mexico.

China, Egypt and Mexico are already part of the Universal Financial Access 2020 (UFA2020) initiative . Led by the World Bank Group, this seeks to bring two billion unbanked adults in 25 countries into formal financial systems by 2020.

The Financial Inclusion Global Initiative consists of two complementary operational and knowledge work streams.

The operational work stream supports each country’s national authority – countries in which digital financial inclusion can significantly improve access to financial services for a large number of people without access to financial services.

The knowledge work stream is designed to advance research and develop policy recommendations in three key areas of digital finance:

  • security of information and communication technology infrastructure and trust in digital financial services;
  • digital IDs for financial services;
  • acceptance and use of e-payments by micro and small-scale merchants and their customers.

The World Bank Group leads the operational work, while the ITU is handling activities related to telecommunications authorities.

“An estimated two billion adults are still without access to a bank account, and yet some 1.6 billion of them have access to a mobile phone, creating the potential for e-finance access,” said ITU Secretary-General Houlin Zhao.

“The ITU community is excited to leverage our unique technical expertise to make e-finance a reality for millions of people through the Financial Inclusion Global Initiative, and in so doing, contribute to poverty eradication and the achievement of the global Sustainable Development Goals,” said Zhao.

Digital financial services offer great potential to meet the financial needs of poor and unbanked consumers. Using agents and digital channels for financial transactions can lower costs and eliminate travel time compared with similar transactions at physical branches of financial service providers.

This evolution of inclusion is already happening in India.

In the last three years, 280 million people have become financially included, India’s Telecommunications and IT Secretary, Aruna Sundararajan told ITU News.

She said India now has a direct benefit transfer program that allows 340 million people to have entitlement benefits transferred directly to their bank accounts, cutting out layers of government bureaucracy that previously hindered their access.

“We today have one billion people who have access to the mobile phone, which is large,” said Sundararajan. “Second, we have one billion people who have digital identities, called Aadhaar. So that enables everyone to join the digital economy. Third, we now have one billion people on digital payment systems.”

World Bank Group President Jim Yong Kim has called for Universal Financial Access by 2020.

“Universal access to financial services is within reach – thanks to new technologies, transformative business models and ambitious reforms,” said President Kim. “As early as 2020, such instruments as e-money accounts, along with debit cards and low-cost regular bank accounts, can significantly increase financial access for those who are now excluded.”

More than 50 countries have now made commitments to financial inclusion targets. “If they fulfill their commitments, if other countries also set bold targets, and if the private sector responds by unleashing its resources and know-how – then we can reach universal access by 2020,” said Kim.

“We are excited to work with ITU and CPMI on this new global initiative that will enable our partner countries to better harness the potential of digital technologies for financial inclusion, and to manage associated risks,” said Ceyla Pazarbasioglu, senior director for the Finance and Markets Global Practice, World Bank Group.

As part of the initiative, the three model countries are receiving technical assistance from the World Bank Group with a view to putting into practice the guiding principles set out by the CPMI-WBG report on Payment Aspects of Financial Inclusion (PAFI).

This assistance will contribute to strengthening public and private-sector commitment and improving legal and regulatory frameworks, financial markets and ICT infrastructure for financial access and inclusion.

It will also focus on improving financial product design; financial literacy and awareness; diversified access points; and large-volume, recurring payment streams.

“The Bill & Melinda Gates Foundation is pleased to support the Financial Inclusion Global Initiative, which we believe will bring digital financial services to some of the world’s most vulnerable unbanked populations as well as advance knowledge on creating a robust digital payments ecosystem,” said Jason Lamb, deputy director, Bill & Melinda Gates Foundation.

The three countries selected – China, Egypt and Mexico – were chosen based on potential for country programs, level of national government and private-sector commitment to financial inclusion, number of people that could be reached through digital financial services, and potential for reforms to encourage innovation and digital technologies use.

According to analyses carried out by the World Bank Group, Egypt has the potential to bring more than 44 million adults into the formal financial sector. Analysts found that Egypt has adequate laws, regulations and financial and ICT infrastructure, but a lack of funding to cover related reforms.

The People’s Bank of China has requested support from the World Bank Group for digital financial inclusion measures to reach rural people without access to financial services.

Considered a last-mile challenge, China has an increasingly well-developed legal and regulatory environment and financial infrastructure, as well as a supportive ICT infrastructure.

Mexico has shown a strong commitment to financial inclusion with its new National Financial Inclusion Strategy launched in June 2016, as well as a draft fintech law.

Mexico has the potential to become a regional and global model for digital financial inclusion, despite today’s relatively low levels of financial inclusion, analysts conclude.

The inter-agency working groups tackling these issues will share findings at annual symposia. The first of these, the Financial Inclusion Global Initiative Symposium 2017, will be held in Bangalore, India, from November 29 to December 1, hosted by the Government of India.


Featured image: Now restricted to notepad and calculator, this Egyptian storekeeper could soon have access to digital banking services. (Photo by Karen Green) Creative Commons license via Flickr
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Green Bond Surge Expands

SolarPowerChina

Solar photovoltaic power generation in Hong Kong, China. (Photo by WING / Electrical and Mechanical Services Department Headquarters) Creative commons license via Wikipedia.


By Sunny Lewis

LONDON, UK, April 18, 2017 (Maximpact.com News) – The market for Green Bonds is developing rapidly, proving effective at channeling money into environmental projects. Offering insights into this fledgling, but fast-growing, market, “Environmental Finance,”the London-based online news and analysis service, has just announced its latest Green Bond Award winners.

The 25 awards recognize best practices, or significant issues in the development of the green bond market, during 2016. The winners were selected by a panel of judges made up of some of the world’s biggest green bond investors.

Poland was honored for the first ever issuance of Green Bonds by a national government. The world’s first sovereign green bonds, issued in December, will finance environmental projects in the country. Poland has been heavily reliant on coal as its energy source; its green bond auction represents a shift to more sustainable energy production.

Deputy Finance Minister Piotr Nowak said the green bonds would allow Poland to further diversify its investor base.

Global law firm White & Case, which advised the Polish Ministry of Finance on the €750 million issuance of its Green Bonds, took the award for best law firm.

Winners include the Dutch mortgage corporation Obvion, which won the title of best asset-based bond for its landmark green residential mortgage-backed security.

The Dutch bank Rabobank took the top spot for the second year running as the best bank issuer of green bonds. Rabobank is a major financier of both onshore and offshore wind farms, holding a Top 10 position worldwide and is the market leader in the United States, Canada and the Netherlands.

Rabobank has developed a Green and Sustainability Bond Framework for the two different types of bonds. Green bonds fund environmental projects, while sustainability bonds fund projects with a social impact that may or may not have environmental benefits.

Rabobank Green Bonds fund renewable energy projects such as solar and wind, while Rabobank Sustainability Bonds fund loans provided to small and medium-sized enterprises with sustainability certifications on products, processes or buildings.

Industrial Bank of China was named as the biggest bank issuer, and Bank of America Merrill Lynch as the biggest underwriter.

Green Bonds enable capital-raising and investment for new and existing projects with environmental benefits. In the past, most green bond issuers have been development banks and financial services firms.

In the United States green bonds have been issued by municipalities, power companies and a few other corporate entities.

Now this year, Environmental Finance Bond of the Year winners are U.S. corporate giants Starbucks and Apple.

In February 2016, Apple, headquartered in California’s Silicon Valley, issued a $1.5 billion green bond, boosting the young market’s prospects for attracting corporate issuers.

In May 2016, the Seattle-based coffee chain Starbucks issued a first-of-its-kind $500 million U.S. corporate sustainability bond. The funding will enhance sustainable coffee supply chain management and the operation of farmer support centers in eight coffee growing regions, as well as loans to farmers made through Starbucks Global Farmer Fund.

Bank of America Merrill Lynch was named again this year as the winner of both Best underwriter: corporate, and Best underwriter: municipality.

Click here to read about all the winners.

Environmental Finance also publishes the Green Bond Database, a table listing the 25 most recently issued green bonds.

Meanwhile, Canada is emerging as a green bond market force.

The Royal Bank of Canada (RBC) Capital Markets Green Bond Conference in Toronto on April 10 saw release of a report showing Canada’s capacity for green bond issues will be at least $56.3 billion in fiscal 2017/18.

The figures reported by the award-winning “clean capitalism” magazine “Corporate Knights,” are based on an analysis of the capital requirements, debt-raising capacity, and intended uses of proceeds on the part of 21 of Canada’s largest public and private bond issuers.

There’s clear momentum in green bond markets, but it’s still seen as a niche and perhaps even challenging financing tool,” says “Corporate Knights” CEO Toby Heaps. “A billion dollars worth of bonds formally labeled as green are currently being issued in Canada annually. This analysis shows there’s potential for exponential growth.

The analysis took a bottom-up approach to quantifying potential bond issues and is the first of its kind in Canada.

The report shows that in 2017/18, the 21 potential bond issuers have a need and capacity to fund $23.60 billion worth of “explicitly green projects” such as public transit, renewable energy, and loans for electric vehicle purchases and green power projects.

The Canadian potential bond issuers have a further need and capacity to fund $32.7 billion worth of “potentially green projects” such as energy efficient construction or retrofitting of public buildings and installation of broadband.

In Latin America, the Mexican government’s development bank Nacional Financiera, or Nafin, has tapped the green bond market with a issuance of $500 million in a deal that was five times oversubscribed.

China, too, is busily developing its green bond market.

More than 500 green finance experts from regulators and industry gathered at the annual Green Finance Summit in Beijing on April 15, the surging number of attendees reflecting the increased attention being placed on greening the financial system, reports Andrew Whiley, writing for Climate Bonds Initiative, an investor-focused not-for-profit based in London.

The Green Finance Summit has been held annually since 2015 by the China Financial Society’s Green Finance Committee which operates under the auspices of the People’s Bank of China.

Major issues on the summit’s agenda this year included:

  • opportunities and challenges facing green credit and green bond markets
  • establishment of green financial systems at a local level
  • innovation in green financial products

The summit saw the debut of the “Study of China’s Local Government Policy Instruments for Green Bonds” report.

Prepared by Climate Bonds & Syntao Green Finance, the new report examines green bond developments at a local government level and sets policy recommendations for growth.

Tracking the rapid growth in Chinese green bond issuance from almost zero in 2015 to RMB 238 billion (US$36.2 billion) or 39 percent of all green bonds issued around the world in 2016, the report outlines the policy steps taken by government regulators and stock exchanges in supporting such rapid growth.

China’s new Guidelines, issued by seven Chinese government ministries last September, call for government ministries and financial institutions to collaborate on the development of a wide range of financial instruments to move money from high-polluting to low-polluting sectors, including green credits, green bonds, green insurance, green equity indices, green development funds and carbon finance.

The guidelines are contained in the report “Establishing China’s Green Financial System” written by the Green Finance Task Force of the People’s Bank of China.

Two recommendations are particularly relevant to the international community’s current concerns about China’s financial system, wrote the World Resources Institute’s Shouqing Zhu last September.

The first relates to green bonds. Since the People’s Bank of China and the National Development and Reform Commission separately issued their directives on green bonds at the end of 2015, the market has witnessed exponential growth.

Following this rapid growth, there have been concerns about “greenwashing,” or businesses using green bonds to finance polluting projects instead of green ones due to a lack of a solid reporting and verification system.

Zhu writes, “The Guidelines call for harmonization of the two domestic green bond standards and development of third-party verification bodies in line with international practices.

International best practices are defined by the International Capital Market Association (ICMA) a UK-based industry membership association that publishes the Green Bond Principles .

Updated as of June 2016, the Green Bond Principles (GBP) are voluntary process guidelines that recommend transparency and disclosure and promote integrity in the development of the Green Bond market by clarifying the approach for issuance of a Green Bond.

The Green Bond Principles provide issuers guidance on the key components involved in launching a credible Green Bond. They are intended to aid investors by ensuring availability of information necessary to evaluate the environmental impact of their Green Bond investments. They assist underwriters by moving the market towards standard disclosures which will facilitate transactions.


Featured image: Trianel Windpark Borkum is an offshore wind farm of 40 turbines in the North Sea off the north coast of The Netherlands near the German border. A second stage of development is planned to start delivering power in 2019. It was financed in part by Rabobank. (Photo courtesy Trianel.com) Posted for media use. 

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Cities Seek US$1 Trillion for Low-Carbon Construction

C40ForumWomen

Women at the C40 Financing Sustainable Cities Forum, from left: Naoko Ishii, CEO and chairperson of the Global Environment Facility; Sue Tindal, chief financial officer at Auckland Council; Val Smith, director, Corporate Sustainability at Citi; Shirley Rodrigues, Deputy Mayor of London for Environment and Energy.

By Sunny Lewis

LONDON, UK, April 12, 2017 (Maximpact.com News) – The world’s largest cities are not sitting around waiting for national governments to hand them a climate-safe future. They are taking the initiative to build their own low-carbon opportunities.

To address climate change arising from urban development, there are over 3,000 low-carbon infrastructure projects in the planning stages across a network of 90 of the world’s megacities known as C40 Cities .

Cities have reported costs for just 15 percent of these projects, but even this small percentage amounts to US$15.5 billion in required investment.

There are 90 megacities in the C40 Cities network. They include: Durban, Nairobi, Lagos, and Addis Ababa in Africa; Delhi, Hong Kong, Bangkok, and Tokyo, in Asia; Auckland, New Zealand in Oceana; Amman, Jordan in the Middle East; Copenhagen, Paris, Rome, London, Berlin, Athens and Amsterdam in Europe; Bogota, Rio de Janeiro, Sao Paulo, and Buenos Aires in South America; and in North America, Houston, New York, San Francisco, Washington, DC, and Vancouver.

Roughly one in every 12 people in the world lives in a C40 city, and these 90 cities generate about one-quarter of the world’s wealth, as expressed by GDP, or Gross Domestic Product.

These numbers highlight an enormous opportunity for collaboration between cities and the private sector to invest in sustainable projects, and also the need to accelerate investment and development in sustainable infrastructure to deliver a climate-safe future.

Rachel Kyte, chief executive, Sustainable Energy for All, an initiative of the United Nations Secretary-General, has said, “Buildings account for one-third of global energy use and with cities growing rapidly, there’s an urgent need for partnerships that help cities and citizens use energy better.”

Recent C40 research, contained in the report “Deadline 2020,” estimates that C40 cities need to spend US$375 billion over the next four years on low carbon infrastructure in order to be on the right track to meet the ambition of the Paris Agreement on Climate that took effect in November 2016.

Under this agreement, world governments pledged to keep Earth’s temperature increase to less than two degrees Celsius above pre-industrial levels.

Deadline 2020” estimates before 2050, C40 cities will need to invest over US$1 trillion on new climate action and in renewing and expanding infrastructure to get on the trajectory required to meet the goal of the Paris Agreement.

But how are the megacities to attract this mega-investment?

On April 4, the C40 Financing Sustainable Cities Forum gathered over 200 delegates from cities, investors, national governments, academics, private sector experts, civil society groups and technology providers to identify the key barriers in financing sustainable urban infrastructure.

The Forum was hosted in London by the C40 Cities Climate Leadership Group and the Greater London Authority, with the support of the Citi Foundation and World Resources Institute’s Ross Center for Sustainable Cities.

City action can deliver 40 percent of the Paris goal,” Mark Watts, executive director, C40 Cities, said at the Forum.

Participants looked at unlocking finance for low-carbon investments in cities. They agreed that cities must improve project development information in order to accelerate climate action, a conclusion articulated in a new report, “The Low Carbon Investment Landscape in C40 Cities.

They recognized that accessing and attracting finance are some of the biggest barriers that mayors face in delivering their climate change plans, especially in developing countries and emerging economies with a lack of expertise in securing investment.

To help solve this problem, the C40 Cities Finance Facility was launched during COP21, the 2015 United Nations Climate Change Conference in Paris, where the Paris Agreement on Climate was approved by world governments.

The C40 Cities Finance Facility will provide US$20 million of support by 2020 to help unlock and access up to US$1 billion of additional capital funding, by providing the connections, advice and legal and financial support to enable C40 cities in developing and emerging countries to develop more financeable projects.

For developing markets, public-private partnerships are key to getting sustainable projects off the ground,” said Val Smith, director, Corporate Sustainability at Citi.

But the financial industry tells C40 Cities that they are experiencing a lack of corporate understanding of the low carbon technology being deployed.

They lack understanding of the financing models cities use to fund low carbon infrastructure and, in addition, financiers are seeing inadequate capacity within city governments to form partnerships and collaborate on sustainable infrastructure projects.

CDP’s Matchmaker program aims to overcome these challenges by engaging cities early in the project development process and standardizing how these projects are disseminated to the market.

CDP, formerly the Carbon Disclosure Project, is a not-for-profit that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.

Since the Paris Agreement was adopted in 2015, CDP says they have seen a 70 percent increase in cities disclosing their carbon emissions.

CDP says this year’s disclosures reveal that many cities are actively looking to partner with the private sector on climate change. Cities highlighted a total 720 climate change-related projects, worth a combined US$26 billion, that they want to work with business on.

Matchmaker will publicize these low-carbon infrastructure projects to CDP’s growing number of investor signatories that currently represent over US$100 trillion in assets.

And these are by no means all of the opportunities for sustainable investment in urban low-carbon construction.

On April 4, at a meeting of the Sustainable Energy for All Forum in New York City April 3, five new cities and districts committed to improve their buildings by adopting new policies, demonstration projects and tracking progress against their goals.

They joined the Building Efficiency Accelerator (BEA), a public-private collaboration that now includes over 35 global organizations and 28 cities in 18 countries.

The cities and districts joining the BEA are Kisii County, Kenya; Merida, Mexico; Nairobi City County, Kenya; Pasig City, Philippines; and Ulaanbaatar, Mongolia.

World Resources Institute (WRI) leads the BEA, convening businesses, nonprofits and multilateral development organizations to support local governments in implementing policies and programs that make their buildings more efficient.

Jennifer Layke, global director, Energy Program, World Resources Institute, encapsulated the push for sustainable construction, saying, “People want schools, homes, and offices that are healthy and comfortable without the burden of high energy costs due to inefficiency. Prioritizing efficiency in buildings can save money and reduce pollution. Our new Building Efficiency Accelerator partners are signaling their intent to avoid the lock-in of decades of inefficient development.

Supporting these new members are ICLEI – Local Governments for Sustainability, the India Green Building Council, the Kenya Green Building Society, Pasig and WRI Mexico.

We must transform our urban systems to meet the challenges of sustainability and climate,” said Naoko Ishii, CEO and Chairperson of the Global Environment Facility, a funding organization. “Through this partnership, we can provide awareness raising, policy advice and technology transfer directly to sub-national governments ready to take action.”

Follow C40 Cities on Twitter


Featured Image: Duke Energy Center in Charlotte, North Carolina is a LEED Certified Platinum building, the highest sustainability rating awarded by the U.S. Green Building Council. (Photo by U.S. Green Building Council) Posted for media use

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Europe’s Microcredit Providers Have It EaSI

Europes Microcredit Providers Have It EaSIBy Sunny Lewis

BRUSSELS, Belgium, February 28, 2017 (Maximpact.com News) – The European Investment Fund and Nest Bank earlier this month signed a microfinance agreement aimed at supporting micro-businesses in Poland under the new EU Programme for Employment and Social Innovation (EaSI).

EaSI is a new source of funding, offered by the European Investment Fund and the European Commission, to help micro-credit and social enterprise finance providers develop their businesses.

The EaSI guarantee plan provides support to financial intermediaries that offer microloans to entrepreneurs or finance to social enterprises that would not have been able to obtain financing otherwise due to risk considerations.

The goal is to increase access to microfinance for vulnerable groups who want to set up or develop their business and micro-enterprises, through loans of up to €25,000.

EaSI aims to contribute to the implementation of the Europe 2020 strategy by supporting the EU’s objective of high level employment, guaranteeing adequate social protection, fighting against social exclusion and poverty and improving working conditions.

The new EaSI Capacity Building Investments Window will reinforce the capacity of selected financial intermediaries in the areas of microfinance and social enterprise finance.

Through equity investments such as seed financing and risk capital, EaSI will support the development of these finance providers in their efforts to do things such as open a new branch, invest in human resources, develop a new IT tool or finance expenses.

PolandBitspirationWoman

Dorota Zys is a Polish entrepreneur in the field of Internet and mobile applications with extensive experience in website design and digital marketing consultancy. She has advised professionals and trained over 100 companies in Inbound Marketing principles and their application. (Photo courtesy Bitspiration 2016) Posted for media use.


In Poland, with the financial backing of the European Commission, the European Investment Fund is providing a guarantee that will enable Nest Bank to provide over €9 million worth of loans on favorable conditions to about 1,300 microbusinesses in Poland over the next three years.

Earlier this month, France became the first EU Member State to benefit under EaSI from the support of the European Fund for Strategic Investments, the heart of the Investment Plan for Europe.

This guarantee will allow Initiative France to award more than €10 million in interest-free loans to more than 500 French microenterprises over the next three years.

The European Investment Fund is using its EaSI guarantee to support Initiative France in the context of its Initiative Remarquable unsecured loans intended for businesses taking an economically responsible approach and creating jobs.

Announcing the new capacity building project, EU Commissioner for Employment, Social Affairs, Skills and Labour Mobility Marianne Thyssen said in December, “Ultimately, these investments will help increase the offer and opportunities for micro-borrowers and social enterprises.”

“It responds to the needs of financial institutions that want to build up their capacity and reinforce the offer on the market,” Thyssen said. “Through this instrument, we confirm our commitment to give a boost to jobs and growth and help the most vulnerable people in the labour market.

At the signature event in Paris in December, EIB Vice-President Ambroise Fayolle said “The Juncker Plan continues to develop in France, with 46 operations signed in France so far, accounting for a total amount of €3.1 billion, which is expected to generate an additional €15.9 billion.

This new agreement with Initiative France marks an important milestone in the EIB Group’s support for small French firms,” said Fayolle. “By extending the scheme to businesses in the weakest regions, to job creators in priority districts and young student entrepreneurs, we will further develop our financing and support aims.”

The 222 platforms of the Initiative France associative network of creative financing and corporate buyers provide unsecured loans to 19,000 entrepreneurs each year.

At least 60 percent are unemployed. They are expected to create and develop over 16,000 businesses, creating more than 40,000 jobs.

The progress of 55,000 entrepreneurs is being followed, and 9,000 of them are being mentored.

Louis Schweitzer, president of Initiative France, explained, “This new support from the European Investment Fund confirms the effectiveness of the unique Initiative France model in general and of the Initiative Remarquable program in particular.  We are also very proud to be the first beneficiaries in Europe of EU support under its EaSI program.

In 2015, €176 million of unsecured loans led to over €1 billion in bank loans. These local associations, well-integrated into their local areas, have 950 staff and 16,180 volunteers, including 4,640 business mentors to support new entrepreneurs.

The combination of the mentoring, the loans, and the banking services has helped these enterprises to achieve a 88 percent survival rate over three years, compared with a national rate of 70 percent, according to the French National Institute for Statistics and Economic Studies.

EIF Chief Executive Pier Luigi Gilibert, said, “I am confident that the EaSI Capacity Building Investments Window will be instrumental in strengthening the operational and institutional capabilities of micro-credit and social finance providers.”

Capacity building is fundamental for finance providers to be able to deliver on their investment objectives in an effective and sustainable manner,” Gilibert emphasized. “I am pleased to see that EIF will support those finance providers in creating an investment friendly environment.”

Gilibert said the EaSI Capacity Building Investments Window reflects the European Commission’s “strong commitment” to launch initiatives aiming at boosting jobs, growth and investment.

Launched in June 2015, EaSI is managed directly by the European Commission. The total budget for 2014-2020 is €919,469,000 in 2013 prices.

Also, for the first time, the European Commission is helping social enterprises through investments of up to €500,000.

The European Commission is reinforcing the social dimension of the European Fund for Strategic Investments for both microfinance and social entrepreneurship. Overall, the total amount of support to these areas is expected to increase from €193 million under the EaSI program to about €1 billion, mobilizing roughly €3 billion in additional investment.

The European Investment Fund is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized businesses by helping them to access finance.

In this role, EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. EIF aims to foster EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.


Featured image: The European Commission is investing in micro-businesses to create jobs and support new entrepreneurs. (Photo by Peter Linke) Creative Commons license via Flickr

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Green Climate Fund Disburses Hope

SamoaRiver

Dwellings on the banks of Samoa’s Vaisigano River are at risk during increasingly extreme storms. (Photo courtesy UN Development Programme)

By Sunny Lewis

SONGDO, South Korea, February 23, 2017 (Maximpact.com News) – Just three days before he left office on January 20, U.S. President Barack Obama transferred a second installment of US$500 million to the Green Climate Fund, based in South Korea’s Songdo International Business District.

To be financed by wealthy countries, the Green Climate Fund was established by 194 governments to limit or reduce greenhouse gas emissions in developing countries, and to help vulnerable societies adapt to the unavoidable impacts of climate change.

The Fund was key to the Paris Agreement on climate which took effect throughout the world on November 4, 2016. The Agreement’s stated aim is to keep climate change “well below” 2°Celsius and, if possible, to 1.5°C above pre-industrial levels.

At the UN climate treaty talks in Paris, wealthy governments, including the United States, pledged to contribute US$100 billion a year by 2020 for climate change adaptation and mitigation projects in the Global South, primarily through the Green Climate Fund.

As of January 2017, contributions to the Green Climate Fund total US$10.3 billion.

Initially, the United States committed to contributing US$3 billion to the fund. President Obama’s most recent installment still leaves US$2 billion owing, with President Donald Trump expected to stop payments entirely.

In his “Contract With the American Voter,” which defines his program for his first 100 days in office, President Trump pledges to “cancel billions in payments to U.N. climate change programs and use the money to fix America’s water and environmental infrastructure.

President Obama’s move followed a campaign coordinated by the nonprofit Corporate Accountability International , with more than 100 organizations and nearly 100,000 people asking Obama to transfer the full US$2.5 billion to the Fund.

Although that didn’t happen, the Green Climate Fund Board is already disbursing what money it does have. To date, the Fund has approved more than US$1.3 billion to support low-emission and climate-resilient projects and programs in developing countries.

This year has demonstrated that the Fund is rapidly gathering pace with regard to scaling up climate finance,” said then Board Co-Chair Zaheer Fakir of South Africa, who held developing country role on the Board. “I am proud of the progress we have made over the past 12 months in improving Fund performance and growing our portfolio of investments.

That developing country role has now passed to Ayman Shasly of Saudi Arabia, representing the Asia Pacific group.

Fellow Co-Chair Ewen McDonald of Australia, who this year retains his role representing the developed countries on the GCF Board, said, “I have high hopes that 2017 will be the year of climate finance for the Pacific.

In December, following the last GCF Board meeting of 2016 in Apia, Samoa, McDonald said, “I am really pleased that the Board approved US$98 million for Pacific proposals at this meeting. This is the largest climate finance meeting to ever be held in the region and it comes on the cusp of 2017, the year Fiji will host the UNFCCC Conference of the Parties.”

The 2017 UN Climate Change Conference, COP23, will take place from November 6 to 17 at the World Conference Centre in Bonn, Germany, the seat of the Climate Change Secretariat. COP23 will be convened under the Presidency of Fiji.

The approved projects are funded in cooperation with accredited partners of the Green Climate Fund, which can be multi-lateral banks or UN agencies, such as the UN Development Programme (UNDP).

One of the projects approved by the GCF Board in Apia was US$57.7 million for integrated flood management to enhance climate resilience of the Vaisigano River Catchment in Samoa, with the UNDP.

The Vaisigano River flows through the Apia Urban Area, Samoa’s capital and largest city, the island nation’s primary urban economic area.

As a Small Island Developing State in the Pacific, Samoa has been heavily impacted by increasingly severe tropical storms blamed on the warming climate.

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Green Climate Fund Board Co-chairs Ewen McDonald of Australia and Zaheer Fakir of South Africa join in the applause for multi-million dollar decisions to support developing countries as they mitigate and adapt to the Earth’s changing climate. Apia, Samoa, December 15, 2016. (Screengrab from video courtesy Green Climate Fund) Posted for public use

The Integrated Flood Management project, proposed by the government, will enable Samoa to reduce the impact of recurrent storm-related flooding in the Vaisigano River Catchment.

Some 26,528 people in the catchment will benefit directly from upgraded infrastructure and drainage downstream, integrated planning and capacity strengthening, including planning for flooding caused by extreme weather events, and flood mitigation measures, such as riverworks and ecosystems solutions.

Another 37,000 people will benefit indirectly from the project, which is expected to run from 2017-2023.

Peseta Noumea Simi, who heads Samoa’s Ministry of Foreign Affairs and Trade, said the project is about improving the protection of people living near the river.

You might be aware that during the cyclone in 2012, the extensive damage caused was as a result of the Vaisigano River flooding,” she told the “Samoa Observer” newspaper.

And that extended from the mountain down to the ocean. So this is the basis of this program. You will also recognize that along the Vaisigano River route, we have extensive and very important infrastructure initiatives by the government including hydropower, the bridges, the roads as well as the water reservoirs up at Alaoa. So this is what gives importance to this program.

The Vaisigano River project is one of eight proposals approved by the Board at its December meeting. And it wasn’t the only good news for the host of the biggest climate-funding meeting ever held in the Pacific region.

Of three approvals related to the Pacific, Samoa is involved in two. The second is a US$22 million grant for a multi-country renewable energy program with the Asian Development Bank (ADB).

The Pacific Islands Renewable Energy Investment Program will assist Cook Islands, Tonga, Republic of Marshall Islands, Federated States of Micronesia, Papua New Guinea, Nauru, and Samoa to move away from burning polluting diesel fuel to generate electricity and towards solar, hydropower, and wind energy.

The program offers an excellent opportunity for Pacific islands countries to share experiences and learn from the innovation ongoing in the region,” said Anthony Maxwell, ADB principal energy specialist. “It will help finance transformation of the power grids in the region.

The GCF board approved an initial US$12 million grant for Cook Islands to install energy storage systems and support private sector investment in renewable energy. This investment will see renewable energy generation on the main island of Rarotonga increase from 15 percent to more than 50 percent of overall supply.

The GCF funding will allow Cook Islands to ramp up renewable energy integration onto the grid, and lower the cost of power generation,” said Elizabeth Wright-Koteka, chief of staff, Office of the Prime Minister, Cook Islands. “This will have significant benefits to our economy and help achieve the government’s objectives of a low carbon sustainable economy,

The GCF Board also approved a US$5 million capacity building and sector reform grant to develop energy plans, build skills, implement tariff and regulatory reforms, and foster greater private sector participation in the energy sector.

To see all projects approved at the GCF Board’s December 2016 meeting, click here.


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Positive Impact Finance Stands on Principles

BankofAfricaMadagascar

A crowd waits for a Bank of Africa branch to open in Madagascar, Oct 1, 2014 (Photo by Bruce Thomson) Creative Commons license via Flickr

By Sunny Lewis

PARIS, France, February 21, 2017 (Maximpact.com News) – Nineteen global banks and investors, worth a total of US$6.6 trillion in assets, have agreed on a set of standards for financing sustainable development framed as the first-ever Principles for Positive Impact Finance.

On the last Monday in January, the set of four unpublished Positive Impact Principles was launched to provide a global framework for financiers and investors to analyze, monitor and disclose the social, environmental and economic impacts of the financial products and services they deliver.

The Principles for Positive Impact Finance are a direct response to the challenge of financing the UN’s Sustainable Development Goals . Adopted by the world’s governments in 2015 to end poverty, protect the planet, and ensure prosperity for all, each of the 17 SDGs has specific targets to be achieved over the next 15 years.

The principles are intended to provide a global framework for impact financing that applies across different business lines, including retail and wholesale lending, corporate and investment lending, and asset management.

Principle One: Definition

This principle is simple, “It’s a good idea to make a donation.

Eric Usher, director of the United Nations Environment Program (UNEP-FI) looks at what it will cost to make the SDGs a reality. “Achieving the Sustainable Development Goals – the Global Program of Action to End the Poverty, fight climate change and protect the environment – should cost between $5 and $7 billion a year by 2030,” he said.

The Principles for Positive Impact Finance will change the situation,” said Usher. “They will allow us to direct hundreds of billions of dollars managed by banks and investors towards clean low-carbon emissions, benefiting everyone.

The scope here is broad; this first principle covers loans of all kinds – corporate, retail, municipal, sovereign, inter-bank, project-related; bonds; equity; notes and credit-linked notes.

In all these cases the positive impact of the financial activity should be defined.

Principle Two: Frameworks

Entities, whether financial or non-financial, need adequate processes, methodologies, and tools to identify and monitor the positive impact of the activities, projects, programs, and/or entities to be financed or invested in. They should implement specific processes, criteria and methodologies to identify positive impact.

The Principles do not prescribe which methodologies and key performance indicators to use to identify, analyze and verify positive impact, instead they require that there be transparency and disclosure.

Principle Three: Transparency

Entities, financial or non-financial providing Positive Impact Finance should provide transparency and disclosure on the activities, projects, programs, and/or entities financed.

The intended use of funds released via financial instruments and their positive contribution should be clearly marked on the corresponding documentation.

Methodologies, key performance indicators and achieved impacts should be identified and disclosed.

Principle Four: Assessment

The assessment of positive impact should be based on the actual impacts achieved, this principle states. The assessment can be internally processed, or undertaken by qualified third parties such as audit research institutes and rating agencies.

The principles require a holistic appraisal of positive and negative impacts on economic development, human well-being and the environment, this is what makes them innovative.

These principles are timely from the financial sector. They demonstrate the willingness of the financial resources to go beyond current practices and contribute to more sustainable development,” affirmed the French Minister of Economy and Finance Michel Sapin. “These principles should strengthen the cooperation between public and private actors in this field.

The principles were developed by the Positive Impact Working Group, a group of UN Environment Finance Initiative banking and investment members, as part of the implementation of the roadmap outlined in the Positive Impact Manifesto released in October 2015.

The Manifesto calls for a new, impact-based financing paradigm to bridge the gap in financing for sustainable development.

As of January 1, 2017, the Positive Impact initiative is made up of the following members of the United Nations Environment Programme’s Finance Initiative: Australian Ethical, Banco Itaú, BNP Paribas, BMCE Bank of Africa, Caisse des Dépôts Group, Desjardins Group, First Rand, Hermes Investment Management, ING, Mirova, NedBank, Pax World, Piraeus Bank, SEB, Société Générale, Standard Bank, Triodos Bank, Westpac and YES Bank.

Séverin Cabannes, deputy CEO of Société Générale, a founding member of the group, says there is urgency pushing this initiative along – the urgency of confronting what’s happening to the planet.

With global challenges such as climate change, population growth and resource scarcity accelerating, there is an increased urgency for the finance sector both to adapt and to help bring about the necessary changes in our economic and business models,” said Cabannes.

The Principles for Positive Impact Finance provide an ambitious yet practical framework by which we can take the broader angle view we need to meet the deeply complex and interconnected challenges of our time,” he said.

Gérard Mestrallet, chairman of Paris EUROPLACE and chairman of the Board of the French multinational electric utility company ENGIE, views the principles as another tool in his problem-solving toolbox.

They are “the tool that is needed to enable the business and finance community to work and innovate together, and to address the challenge of the UN Sustainable Development Goals,” he said.

The financial sector has already moved forward in that direction,” said Mestrallet, “and we hope that the principles as well as the Paris Green and Sustainable Finance Initiative we launched last year will help marking a new stage.”

The UNEP-FI is a partnership between UN Environment and the global financial sector created after the 1992 Earth Summit in Rio de Janeiro with a mission to promote sustainable finance.

Over 200 financial institutions, including banks, insurers and fund managers, work with UN Environment to understand today’s environmental challenges, why they matter to finance, and how to actively participate in addressing them.

The need to align capital markets to a two degree world is urgent and necessary,” said Fiona Reynolds, managing director of the Principles for Responsible Investment. “The UN Environment Finance Initiative Principles for Positive Impact Finance are an important tool for investors to frame their positive contribution to the environment, the society and the economy.”


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Fintech Goes Green

By Sunny Lewis

NAIROBI, Kenya, February 7, 2017 (Maximpact.com News) – A UN-backed app is transforming green finance. At the World Economic Forum in Davos in January, the UN Environment Programme and Ant Financial Services Group, the Chinese online and mobile financial services provider, unveiled the Green Digital Finance Alliance, a joint initiative to stimulate the advancement of digital technologies in green finance.

Erik Solheim, executive director of the Nairobi-based UN Environment agency, formerly UNEP, says the new endeavor will rely on “fintech,” the evolving intersection of financial services and technology.

The Green Digital Finance Alliance is a unique partnership,” said Solheim, “ensuring that we can align tomorrow’s fintech-powered global financial system with sustainable development.

AllianceFounders

At the Green Digital Finance Alliance launch in Davos, Switzerland, from left: Erik Solheim, Under-Secretary General and Head, UN Environment, Doris Leuthard, President, Swiss Confederation, Eric Jing, CEO, Ant Financial Services Group, January 19, 2017 (Photo courtesy Green Digital Finance Alliance) posted for media use

Through market innovation, collaborative action and public awareness, the initiative aims to drive environmental risks, opportunities, incentives and choices into decision-making across the financing value chain.

Ant Financial Services is the first Chinese company to drive a global public-private partnership. Currently, there are 72 million users participating in Ant Financial’s app, called Alipay.

Alipay is a digital financial platform that provides users with a carbon account in addition to their credit and saving accounts.

Ant’s 450 million users can benchmark their carbon footprint and earn “green energy” credits for reducing their footprint, for example, by taking public transit instead of driving.

In addition, Ant Financial has integrated this function into a social media experience, as well as committing to a complementary, tree-planting carbon offset program.

The app is proving to be wildly popular. The number of people that signed up on the day preceding the Green Digital Finance Alliance was nearly the equivalent of the entire population of Switzerland.

Every day tens of millions of users go to their Ant Forest to grow their virtual trees while reducing carbon emissions.

UN General Assembly President Peter Thomson of Fiji told a Davos audience at the launch that his office is organizing a series of events aimed at bringing international discussion of sustainable finance into the United Nations.

Given the trillions of dollars that will be needed to finance the Sustainable Development Goals, initiatives like this are essential to ensuring technological developments contribute to the greening of the global financial system, and to achieving a sustainable future for humanity,” said Thomson.

Innovative partnerships like this, which align UNEP’s cutting-edge research with Ant Financial’s expertise in providing inclusive financial services, are central to global efforts to scale up implementation of the 17 Sustainable Development Goals,” Thomson said.

Thankfully,” he said, “the transformation towards a sustainable financial system is already underway, with many governments, regulators, central banks, institutional investors and private companies starting to align their operations with the principles of sustainability.

Such efforts need to be scaled up. Digital technologies have the potential to accelerate this transformation – particularly for low-income countries, and small and medium enterprises,” he said.

To this end, in April I will be convening an SDG Financing Lab in New York which will examine existing financing mechanisms for the Sustainable Development Goals, and how they can be best applied to each goal.

We are already seeing fintech disrupt traditional practices in the banking, insurance and microcredit sectors, open new markets in energy, agriculture and health, and contribute to enhancing transparency and accountability,” Thomson said.

Ant Financial CEO Eric Jing said, “Ant Financial is a strong believer in green finance. Several of our products and services have been contributing to sustainable development.

Leveraging mobile Internet, cloud computing and big data, we can encourage our hundreds of millions of users to participate in a green lifestyle. We hope that the Green Digital Finance Alliance will contribute to shaping and accelerating this development.

Getting finance at the right price to the right people at the right time will be critical in both securing clean energy access for all and meeting the climate change challenge,” said Rachel Kyte, a former World Bank executive, who is now CEO of the UN Decade for Sustainable Energy for All, Sustainable Energy for All (SE4ALL).

Digital finance can be a powerful tool for unlocking barriers to investment and empowering people to meet the challenge and seize the opportunity of clean, affordable future,” said Kyte. “This Alliance will I hope help to catalyze finance so that we transform lives, create jobs, clean air, provide energy, and restore landscapes at the speed and scale needed.

Swiss President Doris Leuthard said, “This is just the beginning!

The Green Digital Finance Alliance is tentatively scheduled to release its first round of global digital green finance practice reviews at the International Monetary Fund annual meeting in October 2017.

The Ant Forest Program will combine the early tests of UNEP’s carbon emissions measurement and the innovation of carbon abatement incentives and present the results to global alliance members to start interaction.

Ant has been able to encourage hundreds of millions of users to participate in a greener and greener lifestyle using technology such as mobile Internet, cloud computing and big data.

The Ant Financial Services Group, the parent company of the global mobile payment platform Alipay, directs its efforts towards serving small and micro enterprises, as well as consumers.

With the vision of bringing “small and beautiful changes to the world,Jing says Ant Financial is dedicated to “building an open ecosystem of Internet thinking and technologies” while working with other financial institutions to support the future financial needs of society.

Businesses now operated by Ant Financial Services Group include Alipay, Ant Fortune, Zhima Credit and MYbank – and this year, Ant is expanding its network with the acquisition of the the publicly-traded Texas-based company MoneyGram, a global provider of innovative money transfer services.

Valued at approximately US$880 million, the transaction announced January 26 will connect MoneyGram’s money transfer network of 2.4 billion bank and mobile accounts and 350,000 physical locations with Ant Financial’s users.

Moneygram will leverage Ant Financial’s global presence and existing network to serve more than 630 million users, including 450 million with Alipay and 180 million with India’s leading mobile payment provider Paytm.

The transaction will help expand Ant Financial’s business in new global markets following its recent partnerships with Paytm in India and Ascend Money in Thailand.

The acquisition of MoneyGram is a significant milestone in our mission to bring inclusive financial services to users around the world,” said Jing. “We believe financial services should be simple, low-cost and accessible to the many, not the few.

The combination of Ant Financial and MoneyGram will provide greater access, security and simplicity for people around the world to remit funds,” said Jing, “especially in major economies such as the United States, China, India, Mexico and the Philippines.

The Green Digital Finance Alliance will be part of all this growth. The Alliance is in the process of establishing a Steering Committee to be co-chaired, at first, by its founders, and will have a secretariat to support its work. In the first instance, UN Environment, based in Nairobi, will act as the secretariat for the Alliance.

Dr. Patrick Njoroge, Governor, Central Bank of Kenya is looking forward to the challenge. “Innovations in financial technologies (fintech) offer the greatest hope for aligning the world’s financial systems with the urgent twin objectives of sustainable development and deepening financial inclusion,” he said. “Further progress requires the close cooperation of all-innovators, regulators, financial institutions.


Featured image: A happy user of the Ant app Alipay (Photo courtesy UNEP) posted for media use

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Hopscotching Through Davos 2017

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Snow on the peaks above Davos, Switzerland where just two weeks ago there was little snow. (Photo by Valeriano Di Domenico courtesy World Economic Forum) Posted for media use on Flickr

By Sunny Lewis

DAVOS, Switzerland, January 17, 2017 (Maximpact.com News) – World Economic Forum Founder and Executive Chairman Klaus Schwab welcomed participants to the 47th Annual Meeting today with the thought that despite the “disruptive economic and political models,” now underway, the meeting is a way to construct a positive vision for the future.

Sometimes it seems that the world is overwhelmed by pessimism and cynicism,” said Schwab. “But we have to look in a confident way into the future.

Co-chair Meg Whitman, CEO of Hewlett Packard Enterprise, called for optimism “amid a daunting wave of technological change,” offering hope that technology can help resolve the toughest problems.

Convening under the theme Responsive and Responsible Leadership, more than 3,000 participants from nearly 100 countries are taking part in over 400 sessions.

The meeting is focusing on critical leadership challenges for 2017 – strengthening global collaboration, revitalizing economic growth, reforming capitalism, preparing for the Fourth Industrial Revolution and restoring a sense of shared identity.

Responsive means that we listen to and interact with those who have entrusted us with leadership,” Schwab said, emphasizing  values and ethics. “It is always important to prioritize the public social good over our own interests. We must emphasize humanization over robotization.

Networked sensors, machine to machine communications, and data analytics are just a few of the trends driving a global transformation of today’s cities into the smart cities of the future, Johnson Controls chairman and CEO Alex Molinaroli informed the participants today in Davos.

Around the world, governments are investing in innovative technologies and private-sector solutions to make their cities safer, smarter and more sustainable, he blogged at the annual event.

Yet, Molinaroli calls networked sensors a “foundational component of smart cities,” explaining that the technology exists today to “mimic all five of the human senses plus many additional ones” and use that data in computerized monitoring and management systems.

Whether “seeing” security incidents through video surveillance, “hearing” gun shots through audio processing or “smelling” polluted air through chemical and particulate detectors, networked arrays of sensors provide the basis for more accurate analysis and decision-making,” Molinaroli explained.

He points to one growing concern for highly interconnected systems, such as the electric power grid – the risk of cybersecurity breaches.

While individuals have always been at financial and privacy risk from their use of the Internet, interconnected devices and systems communicating and operating autonomously over networks raise significant safety and security concerns,” said Molinaroli. “The cybersecurity of critical infrastructure and the IoT [Internet of Things] is currently being addressed by a number of government bodies and business alliances.

Improving efficiency and resilience are two of the most important drivers of smart city investment, he said.

In 2016, Johnson Controls completed its 10th Energy Efficiency Indicator survey of more than 1,200 organizations with commercial, institutional and industrial facilities in Brazil, China, Germany, India and the United States. Of those polled, 72 percent said they were planning to increase energy efficiency and renewable energy investments in 2017.

From cities to forests, this year’s World Economic Forum covers a lot of ground.

Florian Reber, manager, Tropical Forest Alliance 2020, a global public-private partnership to reduce the deforestation associated with harvesting palm oil, soy, beef, and paper and pulp, told the Forum that, “Globally, the link between climate change, forests, land use and economic development is one of the most urgent challenges to solve if we are to avoid costly and irreversible impacts of climate change.

Climate change has already come to Davos, Reber points out. Switzerland is experiencing record low snow levels after the driest December since recordkeeping began in 1864.

The now snowy streets and frosty temperatures in Davos certainly meet the weather expectations of those participants who have travelled to the Forum’s Annual Meeting,” Reber said. “Yet, had they come to the highest town of the Alps just two weeks earlier, they would have experienced a very different backdrop: no snow at all up until high altitudes with only thin slopes made with artificially produced snow.

In a normal year, the natural seasonal hazard would be avalanches,” he said. “This year, not far away from Davos in the southern parts of Graubünden, some of the biggest forest fires in the recent history of Switzerland happened between Christmas and early January. The now missing forest will increase the exposure of villages to future avalanche and rock-fall risk.”

President Xi Jinping spoke at the opening plenary this morning, offering Chinese remedies for the world’s economic ailments. It is the first time a top Chinese leader has attended the event.

The Chinese economy is experiencing “unprecedented and profound changes,” Xi said. He spoke of “innovative, coordinated, green, open and shared” development that offers solutions for China’s current economic problems and indicates a direction for its long-term development.

Xi said that efforts to promote deeper overall reforms, the simplifying of administrative procedures and the delegating of central government power to lower levels of government, along with innovation-driven development, the rule of law, and the fight against corruption, will carry the world’s most populous country into the future.

Big business rules, according to the McKinsey Global Institute.

Fewer than 10 percent of the world’s public companies account for 80 percent of all profits. Firms with more than US$1 billion in annual revenue account for nearly 60 percent of total global revenues and 65 percent of market capitalization. “The quest for size is producing a global bull market in mergers and acquisitions,” the McKinsey data shows.

One session coming up later today aims to explore what operating at this gigantic scale means for competition, collaboration and innovation.

Sir Martin Sorrell, who heads Great Britain’s WPP plc, the world’s largest advertising company by revenues, tweeted today, “Brexit and [U.S. President-elect Donald] Trump’s victory have generated a populist trend where big business is in the front line.

But Sorrell also gave an encouraging nod to small business, saying, “Leveraging the benefits of scale and size are crucial, but small businesses create jobs.

Ruth Porat, CFO of Google parent company Alphabet, believes that progress results when people take risks and push the frontiers. “Success is just as much about what you do, as what you stop doing,” she declared. “Competition is fierce, and you need to remain focused on that.

Brian Moynihan, CEO of the Bank of America, says inclusiveness and sustainability are important as the global economy grows.

We have to grow, no excuse, but you have to do it the right way,” Moynihan said. “The growth that has to take place has to focus on all participants, it has to include everybody, it has to deal with the ups and downs of market-based forces.”

Growth has to avoid excessive risk and be environmentally sustainable, he said, as well as being “sustainable in building safety nets around the world to make sure all citizens are dealt with fairly.

The World Economic Forum continues through January 20 at Davos.


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Stock Exchanges Adopt Sustainability Reporting

newyorkstockexchange

Trading floor at the New York Stock Exchange, May 15, 2014 (Photo by Scott Beale / Laughing Squid ) Creative Commons license via Flickr

By Sunny Lewis

GENEVA, Switzerland, December 13, 2016 (Maximpact.com News) – As many as 21 more of the world’s stock exchanges could introduce sustainability reporting standards before the end of the year, bringing the total number to 38, says an official with the United Nations Conference on Trade and Development .

Seventeen stock exchanges already recommend that their listed companies report on environmental, social, and governance, known as ESG, issues.

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James Zhan, director of investment and enterprise, UNCTAD (Photo courtesy UNCTAD) Posted for media use.

And James Zhan, director of the Division on Investment and Enterprise at UNCTAD, which co-organizes the UN’s Sustainable Stock Exchanges (SSE) initiative, said that 23 stock exchanges have committed to introduce new standards on sustainability reporting in 2016.

Just two have implemented so far, but more are expected to introduce new standards before the end of the year or early in 2017, he said.

The upsurge in sustainability reporting standards follows the launch of the SSE Model Guidance on Reporting ESG Information to Investors.

Twenty-one stock exchanges have confirmed to us they will introduce new guidelines either this year or within the first quarter of next year, and we know that many of them are close because they have posted draft guidelines on their websites for comment and discussion,” Zhan said.

Sustainability reporting has come of age,” he said, adding that the UN and nongovernmental organizations are no longer the only ones to advocate sustainability reporting and that “the markets themselves are demanding it.

In a newly published biennial report “2016 Report on Progress” on the progress made by Sustainable Stock Exchanges, SSE, the authors examined the environmental, social, and governance practices of 82 stock exchanges and found that exchanges are increasingly taking actions that contribute to the creation of more sustainable capital markets.

The report was prepared for the fifth SSE Global Dialogue held in September in Singapore. Representatives from 16 countries, including stock exchange chief executives, institutional investors and companies, senior government policymakers and United Nations representatives gathered to discuss the theme, “A New Global Agenda.

One development in the new agenda is the number of exchanges now partnering with the SSE initiative. Fifty-eight stock exchanges, representing over 70 percent of listed equity markets, have made public commitments to advancing sustainability in their markets and are now official SSE Partner Exchanges.

Market transparency is gaining in acceptability too. Twelve exchanges currently incorporate ESG reporting into their listing rules and 15 provide formal guidance to stock issuers.

The progress of SSE’s campaign to encourage exchanges to issue guidance signals that the industry is ready to take the lead when presented with practical opportunities to develop more sustainable markets.

Another significant development is the growth of green finance. Green bond listings grew considerably and there is increasing interest among equity investors in issues like stranded assets and carbon risk.

The Luxembourg Stock Exchange now lists 110 green bonds and represents half of all listed green bonds globally.

Today 11 stock exchanges offer green bond listings, demonstrating that exchanges are already supporting the transition to a green economy and there is room for further growth.

ESG indices remain the most popular sustainability instrument among exchanges, with 38 of 82 exchanges providing them.

Upon joining the ESG guidance campaign in September 2015, Oscar Onyema, CEO of the Nigerian Stock Exchange, said, “The Nigerian Stock Exchange is using its unique platform to advocate for the adoption of global corporate governance standards and sustainable business practices. We are committed to developing principle-based sustainability reporting guidelines and a roadmap that will inspire sustainability imperatives in the Nigerian capital market.

Looking at the policy landscape, many governments, too, are encouraging corporate disclosure of ESG factors, with 30 of the largest 50 country economies having at least one regulation on disclosure of ESG factors in place.

Government involvement on the investment side is less developed, with eight of the 50 countries implementing an investor stewardship code that addresses ESG factors.

Despite many reasons to be optimistic, the SSE’s data show that more action is needed if stock exchanges are going to play an important role in promoting the reorientation of financial markets to support the Sustainable Development Goals.

By reporting on sustainability issues, companies tend to act more sustainably too, Zhan said. They may have an incentive to do so, since analysts increasingly see a positive correlation between sustainable performance and strong financial performance too.

Zhan said the SSE initiative had helped spread corporate sustainability reporting, by distributing model guidelines for use by the stock exchanges themselves and their listed members.

The SSE initiative works to “advance sustainability” in the markets. It is organized by UNCTAD, the United Nations Global Compact, the United Nations Environment Programme Finance Initiative (UNEP-FI) and the Principles for Responsible Investment.

The private sector is seen as critical to achievement of the UN’s Sustainable Development Goals , and the SSE initiative is viewed as an important channel to get the private sector more involved in accomplishing these goals.

Launched by UN Secretary-General Ban Ki-moon in 2009, the SSE initiative now includes 58 stock exchanges, representing more than 70 percent of listed equity markets, and some 30,000 companies with a market capitalization of over US$55 trillion.

The SSE initiative was built on the demand from exchanges for a place to come together with investors, companies and policymakers to share good practices and challenges in a multi-stakeholder environment.

Since 2012 when the first five stock exchanges – BM&FBOVESPA in São Paulo, Brazil; Borsa Istanbul; Egyptian Exchange (EGX); Johannesburg Stock Exchange (JSE); and Nasdaq – made a public commitment to advancing sustainability in their market, the initiative has grown into a global partnership platform including most of the world’s exchanges.

Through the SSE, exchanges have access to consensus and capacity building activities, guidance, research and other support to assist in their efforts to contribute to sustainable development.

Market expectations are shifting quickly and we see more and more stock exchanges viewing sustainability reporting as necessary and inevitable,” said Anthony Miller, UNCTAD’s SSE initiative coordinator. “Those expectations create their own momentum.”

The report concludes with recommendations for exchanges that range from introducing ESG reporting guidance to promoting gender-diverse boards to listing green bonds.

By putting the recommendations into action, exchanges can take leadership roles in creating more stable capital markets and a sustainable society.


Featured image: Nasdaq displays the SSE logo in Times Square, New York City, March 2016 (Photo courtesy UNCTAD) Posted for media use

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US$100 Billion to Finance Climate Triage

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Clever Kanga works for the Foundation for Irrigation and Sustainable Development in the central African country of Malawi, working to install solar powered irrigation projects, April 2016. (Photo by Trocaire) Creative Commons license via Flickr.

By Sunny Lewis

WASHINGTON, DC, November 3, 2016 (Maximpact.com) – Finance is always a hot button issue at the UN’s annual climate negotiations, and this year’s 22nd Conference of the Parties to the UN Framework Convention on Climate Change, COP22, will focus even more intently on financing – this time to support the first global greenhouse gas limitation pact, the Paris Agreement on Climate Change.

At COP22 in Marrakech, Morocco, taking place November 7-18, nations are expected to continue strengthening the global response to the threat of climate change, with the central focus placed on enhancing ambition, promoting implementation and providing support, especially financial support.

The process is energized by the unexpectedly rapid entry into force of the Paris Agreement on November 4, just before the opening of COP22.

The Paris Agreement was adopted at the UN climate conference in December 2015. To enter into force, at least 55 Parties accounting for at least 55 percent of global greenhouse gas emissions were required to join the pact, which enters into force 30 days later.

On October 5, those thresholds were reached. Countries joining the Agreement include the biggest and smallest greenhouse gas emitters, as well as the richest and the most vulnerable nations.

The Paris Agreement is clear that all finance flows – both public and private – must become consistent with a low-emission and climate-resilient development path.

Several new studies make clear that meeting the agreement’s central goal of holding temperature rise to well below 2 degrees C (3.6 degrees F), and aiming for 1.5 degrees C (2.7 degrees F), requires quickly shifting investments from fossil fuels and other high-emissions activities towards clean energy, green infrastructure and climate resilience.

In the United States, 2016 is the first year that investment in renewable energy sources has outpaced investment in fossil fuels, said John Morton, director for energy and climate change for the National Security Council, speaking to reporters today on a conference call.

At COP 22 in Marrakech, work to develop the rules that deliver on this goal continues.

Here are five key climate finance issues to watch as outlined by the World Resources Institute, a global research organization that spans more than 50 countries, with offices in Brazil, China, Europe, India, Indonesia, Mexico, and the United States, where it is headquartered in Washington, DC.

1. Pathway to US$100 Billion

In Paris last December, developed countries were asked for a concrete roadmap for mobilizing US$100 billion in climate finance for developing countries by 2020. This roadmap – which can help build trust that developing countries will be supported in taking urgent climate action – is now being finalized, with the aim of presenting it at a “pre-COP” gathering of ministers next week.

In Copenhagen in 2009 and in Cancún in 2010, developed countries committed to jointly raising $100 billion annually from 2020 to 2025 to help developing countries cope with climate change by building low carbon and climate resilient economies. This pledge was re-affirmed in the Paris at COP21.

This sum may come from bilateral or multilateral, public or private sources, including innovative financing, for example, the French contribution to the financial transaction tax.

Public financing may take several forms: multilateral funds such as the Green Climate Fund; multilateral or regional institutions such as the World Bank; government contributions; and bilateral institutions such as the Agence Française de Développement, the French Development Agency.

The $100 billion in funding should not be confused with the Green Climate Fund; only part of this sum will pass through the Fund.

On October 17, developed countries released a Roadmap for how they will mobilize climate finance between now and 2020.

The Roadmap “aims to provide increased predictability and transparency about how the goal will be reached, and sets out the range of actions developed countries will take to meet it.

An analysis of the Roadmap by the Organization for Economic Cooperation and Development (OECD) finds that by 2020, developed countries are expected to have mobilized between $90 billion and 92 billion of climate finance, depending on how effective public finance is in mobilizing private finance.

By comparison, the overall total for mobilized public and private finance in 2014 was $62 billion.

The OECD analysis predicts that the $100 billion goal will be reachable for 2020, due to increased leverage ratios for private finance.

2. What Counts?

Determining progress towards the $100 billion goal is tricky, say WRI analysts, since countries have never agreed on what counts as climate finance.

After considering this issue at climate negotiations earlier this year, countries agreed to hold a workshop in Marrakech to advance progress on the Paris commitment to develop modes for accounting of climate finance.

Consistency in finance reporting will help all countries to accurately track progress on commitments and ensure improved quantity and quality of climate finance flows.

3. Rules for Reporting Finance

Countries will be developing formats for how finance will be reported, based on these reporting mandates:

  • Developed countries must report projected levels of finance they will provide to developing countries and finance they already have provided to developing countries. Other countries providing finance are encouraged to report voluntarily.
  • Developing countries should report on finance needed and received.

These requirements build on earlier rules, but have the potential to be more comprehensive and systematic. Countries need to ensure the reports provide useful information for the global stocktaking process under the Paris Agreement that will assess progress every five years.

4. Scaling Up Adaptation Finance

The Paris Agreement called for a balance between support for adaptation and mitigation, but there remains some way to go.

Adaptation refers to making changes in the way humans respond to changes in climate.

Mitigation refers to controlling emissions of greenhouse gases so that the total accumulation is limited.

Developed countries’ most recent reporting to the UN shows that 14 percent of bilateral funding went to adaptation in 2014. An additional 17 percent went to both adaptation and mitigation.

In Paris, countries called for increasing adaptation finance. A clear commitment for how adaptation funding will be increased up to 2020 would bolster confidence that the most vulnerable countries’ most urgent needs will be supported.

Proposed options include a 50:50 allocation between mitigation and adaptation, a doubling of the current share of adaptation finance and a doubling of the amount of adaptation finance from current levels.

5. Adaptation Fund, Renewed?

One mechanism for channeling adaptation finance to developing countries is the Adaptation Fund, which was created at the 2001 COP in Marrakech, to serve the Kyoto Protocol. With the Kyoto Protocol’s commitment period ending in 2020, the Fund’s future is uncertain.

Countries are considering whether and how the Adaptation Fund can support the Paris Agreement.

The Adaptation Fund has a good niche in supporting relatively small-scale adaptation projects and prioritizing direct access to funding. It can provide money directly to national institutions in developing countries, without going through international intermediaries.

Creating a mandate for the Adaptation Fund to serve the Paris Agreement in Marrakech would give it a new lease on life to continue supporting vital adaptation efforts around the world.

What is Being Done Today?

Financial institutions have already been busy finding and allocating funding to climate projects.

The two operating entities of the UNFCCC Financial Mechanism, the Green Climate Fund (GCF) and the Global Environment Facility (GEF) approved more than two dozen projects in recent meetings.

Water provision in Ali Addeh camp in Djibouti. A combination of high food prices, water scarcity, climate change and reduced pasture has increased food insecurity. This year’s El Niño has led to even dryer weather. Humanitarian funding from the European Commission provides refugees with access to clean water and sanitation as well as shelter, protection, nutrition and health care. May 2016 (Photo by European Commission DG ECHO) Creative Commons license via Flickr.

The GCF Board approved funding proposals for 10 projects, totaling US$745 million, and the GEF Council approved its Work Program, comprising 16 project concepts and three programmatic frameworks, with total resources amounting to US$302 million.

In addition, the Adaptation Fund Board approved two new projects totaling US$7 million,

World Bank Head Calls for Slowing Down Coal Finance

Speaking at the World Bank-International Monetary Fund Annual Meetings 2016 Climate Ministerial meeting in October, World Bank Group President Jim Yong Kim called on ministers to accelerate the transition to low carbon power sources, noting that the Paris Agreement goals cannot be met if current plans for coal-fired stations are implemented.

Kim called for concessional finance that is well targeted and “follows the carbon,” is leveraged and blended to crowd in the private sector, and is available quickly, at scale and easily deployed.


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Africa Investment Forum Debuts at GITEX

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Akinwumi Adesina, center with trademark bow tie, with the African Development Bank Board of Directors at his investiture ceremony, Abidjan, Cote d’Ivoire, Sept. 1, 2015 (Photo courtesy Office of the AfDB President)

By Sunny Lewis

ABIDJAN, Côte d’Ivoire, October 25, 2016 (Maximpact.com News) – The African Development Bank has launched the Africa Investment Forum as a meeting place for social impact investors who wish to transact business and deploy funds in Africa. The Forum will showcase bankable projects, attract financing, and provide platforms for investing across multiple countries.

Approved by the Board of Directors of the regional multilateral development financial institution on October 7, the Africa Investment Forum’s initial outing just 10 days later was a juicy one – a featured spot at GITEX Technology Week in Dubai.

GITEX, the Gulf Information Technology Exhibition, is a fast-growing annual consumer computer and electronics trade show, exhibition, and conference held in Dubai, United Arab Emirates.

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African attendees at GITEX Technology Week 2016, Dubai, UAE (Photo courtesy Government of Nigeria)

 GITEX 2016 hosted 600 exhibiting companies from 60 countries at the largest technology exchange and marketplace for the Middle East and Africa.

On October 17, the National Information Technology Development Agency (NITDA) of Nigeria co-managed the Africa Investment Forum with the Dubai World Trade Centre as one of the conference highlights.

The Forum focused on technology investments and how African countries could increase the value ICT to help develop their economies, particularly in the fields of business startups, education, cybersecurity, retail, energy, healthcare, and finance.

Dr. Vincent Olatunji, acting director-general of Dubai’s National Information Technology Development Agency, said, “The ICT sector is no longer marginal in Nigeria and many African countries. Investment in ICT has in the last decade become profound in both social and economic terms.”

In the context of the ‘information economy,’ Africa has gained significantly as ICT virtually drives a huge portion of national economies,” Dr. Olatunji said.

 The Africa Investment Forum gathered major economic and technology influencers, business leaders and political decision makers to help put in achievable context what’s next for the continent’s ICT sector.

“In Nigeria,” said Olatunji, “this sector is already deemed the most viable non-oil sector and the Nigerian government is further energizing this sector to bring more benefits.”

The Board of the African Development Bank views the Forum as a broad avenue for connecting investors with both public and private sector projects throughout the continent.

President Akinwumi Adesina, Chairman of the AfDB Board said, “I commend the immense support and encouragement by Board members. The new structures are well thought out and will enable the Bank to achieve its transformation objectives.

 Adesina, formerly Nigeria’s minister of agriculture and rural development, said, “The African Investment Forum is a transformational instrument that will make it possible to crowd in investments to garner the huge financing required in critical areas, with the private sector playing a crucial role.

Senior Vice President Dr. Frannie Leautier said, “The AIF will coordinate with other Africa investment fora and work to strengthen collaborative efforts to crowd-in necessary investment, and attract social impact financing to Africa.

She said, “It will support AfDB regional member countries and potential investors through the provision of rigorous, authoritative and robust, business intelligence and analytical work on African’s competitiveness.

 At the same October 7 meeting, the Board created two new environmentally-related departments within the African Development Bank.

They established a Water, Human and Social Development Department as well as an Infrastructure, Cities, and Urban Development Department.

These are refinements to the institution’s new Development and Business Delivery Model, approved by the AfDB Board of Directors on Earth Day, April 22, 2016.

The Development and Business Delivery Model aims to streamline business processes to improve efficiency, enhance financial performance; increase development impact, and move the bank’s operations closer to its clients to improve delivery of services.

The new structure, which will be rolled out in phases over the 2016-2018 time period, is designed to ensure the successful implementation of the Bank’s Ten Year Strategy and its five scaled-up core development priorities for the continent, nicknamed the High 5s:

Light Up and Power Africa
Feed Africa
Industrialise Africa
Integrate Africa
Improve the Quality of life of the People of Africa

African development is no longer just about agriculture, although food production is still key to most African economies. The African Development Bank is moving forward on the industrial side with its most recent appointment. On October 24, Amadou Hott of Senegal was named vice-president, power, energy, climate and green growth.

Hott was the founder and chief executive officer of the Sovereign Wealth Fund of Senegal, where he spearheaded major infrastructure investments and integrated energy solutions for clients, including structured financing for power and utilities, oil and gas, metals and mining, as well as renewable energy projects.

The AfDB was founded following an agreement signed by member states on August 14, 1963, in Khartoum, Sudan, which became effective on September 10, 1964. The AfDB includes three entities: the African Development Bank, the African Development Fund and the Nigeria Trust Fund.


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Investors Assess Their Climate Risks

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Greenhouse gas emissions from the coal-fired cogeneration Hanasaari B power plant at sunset in Helsinki, Finland, March 9, 2013 (Photo by Fintrvlr) Creative Commons license via Flickr

By Sunny Lewis

OAKLAND, California, October 20, 2016 (Maximpact.com News) – Investors are being put on notice that some mutual funds and exchange traded funds labeled “sustainable,” “ecology,” “green” or “integrity” may actually have very high carbon footprints.

Now, a free software tool that empowers investors to track the carbon pollution that companies embedded in their funds are emitting has expanded its analysis to cover funds worth US$11 trillion.

FossilFreeFunds.org, a website created by the environmental advocacy nonprofit As You Sow, has added carbon footprinting of over $11 trillion in global mutual funds and ETFs to the site – the largest-ever analysis of this kind.

Fossil fuel investments carry real financial risks,” says FossilFreeFunds.org on its site. Their analysis covers more than 8,500 global mutual funds, including 3,000 of the most commonly-held funds in U.S. retirement plans, so that all investors can be aware of the climate risk in their retirement accounts, with financial data provided by Morningstar.

In August, Morningstar introduced a Sustainability Rating for Funds that offers an objective way to evaluate how investments are meeting environmental, social, and governance challenges, helping investors put their money where their values are.

Transparency leads to transformation,” said Andrew Behar, CEO of As You Sow. “Measuring a company’s carbon emissions is a critical way to understand the specific climate risk of your investments.

We have aggregated this data for all of the companies embedded in each of the 8,500 most-held global mutual funds and ETFs,” said Behar. “This tool enables every investor to answer the question, ‘Am I investing in my own destruction or the clean energy future?

The analysis uses data from global sustainability solutions provider South Pole Group, and yourSRI.com, a carbon data analyst and reporting solution provider for responsible investments.

Intially, the analysis will cover funds in Denmark, France, Germany, Hong Kong, the United Kingdom and the United States. The developers plan to expand to include every fund in every exchange around the world.

Institutional investors such as California’s CalPERS and Sweden’s AP4 have embraced carbon footprinting as a way to protect their assets from climate risk.

Major index providers are increasingly offering low-carbon options that incorporate a footprinting analysis.

Traditional fossil-free investment approaches avoid companies with reserves of coal, oil, and gas that represent potential future emissions.

Carbon footprinting turns the focus to current greenhouse gas emissions, helping reveal businesses that operate with higher and lower footprints than their industry peers.

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ConocoPhillips oil refinery, Rodeo, California, December 11, 2012 (Photo by ah zut) Creative Commons license via Flickr

As You Sow explains that, “Carbon footprinting a mutual fund means accounting for the quantification and management of greenhouse gases. It is the first step towards understanding an investor’s impact on climate change.

A carbon footprint is calculated by measuring and/or estimating the quantities and assessing the sources of various greenhouse gas emissions that can be directly or indirectly attributed to the activities of the underlying holdings.

 “Decarbonizing” a portfolio involves investing in companies that have lower carbon footprints than their peers.

The FossilFreeFunds.org platform allows investors to see real scores that are updated every month with Morningstar’s latest holdings data.

A few examples from the analysis:

  • Given that BlackRock recently published a major report on portfolio climate risk, it may be a surprise that the BlackRock Basic Value Fund’s (MABAX) has a carbon footprint 170 percent higher than its benchmark, the Russell 1000 Value Index.
  • Dimensional Social Core Equity (DSCLX) has 85 percent more carbon than the MSCI All World Index, with 13 percent of the portfolio made up of fossil fuel companies including Shell, BP, and tar sands giant Suncor.
  • The State Street SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX) holds 40 fossil fuel companies, including companies with reserves like Phillips66, Valero, and Marathon; coal fired utilities Duke Energy and Southern Company, and oil field services leader Halliburton.

Having funds with smaller footprints is one way to avoid climate risk,” said Andrew Montes, director of digital strategies at As You Sow. “It also actively rewards companies that have made positive decisions to lower the climate impact of their operations.

Investor demand will drive fund managers to drop companies with high carbon footprints and include those companies that are shifting to the clean energy economy,” explained Montes.

By providing a way to examine carbon demand and consider the value chain when measuring climate impact, the data can help investors large and small reconcile their investing with their values.


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Climate Change Takes Its Toll

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A wildfire devours the forest next to Highway 63, 24 kilometers south of Fort McMurray on Saturday, May 7. The “Beast”, as it was called by Wood Buffalo fire chief Darby Allen, caused the mass evacuation of nearly 90,000 people from the northern Alberta city. (Photo by Chris Schwarz / Government of Alberta) Public domain

By Sunny Lewis

MUNICH, Germany, September 21, 2016 (Maximpact.com News) – Monetary losses caused by natural disasters in the first half of 2016 were “significantly higher” than the corresponding figures for the previous year, although fewer people died in these events, according to a report by the German insurance and re-insurance firm Munich Re.

In total, losses to the end of June came to US$70bn (previous year US$59bn), of which US$27bn (US$19bn) were insured.

The main loss drivers were powerful earthquakes in Japan and Ecuador, storms in Europe and the United States, and forest fires in Canada.

A raging wildfire consumed the parched forest south of the oil sands city of Fort McMurray, Alberta on May 7. The 1,500 square kilometer inferno caused the evacuation of nearly 90,000 people.

The European storms are likely linked to climate change, explains Peter Höppe, who heads Munich Re’s Geo Risks Research Unit.

 “Scientific studies have shown that heavy rainfall has become more frequent in certain regions of Europe over the last few decades. For example, in the period 1951–2010 severe spring rainfall events that used to have a mathematical occurrence probability of once every 20 years have already increased by a factor of 1.7. Climate change is likely to have been partly responsible for this,” said Höppe.

Natural catastrophe figures for the first half of 2016:

Overall losses were above the inflation-adjusted average for the last 30 years (US$63bn), but below the average for the last 10 years (US$92bn).

Insured losses were in line with the inflation-adjusted average for the last 10 years and above the average for the last 30 years (US$15bn).

Just 3,800 people lost their lives to natural disasters in the first six months of 2016, fewer than during the same time period in 2015, (21,000) and the averages for the last 10 and 30 years (47,000 and 28,000).

The greatest number of fatalities was caused by an Mw 7.8 earthquake which hit the Pacific coast of Ecuador at almost the same time as the quakes hit Japan. Many buildings were destroyed and shopping mall roofs collapsed. Nearly 700 people were killed. As is so often the case in emerging countries, a relatively small share of the overall loss of US$2.5bn was insured: US$400m.

The highest losses were caused by two earthquakes on the Japanese island of Kyushu in April (US$25bn, just US$6bn was insured).

 Munich Re Board member Torsten Jeworrek said, “These events clearly show the importance of loss prevention, such as protection against flash floods or the construction of earthquake-resistant buildings in high-risk areas. The good news is that improved building codes and a more intelligent approach by emergency services and authorities offer people much better protection than used to be the case.

Catastrophe activity in the United States led to $3.8 billion in insured losses in 29 states during the 2016 first quarter, with much of the damage hitting Texas. Those events were the worst in a decade in terms of frequency and severity, according to a new industry report.

The first quarter is usually mild … since the major perils are hail and winter storm,” the Property Claims Services unit of Verisk Insurance Solutions explained in its first-quarter 2016 catastrophe review, which encompassed 13 catastrophe events.

But this year, said PCS, some of the first-quarter U.S. storms “packed a serious wallop.” One storm alone caused $1.1 billion in insured losses when it hit Texas in March.

The Global Federation of Insurance Associations (GFIA) , a Brussels-based industry group, warned as far back as 2013 that “loss trends and climate scientists indicate that, in the future, more and more insurance will be needed to help economies recover from a growing frequency of weather related losses: tornados, hailstorms, hurricanes/typhoons.

Natural disasters triggered by climate change are tragic and costly, but these are not the only losses people are experiencing due to the warming climate.

The rising price – in money and in health – of extreme weather events amid rapid urbanization, and the value of applying science and technology to reduce these risks, is explored in six research papers released at a United Nations forum in Malaysia on July 19.

Assembled by UN University’s Malaysia-based International Institute for Global Health (UNU-IIGH), the research is published in a special issue of the “Asia Pacific Journal of Public Health.”

The papers include a stern warning about productivity loss due to heat stress. The latest estimates show productivity in many jobs will fall by up to 40 percent by 2030 due to heat stress. The global economic cost of this reduced productivity may be more than US$2 trillion by 2030. 

 The jobs most susceptible include the lowest paid – heavy labor and low-skill agricultural and manufacturing.

In Southeast Asia alone as much as 15 to 20 percent of annual work hours may already be lost in low-paid, heat-exposed occupations, a figure that may double by 2030. 

Author Tord Kjellstrom of the Health and Environment International Trust, New Zealand, said, “Current climate conditions in tropical and subtropical parts of the world are already so hot during the hot seasons that occupational health effects occur and work capacity for many people is affected.

Dr. Kjellstrom’s paper cites estimated GDP losses due to heat stress for 43 countries: Australia, Bangladesh, Cambodia, China, Costa Rica, Denmark, Democratic Republic of Congo, Ethiopia, Fiji, France, Germany, Ghana, India, Indonesia, Japan, Laos, Malaysia, Maldives, Mexico, Myanmar, Netherlands, New Zealand, Nigeria, Norway, Pakistan, Philippines, Papua New Guinea, Qatar, Russia, Saint Lucia, Samoa, South Africa, South Korea, Spain, Sri Lanka, Sweden, Tanzania, Thailand, Tuvalu, United Kingdom, United States, Vanuatu and Vietnam.

The situation in Malaysia is typical of the Southeast Asian countries. As work slows or stops to avoid dangerous heat stress, the country’s Gross Domestic Product is projected to decline by an estimated 5.9 percent (value: US $95 billion) by 2030, more than double the estimated 2.8 percent GDP lost to heat stress in 2010.

 In 2030, in both India and China, the GDP losses could total $450 billion, although mitigation may be made possible by a major shift in working hours, among other measures employers will need to take to reduce losses.

This situation already is straining electricity infrastructure, Dr. Kiellstrom observes. The additional energy needed for a single city the size of Bangkok for each 1°C increase of average ambient temperature can be as much as 2000 MW, roughly the output of a major power plant.

It is very important to develop and apply adaptation measures now to protect people from the disasters that current climate and slowing changing climate brings,” said Kjellstrom. “However, adaptation is only half an answer; we must also take decisive action now to mitigate emissions of greenhouse gases.

Failure will cause the frequency and intensity of disasters to worsen dramatically beyond 2050, and the situation at the end of this century will be especially alarming for the world’s poorest people,” he warned.

Climate change will bring increasingly difficult situations, according to the papers:

  • Disastrously heavy rains can expand insect breeding sites, drive rodents from their burrows, and contaminate freshwater resources, leading to the spread of disease and compromising safe drinking water supplies.
  • Warmer temperatures often promote the spread of mosquito-borne parasitic and viral diseases by shifting the vectors’ geographic range and shortening the pathogen incubation period.
  • Climate change can worsen air quality by triggering fires and dust storms and promoting certain chemical reactions causing respiratory illness and other health problems.
  • In extreme disasters, harm is often amplified by the destruction of medical facilities and disruption of health services
  • Central and south China can anticipate the greatest number of casualties and highest economic losses from extreme weather events in the Asia Pacific region – the world’s most disaster-prone region – and a more integrated, multidisciplinary approach is needed to upgrade the nation’s emergency response system for natural disasters.
  • From 1980 to 2012, roughly 2.1 million people worldwide died as a direct result of nearly 21,000 natural catastrophes such as floods, mudslides, extreme heat, drought, high winds or fires. The cost of those disasters exceeded $4 trillion (US) – a loss comparable to the current annual GDP of Germany.
  • In Asia Pacific 1.2 billion people have been affected by 1,215 disasters since the millennium. Some 92 percent of human exposure to floods occurs in Asia Pacific, along with 91 percent of exposure to cyclones and two-thirds of all exposure to landslides. Between 1970 and 2011, two million people in the region – 75 percent of the world total – were killed by disasters.
  • From 1993 to 2012, the Philippines experienced the highest number of extreme weather events (311), Thailand experienced the greatest financial loss (US$5.4 billion) and Myanmar experienced the highest death rate (13.5 deaths per 100,000 people).
  • In just 40 years, from 1970 to 2010, the regional population exposed to flooding risk more than doubled from about 30 million to 64 million while those in cyclone-prone areas rose from roughly 72 to 121 million.
  • Cities cover two percent of world land cover, generate 60 to 80 percent of greenhouse gas emissions and half of all waste, and are expanding at a rate of one million people per week. In a single generation – from 2000 to 2030 – urban land extents are expected to have tripled.

The authors underline that fast-rising numbers of people are being exposed to the impacts of climate change, with much of the increase occurring in cities in flood-prone coastal areas or on hills susceptible to mudslides or landslides. Especially vulnerable are people living in poverty, including about one billion in slums.

Cities, concentrated sources of energy consumption, heat and pollution, covered in surfaces that absorb warmth, create local heat islands and impair air quality, both threats to health.

And rising demand for cooling contributes to warming the world. Air conditioners not only pump heat out directly, the electricity required is typically produced by burning fossil fuels, adding to atmospheric greenhouse gases. As well, people acclimatized to air conditioning become less heat tolerant, further increasing demand for cooling.

On the other hand, better urban planning presents “tremendous opportunity” to mitigate the health impacts of more extreme weather events, authors emphasize.

Urban planners, the authors say, can help by designing cities “in ways that enhance health, sustainability, and resilience all at once,” incorporating better building design, facilitating a shift to renewable energy, and fostering the protection and expansion of tree cover, wetlands and other carbon sinks, for example.

To mitigate the health impacts of longer, more severe extreme weather events, the authors stress the need to replace piecemeal reactive responses with integrated, multi-disciplinary planning approaches.

Beyond better preparation and warning systems to improve disaster response, recommended steps include enhancing drainage to reduce flood risks and strengthening health care, especially in poor areas.

The six papers, published by the “Asia Pacific Journal of Public Health,” are:

  • Climate Change, Extreme Weather Events, and Human Health Implications in the Asia Pacific Region, by Jamal Hisham Hashim and Zailina Hashim (http://bit.ly/29AXLlM)
  •  Urbanization, Extreme Events, and Health: The Case for Systems Approaches in Mitigation, Management, and Response, by José G. Siri, Barry Newell, Katrina Proust, and Anthony Capon (http://bit.ly/29N9IBA)
  • Impact of Climate Conditions on Occupational Health and Related Economic Losses: A New Feature of Global and Urban Health in the Context of Climate Change, by Tord Kjellstrom (http://bit.ly/29BL0Dn)
  • Impact of Climate Change on Air Quality and Public Health in Urban Areas, by Noor Artika Hassan, Zailina Hashim, and Jamal Hisham Hashim (http://bit.ly/29EX6y4)
  • Review of Climate Change and Water-Related Diseases in Cambodia and Findings From Stakeholder Knowledge Assessments, by Lachlan McIver, Vibol Chan, Kathyrn Bowen, Steven Iddings, Kol Hero and Piseth Raingsey (http://bit.ly/29EWWXw)
  • Emergency Response to and Preparedness for Extreme Weather Events and Environmental Changes in China, by Li Wang, Yongfeng Liao, Linsheng Yang, Hairong Li, Bixiong Ye, and Wuyi Wang (http://bit.ly/29UhBI7)

Featured Image: Rescue vehicles address Cypress Creek flooding near Houston, Texas, April 19, 2016 (Photo by muypronto) Creative Commons license via Flickr

Making Deals in Impact Investing

By Pallavi ShahInternational sustainable/impact investing consultant; photographer

Global Investing, May 20, 2016 (Maximpact.com News)  – Impact investing is gaining traction among both large and small investors and entrepreneurs. Angels, private equity firms, and banks are expanding beyond their traditional markets and exploring deals that could generate financial returns, while also having a positive environmental or social impact. Some previously niche industries – such as clean tech, natural food – are moving toward the mainstream. While both investors and entrepreneurs are embracing this trend, they are having a hard time connecting.

Why? In my experience, it is a limited understanding by both parties on the opportunities of impact investing, the risks, and the realities and nuances of each other’s worlds.

Many investors say they have trouble finding good quality deals; they’re too risky, difficult to scale, and are mired in confusing definitions of business models (for-profit vs. non-profit vs. hybrid) and impact investing itself (impact vs. SRI vs. ESG vs. sustainability). At the same time, for-profit impact enterprises (“investees”) are getting more attention but are having trouble securing funding.

It’s like dating. A good match can be very successful, but it is difficult when you know what you want but just can’t find the right person, or when you are not sure what you want and end up with some not-so-great options. In impact investing, the trial and error process for both parties takes a lot of time and money. It can lead to poor quality investments, higher perceived risks, frustration, and in some cases, no investments at all.

In my work with investors, including through the International Finance Corporation (IFC/World Bank), and with for-profit investees, building their “investor-readiness,” I’ve gained perspective on each party’s needs and common pitfalls. A few lessons stand out:

Investors

Evaluating and choosing impact deals is complicated. As with any investment, investors need to understand the investee’s business model and potential risks before making an investment decision. The riskier the deal profile the costlier the capital. Risk assessment of impact investments is tricky because of the sector’s relative infancy, its heterogeneity, the variety of measurement and reporting approaches, and the limited information on lessons learned.

In addition, most investors do not have an impact investing track record and vague terminology makes it hard to sort through potential options and choose what’s right for them. There are also industries, geographies, and business models that are less risky than others so painting all impact deals with the same brush can lead to an over- or under-assessment. All of these factors affect the categorization of the deal’s risk profile.

What can investors do to help make their process easier?

  • Build their internal capacity. Increase investment staff’s awareness and expertise to help them better understand impact investing and the various risk profiles.
  • Offer a range of investment options. Don’t offer a “one size fits all” deal structure. Typically this isn’t the best way to support both the finance and impact goals of an impact investment.
  • Set up impact-related systems. Set up systems to collect impact evaluation, monitoring and reporting data according to the investor’s impact strategy and goals.
  • Apply lessons learned. Analyze data regularly to identify patterns and understand what worked and didn’t work and why.
  • Collaborate with external parties. Work with industry experts, strategic partners who have complementary geographic, technical, or market expertise.

Investees

For-profit impact investees are unique. Their goal – to address an environmental or social issue and have a profitable business model – is not easy. The ones that will thrive are the ones with effective business models, who know how to approach investors, and who know what factors are critical to their business.

What can investees do to improve their funding chances?

  • Target the right investors. They need to understand and articulate their company profile (e.g., Is this a startup? What is the target market? What impact does the business want to make?). Knowing these answers will help them target the right investors. For instance, angel investors will be best for some investees while others will be better served by a bank.
  • Address key risks for investors. Address two sets of risks: those that are common to all businesses (such as business model, team composition, competitiveness, etc.) and those unique to the impact sector (e.g., how incorporating environmental & social factors will affect the revenue model; how to measure and report impact). Example: A biomass energy company was providing electricity to underserved populations and approached an investor for funding. While the business was compelling, it had not secured a reliable biomass fuel supply or done a comparative analysis to its competition. The deal was rejected because the company did not address its key business risks.
  • Ensure the pitch tells the right story. Lead the pitch with the business arguments. Then show how incorporating environmental, social impact will support the business. Example:A sustainable coffee company focused most of its investment pitch on how the coffee would improve the lives of farmers and reduce environmental impact. It did not provide information about the increasing demand for coffee in its target market, how its coffee met gourmet quality standards, or its plan to get environmental certification, which was proven to yield a price premium. These oversights led to it being rejected by the investor.
  • Clearly show returns, impacts. Showing financial returns over time is important for investors. Additionally, investees need to be clear about which specific environmental, social metrics they will focus on (e.g., CO2 reduction, job creation, access to energy) and their approach to measuring, monitoring, and reporting the impacts.

These are some of the key factors that can help both investors and investees understand each other’s needs and concerns and lead to more productive conversations. Addressing the real and perceived differences in incentives, interests and constraints will give both parties a better chance of finding the right match.

2050 Climate Adaptation Costs: $500B a Year

NigerAdaptation

Funding makes possible this cash-for-work and disaster risk reduction project in the West African country of Niger. These half-moon structures in the drought-stricken village of Gobro collect water when it rains, refilling the water table and encouraging the regrowth of vegetation. Oxfam International runs the project in partnership with the local NGO Mooriben and the UN’s World Food Programme. (Photo by Fatoumata Diabate / Oxfam) Creative Commons license via Flickr

By Sunny Lewis

NAIROBI, Kenya, May 19, 2016 (Maximpact.com News) – By 2050, the cost of adapting to climate change in developing countries could balloon to $500 billion annually, five times greater than previous estimates, warns a new report from the United Nations Environment Programme (UNEP).

The report calculates the difference between the costs of climate change adaptation in developing countries and the amount of money available to meet these costs – a difference known as the “adaptation finance gap.”

The 2016 Adaptation Finance Gap Report is written by authors from 15 institutions and reviewed by 31 experts. They conclude that failure to cut the greenhouse gas emissions humans are pumping out will send the annual costs of adaptation to climate change skyrocketing into the stratosphere. By 2050 these costs could be up to five times higher than earlier World Bank estimates.

The second in UNEP’s series of Climate Adaptation Gap reports, this assessment finds that total bilateral and multilateral funding for climate change adaptation in developing countries has risen in the five years leading up to 2014, reaching $22.5 billion.

But the report warns that, despite this increase, there will be a major funding gap by 2050 unless new and additional finance for adaptation appears.

“It is vital that governments understand the costs involved in adapting to climate change,” said Ibrahim Thiaw, UNEP deputy executive director.

“This report serves as a powerful reminder that climate change will continue to have serious economic costs. The adaptation finance gap is large, and likely to grow substantially over the coming decades, unless significant progress is made to secure new, additional and innovative financing for adaptation,” said Thiaw.

Previous estimates place the cost of adapting to climate change at between $70 to $100 billion annually for the period 2010-2050, a figure based on a World Bank study from 2010.

After reviewing national and sector studies, the new report finds that the World Bank’s earlier figures are likely to be “a significant underestimate.”

The true cost of adapting to climate change in developing countries could range between $140 and $300 billion per year in 2030, and between $280 and $500 billion per year in 2050.

Adaptation costs are likely to increase sharply over time even if the world succeeds in limiting a global rise in temperatures to below two degrees Celsius by 2100, the report warns.

The United Nations Framework Convention on Climate Change (UNFCCC) has called on developed countries to provide $100 billion annually by 2020 to help developing countries mitigate climate change, and adapt to its impacts, such as drought, rising sea levels and floods.

But the UNEP report warns, “There is no agreement as to the type of funding that shall be mobilised to meet this goal. This hampers efforts to monitor progress toward meeting the goal.”

“The adaptation finance gap is large, and likely to grow substantially over the coming decades, unless significant progress is made to secure new and additional finance for adaptation,” the report concludes.

The Green Climate Fund, an operating entity of the UN Framework Convention on Climate Change’ Financial Mechanism, is mandated to promote a paradigm shift towards low-emission and climate-resilient development pathways in developing countries.

Based in South Korea, the Green Climate Fund has mobilized about US$10 billion and has already made its first investments. It is the largest entity under the financial mechanism of the Paris Climate Agreement, which 195 countries negotiated in December and 170 of them signed April 22 at UN Headquarters in New York.

Green Climate Fund Executive Director Héla Cheikhrouhou said at the signing ceremony, “We need to ensure that the investments GCF makes today and in the years ahead are indeed groundbreaking. We need developing countries and our partner institutions to bring forward project proposals that meet the ambition of Paris, that unlock innovation, and that will truly drive low-emission, climate-resilient development. It is time to convert the words – and signatures – into action!”

To meet finance needs and avoid an adaptation gap, the total finance for adaptation in 2030 would have to be approximately six to 13 times greater than international public finance today, calculates the UNEP report.

Christiana Figueres of Costa Rica, outgoing executive secretary of the UN Framework Convention on Climate Change, addresses the Adaptation Futures conference in Rotterdam, The Netherlands, May 10, 2016 (Photo by Maartje_Strijbis) Posted for media use.

Christiana Figueres of Costa Rica, outgoing executive secretary of the UN Framework Convention on Climate Change, addresses the Adaptation Futures conference in Rotterdam, The Netherlands, May 10, 2016 (Photo by Maartje_Strijbis) Posted for media use.

Adaptation costs are already two to three times higher than current international public funding for adaptation, states the report, which was issued May 10 in Rotterdam at Adaptation Futures 2016, the biennial conference of the Global Programme of Research on Climate Change Vulnerability, Impacts and Adaptation.

Adaptation Futures 2016 attracted over 1,600 participants from more than 100 countries, people from the business community, from governments and nongovernmental organizations, scientists and climate specialists.


Featured Image: The Adaptation Gap Report 2016 

 

Just Half of Top Investors Tackle Climate Risk

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By Sunny Lewis                                                                      Follow us at: @Maximpactdotcom

LONDON, UK, May 5, 2016 (Maximpact.com News) – Half the world’s 500 largest investors are acting to lessen the risks posed to their portfolios by climate change, but the other half are ignoring climate risk entirely, finds the latest Global Climate 500 Index.

The fourth annual benchmark report on the industry from the Asset Owners Disclosure Project (AODP) documents a growth in low carbon investments and a big rise in support for climate resolutions over the past year, but little progress on stranded asset risk.

The independent non-profit AODP rates the world’s 500 biggest investors: pension funds, insurers, sovereign wealth funds, foundations and endowments with $38 trillion of assets under management – on their success at managing climate risk within their portfolios, based on direct disclosures and publicly available information. They are graded from AAA to D while those taking no action are rated X.

This year AODP has raised the bar, requiring evidence of tangible action and no longer scores purely for transparency or commitments.

The result is the Global Climate 500 Index – the world standard for assessing the success of asset owners at managing climate risk.

A fifth (97) of the world’s 500 biggest investors with $US9.4 trillion in funds are taking tangible action to mitigate climate change risk, and another 157 worth $14 trillion are taking the first steps, according to the new Global Climate 500 Index.

But few investors are acting on warnings from Mark Carney, Governor of the Bank of England and chairman of the international Financial Stability Board, that climate action could leave fossil fuel and other high-carbon investments as worthless stranded assets.

Carney has warned that climate change action could turn huge reserves of coal, oil and gas into unburnable stranded assets, threatening investors with huge losses and destabilizing markets.

The Financial Stability Board has set up a task force to recommend how asset owners, the companies they invest in, and other financial intermediaries should report the potential impact of climate change on their bottom lines.

But nearly half the top 500 investors are ignoring climate risk completely, the AODP report finds. That group includes 246 investors with $14.3 trillion in funds under management.

AODP chief executive Julian Poulter said, “Climate change risk is now a mainstream issue for institutional investors and last year has seen many significantly step up their action to manage this. However, only a handful are protecting their portfolios from the very real danger of stranded assets, and it is shocking that nearly half the world’s biggest investors are doing nothing at all to mitigate climate risk.”

“Pension funds and insurers that ignore climate change are gambling with the savings and financial security of hundreds of millions of people around the world and risking another financial crisis,” Poulter warned.

The UK’s $4 billion Environment Agency Pension Fund tops the 2016 Global Climate 500 Index, closely followed by Australia’s $7.1 billion Local Government Super, each coming top or second in all three categories, proving that size is no barrier to managing climate risk.

The Environment Agency Pension Fund has 26 percent of its portfolio in low carbon assets, the highest in the index.

Other leaders include giant institutions that have been active in campaigning for climate action – the $391 billion Dutch pension fund ABP and the $301 billion California Public Employees Retirement System, both rated AAA, and UK insurer Aviva with $445 billion of assets, rated A.

France’s Caisse des Dépôts has jumped from a CC rating to a AA, while the Swedish pension fund AMF and the UK’s Greater Manchester Pension Fund are both up from D to A.

Scandinavian asset owners are taking the most action to manage climate risk. Sweden tops the Country Index, followed by Norway, and Denmark comes fifth.

France, where the Paris Climate Summit in December brought climate risk into sharp focus, takes fourth place with three funds in the top 20 for the first time. In a world-first, France announced that it would require all institutional investors to disclose information on how they are managing the risks of climate change.

Overall, investors that recognize climate risk are taking much more action than last year. The leaders, rated A to AAA, have grown 29 percent from 24 to 31 investors with $2.7 trillion in assets under management.

On average, these 12 AAA-rated institutions have outperformed the benchmark return over five years, demonstrating that climate risk can be managed without sacrificing returns, the AODP reports.

The biggest increase has been in asset owners still developing their climate risk strategy, with a 52 percent rise in those rated C to CCC, from 27 to 41 with $3.4 trillion under management.

There are now 97 investors rated C or above with $9.4 trillion under management, up from 77, while the D group taking least action has shrunk from 191 to 157 with $14 trillion under management.

However, the number of X-rated investors has grown from 232 last year to 246 today.

An encouraging 10 percent of asset owners and 74 percent of the leaders group (rated A to AAA) are measuring carbon in their portfolios, up from seven percent and 67 percent last year.

Yet, only two percent of asset owners have declared a target for reducing portfolio carbon next year.

Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC), has piloted global climate negotiations for years and achieved success in Paris last December.

“The Paris Agreement has set out the path, direction and ultimate destination for the global economy,” said Figueres, commenting on the new Global Climate 500 Index. “Increasing numbers of asset owners understand this and more are coming to that realization.”

“I would encourage all of them to pick up the pace and ramp up their ambition in respect to a low carbon transition,” said the top UN climate official. “It is the key to reducing risk and securing the health of their portfolios now and over the long term.”


 

Main image: British currency (Photo by TaxRebate.org

Featured image: 123rf stock imagery 

The Proper Amount of Due Diligence: From Field to Financial Due Diligence

The Proper Amount of Due DiligenceMaximpact Services

Many types of investments are worthy of consideration by investors. However, regardless of the type of investment, it is vital for investors to consider all elements of the investment — including a risk assessment. The most effective tool in determining the reliability, quality and soundness of an investment is to use the process of financial due diligence. Click here to view Investor Financial Due Diligence Checklist.

As in the general principle of due diligence, “financial due diligence” ensures that the course of action being undertaken is wise and financially worthwhile for every party involved. Read on to learn more about the process of financial due diligence, why it is important to investors and businesses, and how a financial consultant can help.

What Is Financial Due Diligence?

When considering an investment, financial due diligence is the most important task toward making sure that the investment is sound. When performing financial due diligence, in a process very similar to an audit, every financial record, as well as any other relevant financial information to the investment, is audited and double-checked to determine if all the accounts are consistent.

By examining categories such as gross value, valuation and balance sheets, financial due diligence provides security to both the buyer and seller in any given transaction.

Although financial due diligence is generally focused on the buyer, the seller can also employ the process before moving forward.

Why Is Financial Due Diligence Important?

Evaluating the real situation of assets, their liabilities and other risks provides much-needed insight into an investment. The evaluation process is one that assists in the ability to make good investment decisions.

  • For investors, financial due diligence provides the type of information that ensures the targeted investment is in the financial position that it states it is in.
  • For businesses seeking funding, having a financial due diligence report in place can serve to impress potential funding sources and investors by demonstrating that the business is committed to transparency and is ready to move forward quickly.

This report assures both parties that an investment is viable, reliable and equitable, and it can assist in identifying any potential risk factors.

Other Types of Due Diligence

While financial due diligence is very important, it is not the only type of diligence tool that is available — and sometimes necessary. “Field due diligence,” for example, is a process used to measure the viability of certain investment sectors, such as renewable energy or agriculture, through the employment of sector-specific experts.

Sector experts perform evaluations, assessments and analysis of potential investments to identify important factors that are used in a decision-making process. In this area of due diligence, sector-specific experts and consultants may be needed to assess in sectors such as agriculture, clean technology, renewable energy, water, etc. Assessments can be technical, environmental and legal, and they can also be based on social impact, sustainability and feasibility.

How Can Maximpact Help Businesses, Investors and Funds?

Financial due diligence is an important task for both businesses and investors. However, financial due diligence is not an easy task, which is why getting it done by a team of experts through Maximpact Services will save you time and money.

Maximpact Services helps investors — such as funds, VCs, angle investors, accelerators, private investors and other types of funding sources, including grant-givers — by taking over the in-depth process of financial due diligence. Outsourcing the labor-intensive parts of the evaluation process for multiple investments enables each party to save time and money to focus on what each does best.

For businesses, Maximpact Services provides financial due diligence reports that will impress investors and increase your chances of fundraising success.

With access to hundreds of experts and consultants covering more than 200 sectors, all players can easily find the experts they need for evaluations, assessments and all kinds of due diligence.

Use this helpful tool and resource:  Maximpact Investor Financial Due Diligence Checklist

Visit Maximpact, and find out more at: Maximpact Finance Services:Due Diligence

Still have questions? Schedule a call with a funding expert and receive expert advice, or contact Maximpact, and we will guide you in finding what you need.

20,000 Investment Funds Rated for Sustainability

20000_Investment_Funds_Rated_for_Sustainability

Morningstar Head of Sustainability Steven Smit (right with glasses) and Morningstar Chairman and CEO Joe Mansueto. (Screengrab from video courtesy Morningstar)

By Sunny Lewis,

CHICAGO, Illinois, March 3, 2016 (Maximpact.com News) – Evaluating mutual funds and exchange-traded funds based on how well the companies they hold manage their environmental, social, and governance (ESG) risks and opportunities just became easier.

Based in Chicago, the publicly-traded provider of independent investment research, Morningstar, Inc., has just introduced the Morningstar Sustainability Rating™ for some 20,000 funds around the world.

“Given the widespread and growing interest in sustainable investing around the world, investors need better tools to help them determine whether the funds they own or are considering adding to their portfolios reflect best sustainability practices,” said Steven Smit, CEO of Morningstar Benelux.

Smit has been named Morningstar’s head of sustainability. He will be responsible for leading the company’s initiative to bring the new ratings and metrics to investors globally.

He says the goal is to create transparency and get to one global measure – a global sustainability standard for funds worldwide.

“Creating more insight into sustainability investing is a passion of mine and many others at Morningstar,” Smit shared. This initiative will help us better serve investors who place particular importance on incorporating ESG factors into their investment decisions.”

Morningstar has operations in 27 countries in North America, Europe, Australia, and Asia. The company offers investment management services through its subsidiaries, with more than US$180 billion in assets currently under advisement and management.

“Our Sustainability Rating and related metrics will provide investors with an ESG lens they can use to evaluate funds and, eventually, other managed products,” said Smit. “It’s not so much about what the fund says it does, but what it actually holds.”

Sustainable investing goes beyond the exclusionary approach of socially responsible investment, or SRI, strategies, say Morningstar executives. Sustainable investing is a long-term approach that incorporates ESG factors into the investment process.

Jon Hale, PhD, CFA, former head of manager research for North America, has been named head of sustainability research.

“Many investors are interested in sustainable investing but unsure how to put it into practice,” Hale said. “Our new rating makes it easier to compare funds based on their ESG attributes.”

“In that way, investors can better determine how to incorporate sustainable investing into their portfolios, or assess the extent to which their fund investments are upholding best sustainability practices,” said Hale.

Morningstar calculates the ratings based on the underlying fund holdings and company-level ESG research as well as ratings from Sustainalytics, an independent provider of ESG and corporate governance ratings and research.

Sustainalytics has been analyzing companies’ ESG performance and impact since its origin as Janzi Research in Canada in 1992. The company has since joined with other analytics groups around the world and now has offices in North America, Europe, Australia and Singapore.

To help investors compile a low-carbon portfolio, Sustainalytics offers an expanded suite of Carbon Solutions, which includes portfolio analytics, data and research. Increasingly, investors are aiming to better understand their portfolio exposure to carbon, to reduce this exposure and to implement low-carbon mandates.

The new Morningstar Sustainability Rating calculation is a two-step process.

First, each fund with at least 50 percent of assets covered by a company-level ESG score from Sustainalytics receives a Morningstar®Portfolio Sustainability Score™.

The Portfolio Sustainability Score is an asset-weighted average of normalized company-level ESG scores with deductions for companies involved in controversies over such activities as environmental accidents, fraud, or discriminatory behavior.

The Morningstar Sustainability Rating is the Portfolio Sustainability Score compared with at least 10 category peers, assigned in a bell curve distribution.

 

SustainabilityRating

Sustainability is indicated with globe icons. Funds can receive any of five Sustainability Ratings – Low, Below Average, Average, Above Average, and High. Low equals one globe and High equals five globes.

 

 

 

 

 

Funds can receive any of five Sustainability Ratings – Low, Below Average, Average, Above Average, and High. Ratings are indicated by globe icons. Low equals one globe and High equals five globes.

Of the 20,000 funds with Morningstar Sustainability Ratings, 10 percent received five globes, 22.5 percent received four globes, 35 percent received three globes, 22.5 percent received two globes, and 10 percent received just one globe.

“Some firms say that they invest according to sustainability principles, but it’s been hard to verify,” Hale explained. “Now investors can draw their own conclusions, using an independent, robust check of that claim that’s based on comprehensive analysis of a fund’s holdings.”

Morningstar will update Portfolio Sustainability Scores when it receives new fund holdings data and will base them on the latest company scores from Sustainalytics.

Morningstar will update the Sustainability Rating each month using the most recent Portfolio Sustainability Scores.

Morningstar’s first analysis of the ratings shows that funds with explicit sustainable or responsible mandates are generally practicing what they preach. But Morningstar notes that such funds make up only about two percent of the fund universe.

Two out of three funds with explicit sustainable or responsible mandates received the highest ratings, more than double the percentage of all funds with Sustainability Ratings.

Morningstar Chairman and CEO Joe Mansueto said, “Sustainability research is the next big initiative at Morningstar. We’re incredibly excited about it. … We believe our new sustainability research will be good, not just for investors, but also for society.”


Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Are You Investor Ready?

34403284_mlIf you are in the midst of launching your own business or if you are currently in business, you are likely wondering if your enterprise is investor-ready. “Investor readiness” hinges on a variety of factors. Simply preparing a strategic business plan and financials is not an indication that your business is ready to take on an outside investment. Even if you are eager for an outside investment, there is no guarantee that anyone will be interested in your venture. Plenty of preparation and hard work is necessary to put your enterprise in a position that interests outsiders. This process is commonly referred to as “investor readiness.” Click here to view Investor Ready Checklist.

Types of Investment

As capitalism has progressed, the variety of funding options has blossomed. Today, business investment takes place in all sorts of forms from new age crowd funding to angel investors, venture capital and traditional bank loans. The challenge lies in securing the necessary funding. It is quite often the entrepreneur’s lack of investor readiness which prevents them from securing investment funds they so desperately needs.

Common Errors When Seeking Business Funding

Put yourself in the position of a venture capitalist or general business investor. Such an individual is constantly bombarded with requests for investments. Though venture capitalists might genuinely be interested in helping to launch or improve enterprises, the truth is that it is often too premature for such an investment. The average business has a variety of weaknesses and structural problems that an investor does not want to be involved in fixing. In some instances, the investor does not have the necessary capital to address such problems either. Entrepreneurs seeking investment capital should ensure that there is a certain polish to their presentation in terms of both content and aesthetics. They should put themselves in the investor’s shoes and consider how the pitch sounds from their perspective and whether the requested amount of funds is appropriate for your business’s current state and goals.

Steps to Take

Begin by assessing your business plan and your projected financial goals. It is prudent to engage the assistance of a funding expert to determine if your investment request is appropriate for the stage that your business is at. The funding expert will analyze your company’s financials and provide appropriate advice. He will also help you figure out the proper type of funding for your business and determine the best way to approach potential investors.

Figure out the type of investment that is ideal for your company as there are different types of funding. Some forms might be appropriate for your business while others are not. It is imperative that you pinpoint the funding types that are appropriate for your company’s objectives. This way, you can determine if an investor’s objectives are aligned with your own. Determine which forms of funding are appropriate for your long term goals as well. For some entrepreneurs, giving up equity will hamper the business in the short-term and/or the long-term. It is therefore important to determine what type of impact a new investor will make on your ability to lead and steer the company. Consider whether ceding a portion of control is really worth the money.

Target the Right Type of Investor

Be as objective as you can when attempting to determine which investors are ideal for your business. Perhaps your business is not suited for an investment from a venture capitalist. Maybe an angel investor or crowd funding is a more appropriate option. In general, venture capitalists are not the best investor target for local businesses. However, plenty of crowd funding participants are interested in funding small businesses. Do your homework before soliciting funds from these groups and you’ll boost the odds of finding an interested investor.

Maximpact experts are here to help you simplify the process to become investor ready. You can visit us on the web at www.Maximpactservices.com. Maximpact has 135  business development products and services designed to help your business evolve and meet its full potential. Our mentors and business experts will steer you in the right direction and jump-start your investor readiness. Visit www.maximpact.com now to find solutions you need for success.

Helpful Resource and Tool:  Maximpact Investor Read Check List

Fossil Fuels: To Invest or Divest – That Is the Question

GlobalMapHottest2015

By Sunny Lewis

WASHINGTON, DC, January 21, 2016 (ENS) – The year 2015 was Earth’s hottest by widest margin on record, and in December 2015 the temperature was the highest for any month in the 136-year record, according to scientists with the U.S. space agency, NASA, and the U.S. oceanic and atmospheric agency NOAA.

Those who blame the burning of coal, oil and gas for this unprecedented warming are urging investors to pull their money out of fossil fuel companies and urging fossil fuel companies to reconsider their business activities.

This week, a group of investors led by New York State Comptroller Thomas P. DiNapoli and the Church of England demanded that ExxonMobil, the world’s largest publicly traded international oil and gas company, disclose the climate resilience of its business model.

The group of investors, including co-filers the Vermont State Employees’ Retirement System, the University of California Retirement Plan and The Brainerd Foundation, represents nearly $300 billion in assets under management and more than $1 billion in Exxon shares.

Their demand follows the Paris Agreement on climate change reached by 195 nations in December.

“The unprecedented Paris agreement to rein in global warming may significantly affect Exxon’s operations,” said DiNapoli, who is Trustee of the New York State Common Retirement Fund, the third largest public pension fund in the United States, with $184.5 billion in assets under management as of March 31, 2015.

The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. The Fund has a diversified portfolio of public and private equities, fixed income, real estate and alternative instruments.

“As shareholders, we want to know that Exxon is doing what is needed to prepare for a future with lower carbon emissions,” said DiNapoli. “The future success of the company, and its investors, requires Exxon to assess how it will perform as the world changes.”

The Church of England’s investment fund, the Church Commissioners, manages a fund of some £6.7 billion, held in a diversified portfolio including equities, real estate and alternative investment strategies.

“Climate change presents major challenges to corporate governance, sustainability and ultimately profitability at ExxonMobil,” said Edward Mason, the Head of Responsible Investment for the Church of England’s investment fund.

“As responsible investors we are committed to supporting the transition to a low carbon economy,” said Mason. “We need more transparency and reporting from ExxonMobil to be able to assess how they are responding to the risks and opportunities presented by the low carbon transition.”

ExxonMobil says “Society faces a dual energy challenge: We need to expand energy supplies to support economic growth and improve living standards, and we must do so in a way that is environmentally responsible.”

The oil and gas giant says it is relying on developing new technologies to reduce greenhouse gas emissions.

“We believe that carbon emissions will plateau and start to decrease starting around 2030 as energy efficiency spreads and as various carbon-reduction policies are enacted around the world,” ExxonMobil says in a position statement on its website.

“ExxonMobil leads in one of the most important next-generation technologies: carbon capture and sequestration (CCS). CCS is the process by which carbon dioxide gas that would otherwise be released into the atmosphere is separated, compressed and injected into underground geologic formations for permanent storage.

In addition, ExxonMobil says it continues to fund and conduct research on advanced biofuels. “This work is part of our many investments in new technologies with the transformative potential to increase energy supplies, reduce emissions, and improve operational efficiencies.”

Across Europe, the year 2015 was the second hottest on record, with mean annual temperatures just above the 2007 average and below the record set in 2014, according to an analysis by one of the World Meteorological Organization’s regional climate centers. Much of eastern Europe was exceptionally warm, with temperatures higher than in 2014.

The negative climate trend is expected to continue for at least the coming five decades, says WMO Secretary-General Petteri Taalas, who took office at the start of the year. He predicted a growing number of weather-related disasters and a continuing increase in sea level rise.

In the first global effort to avert the worst impacts of climate change, under the Paris Climate Agreement world leaders committed to holding the rise in global temperatures well below two degrees Celsius and to seek to restrict warming to 1.5 degrees.

The shareholder proposal filed by Comptroller DiNapoli and the Church of England’s investment fund asks ExxonMobil to publish an assessment of how its portfolio would be affected by a two degree target through, and beyond, 2040.

Specifically, the assessment should include an analysis of the impacts of a two-degree scenario on the company’s oil and gas reserves and resources, assuming a reduction in demand resulting from carbon restrictions.

Exxon’s peers, Shell and BP, have already agreed to disclose how they will be impacted by efforts to lower greenhouse gas emissions in response to similar shareholder proposals co-filed in 2015 by the Church of England and other investors and endorsed by the boards of both companies.

More recently, 10 global oil and gas companies, including Shell and BP, announced their support for lowering greenhouse gas emissions to help meet the 2 degree goal.

In addition, the global movement seeking to encourage investor divestment of fossil fuel stocks is gathering strength, says Brett Fleishman of the global climate action group Fossil Free, a project of the nonprofit 350.org.

“If it is wrong to wreck the climate, it is wrong to profit from that wreckage,” declares Fossil Free.

Fleishman cites a recent report (CISL_Report) by the University of Cambridge that details the material risk of climate change to investment portfolios. The report found that, “Short-term shifts in market sentiment induced by awareness of future climate risks could lead to economic shocks and losses of up to 45 percent in an equity investment portfolio value.”

The University of Cambridge report was not alone. The growing risk to the economy and investment funds because of climate change has been reported by the financial giants of the world – HSBC, Deutsche Bank, Standard and Poor’s, CitiBank and The Bank of England, among others.

The dire forecasts are already affecting investors. California’s pensions systems lost more than $5 billion on their fossil fuel holdings last year. The Massachusetts state pension fund lost $521 million in value from their fossil fuel stocks over the past year, a 28 percent decline.

Those major losses are advancing the divestment dialogue this year.

“While each [Fossil Free divestment] campaign is independently run and may bring different emphases and asks depending on their local context,” says Fleishman, the majority of campaigns are asking institutions to “immediately freeze any new investment in fossil fuel companies, and divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within five years.”

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African Catholic groups associated with 350.org have called on Pope Francis to support the divestment movement.

In a December letter to the Pope they wrote, “Because of the grave threat of climate change and the fossil fuel sector’s unyielding refusal to change, it is no longer right for religious groups to profit from investments in such companies. We appeal for your support for the global divestment movement from the fossil fuel industry and to call for a just transition towards a world powered by 100 percent renewable energy.”

They felt that Pope Francis acknowledged their concerns in his speech to the United Nations Environmental Programme in Nairobi, where he stated that the Paris climate conference, “represents an important stage in the process of developing a new energy system which depends on a minimal use of fossil fuels, aims at energy efficiency and makes use of energy sources with little or no carbon content.”

Now, 350 Africa intends to broaden its sphere of influence to include divestment activists of all faiths, saying in December, “We need to change the idea that the climate change crisis is to only be tackled by environmental organizations. The recent resolution of the Anglican Church of Southern Africa to explore withdrawing their investments from companies that exploit fossil fuels, is an example of how faith groups can do their part in the climate movement through divestment.”


Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Header image: 2015 was the warmest year since modern record-keeping began in 1880, finds a new analysis by NASA’s Goddard Institute for Space Studies. The record-breaking year continues a long-term warming trend – 15 of the 16 warmest years on record have now occurred since 2001. (Image: Scientific Visualization Studio courtesy NASA Goddard Space Flight Center) public domain
Featured image: New York State Comptroller Thomas DiNapoli, April 2015 (Photo courtesy New York State Comptroller) Public Domain via Flickr
Image 01: African Catholics advocate for divestment from fossil fuel companies, December 2015, Nairobi, Kenya (Photo courtesy Go Fossil Free.org)

Closing the Loop: EU Quarrels Over Circular Economy Plan

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By Sunny Lewis

BRUSSELS, Belgium, December 30, 2015 (Maximpact.com News) – The European Commission has adopted a new Circular Economy Package it says will help European businesses and consumers contribute to “closing the loop” of product lifecycles through greater recycling and re-use.

But Members of the European Parliament are critical of the new package.

The Commission says its plan will extract the maximum value and use from all raw materials, products and waste, encouraging energy savings, reducing greenhouse gas emissions and bringing benefits to Europe’s environment and economy.

The changes are needed, the Commission says, because global competition for resources is increasing. The concentration of resources outside the EU, particularly critical raw materials, makes industry and society within the 28 Member States dependent on imports and vulnerable to high prices, market volatility, and the political situation in supplying countries.

The new Circular Economy Package sets a common EU target for recycling 65 percent of municipal waste and 75 percent of packaging waste by 2030.

The plan calls for a binding target to reduce landfill to a maximum of 10 percent, with a complete ban on landfill for separately collected waste.

There will be economic incentives for producers to put greener products on the market and support recovery and recycling schemes for packaging, batteries, electric and electronic equipment as well as vehicles, among other products.

There are also plans to harmonize the way recycling rates are calculated across the Member States.

The proposals require action at all stages of the life cycle of products – from the extraction of raw materials, through material and product design, the production, distribution and consumption of goods, repair, re-manufacturing and re-use schemes, all the way through to waste management and recycling.

All these stages are linked. For instance, use of certain hazardous substances in the production of products can affect their recycling potential, and improvements in terms of resource and energy efficiency can be made at all stages.

In July 2014, under President Jose Barroso, the Commission adopted a Circular Economy Package that included a proposal for the review of waste legislation in response to the legal obligation to review the targets of three Directives: the Waste Framework Directive, the Landfill Directive, and the Packaging and Packaging Waste Directive.

Then, on November 1, 2014, a new Commission took office under President Jean-Claude Juncker. In its 2015 Work Programme, the Juncker Commission announced its intention to withdraw the 2014 proposal on Waste Review and to replace it with a new, more ambitious proposal to promote the circular economy by the end of 2015.

Two main reasons motivated this withdrawal.

First, the overall approach presented in July 2014 had an exclusive focus on waste management, without exploring synergies with other policies such as the development of markets for secondary raw materials.

Second, the Juncker Commission wanted to make the proposal more country specific and improve the implementation of waste policy, particularly existing problems of non-compliance.

On December 2, the Juncker Commission presented its new Circular Economy Package to the European Parliament.

The new initiative would establish a framework to overcome past shortcomings and create conditions for the development of a circular economy “with a clear and ambitious political vision combined with effective policy tools that can drive real change on the ground,” the Juncker Commission said.

The Commission said its new package “contributes to broad political priorities by tackling climate change and the environment while boosting job creation, economic growth, investment and social fairness.”

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The package was prepared by a core project team co-chaired by First Vice-President Frans Timmermans and Vice-President Jyrki Katainen, with the close involvement of Commissioner for Environment, Fisheries and Maritime Affairs Karmenu Vella and Commissioner for Internal Market, Industry, Entrepreneurship and SMEs Elżbieta Bieńkowska.

Timmermans, responsible for sustainable development, said, “Our planet and our economy cannot survive if we continue with the ‘take, make, use and throw away’ approach. We need to retain precious resources and fully exploit all the economic value within them.”

“The circular economy is about reducing waste and protecting the environment, but it is also about a profound transformation of the way our entire economy works,” Timmermans said. “By rethinking the way we produce, work and buy we can generate new opportunities and create new jobs. With today’s package, we are delivering the comprehensive framework that will truly enable this change to happen.”

“It sets a credible and ambitious path for better waste management in Europe with supportive actions that cover the full product cycle. This mix of smart regulation and incentives at EU level will help businesses and consumers, as well as national and local authorities, to drive this transformation,” said Timmermans.

Katainen, responsible for jobs, growth, investment and competitiveness, said, “These proposals give a positive signal to those waiting to invest in the circular economy. Today we are saying that Europe is the best place to grow a sustainable and environmentally-friendly business.”

“This transition towards a more circular economy is about reshaping the market economy and improving our competitiveness,” said Katainen, a former Finnish prime minister. “If we can be more resource efficient and reduce our dependency on scarce raw materials, we can develop a competitive edge. The job creation potential of the circular economy is huge, and the demand for better, more efficient products and services is booming.”

The Juncker Commission is in partnership with the European Investment Bank to fund the new package.

On December 10, Vella blogged that the partners signed an amendment to the InnovFin Delegation Agreement “that will enable higher-risk, yet innovative sustainable business models and plans to access credit through InnovFin – an EU finance support programme under Horizon 2020.”

Funding of over €650 million under Horizon 2020 and €5.5 billion under the structural funds will suppport the new Circular Economy Package, the Commission said.

“The proposals are a powerful enabling framework, but we will also need substantial private sector funding directed towards the circular economy,” wrote Vella. “The European Fund for Strategic Investment (the ‘Juncker Plan’) is one tool to support this. The Commission would like to also guide future investment, steering it more towards green choices, with progressive divestment from unsustainable activities.”

Vella wrote that the EIB, the Commission and national banks plan to work together to increase awareness of circular economy financing.

But many Members of the European Parliament are not impressed with the new package.

The 65 percent target is a point of contention. Although the Juncker Commission says the new package is far more ambitious than its predecessor, MEPs point out that Barroso’s team wanted to introduce a 70 percent target in 2014.

Karl-Heinz Florenz, a German Member of the European Parliament who sits with the European People’s Party group, told the “Parliament Magazine” that the new proposal amounts to “much ado about nothing.”

Progressive Alliance of Socialists and Democrats Vice-Chair Kathleen Van Brempt of Belgium said, “This ambitious roadmap needs to be supported by specific targets, and our political group will try to build a consensus in the Parliament to introduce those targets, to make sure the roadmap is accomplished.”

Gerben-Jan Gerbrandy, shadow rapporteur on the circular economy with the Group of the Alliance of Liberals and Democrats for Europe, accused the Commission of, “wasting months of work and many hours of parliamentary time.”

“With a weakened waste proposal and an action plan copy-pasted from the 2010 roadmap to a resource efficient Europe, it’s clear the European Commission is failing to deliver on this important agenda for growth and jobs,” the Dutch MEP told the “Parliament Magazine.”

Greens/European Free Alliance Group Vice-Chair Bas Eickhout commented, “While we welcome the fact that the Commission has finally come forward with revised proposals on the circular economy, we are concerned that the plans are undermined by the reduced ambition. This is contrary to the commitment by the Commission for a more ambitious proposal.”

“A year on from the initial decision by the Commission to withdraw its original proposals, we have lost both time and ambition in the push to stimulate the circular economy at EU level,” said Eickhout.

Green environment spokesperson Davor Škrlec said, “It is a major shame that the Commission is not seeking to maximize the potential of the circular economy. We will seek to address some of the shortcomings in Parliament.”

Responding to criticism of the new package, Vice President Timmermans pointed out that the legally-binding 10 percent cap on land-filling was, “completely new” and that the 65 percent target for recyclables was, “an extremely ambitious goal, which for many member states will require a huge effort.”

Key actions under the Juncker Commission’s new Circular Economy Package include:

  • Funding of over €650 million under Horizon 2020 and €5.5 billion under the structural funds;
  • Actions to reduce food waste, including a common measurement methodology, improved date marking, and tools to meet the global Sustainable Development Goal to halve food waste by 2030;
  • Development of quality standards for secondary raw materials to increase the confidence of operators in the single market;
  • Measures in the Ecodesign working plan for 2015-2017 to promote reparability, durability and recyclability of products, in addition to energy efficiency;
  • A revised regulation on fertilizers, to facilitate the recognition of organic and waste-based fertilizers in the single market and support the role of bio-nutrients;
  • A strategy on plastics in the circular economy, addressing issues of recyclability, biodegradability, the presence of hazardous substances in plastics, and the Sustainable Development Goals target for reducing marine litter;
  • A series of actions on water reuse, including a legislative proposal on minimum requirements for the reuse of wastewater.
  • A clear timeline for the actions proposed and a plan for a simple and effective monitoring framework for the circular economy.

Vice President Katainen said, “We will remove barriers that make it difficult for businesses to optimize their resource use and we will boost the internal market for secondary raw materials. We want to achieve real progress on the ground and look forward to delivering on this ambition together with not only Member States, regions and municipalities, but also businesses, industry and civil society.”

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Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Main image: Members of the European Parliament in plenary session, 2015. (Photo courtesy European Parliament) © European Union 2015 – European Parliament.
Featured image: Naples, Italy struggles with longstanding garbage problems, June 2007 (Photo by Chris Beckett) under Creative Commons license via Flickr
Image 01: EU Vice-President Jyrki Katainen addresses the European Parliament, January 2015 © European Union 2015 – European Parliament. (Attribution-NonCommercial-NoDerivatives Creative Commons licenses creativecommons.org/licenses/by-nc-nd/4.0/).
Image 02: Landfill at the Selly Oak Battery Park redevelopment site in Birmingham, England, May 2015 (Photo by Elliott Brown) under Creative Commons license via Flickr

Green Grow the Climate Awareness Bonds

By Sunny Lewis

LUXEMBOURG, October 29, 2015 (Maximpact News) – The European Investment Bank is the first issuer to link its individual green bonds to the projects they finance for the sake of transparency and accountability ahead of the Paris climate talks.

As the planet warms, growing cities and developing countries need airports, roads, buildings, water systems and energy generation that can withstand rising temperatures and extreme weather.

Green bonds, called Climate Awareness Bonds or CABs, are a new and increasingly popular source of climate-friendly funding for these expensive projects.

Green bonds were created to increase funding by accessing the $80 trillion bond market and expanding the investor base for sustainable projects. They are dedicated exclusively to climate mitigation and adaption projects, and other environmentally beneficial activities.

The EU’s nonprofit long-term lending institution, the European Investment Bank (EIB), the world’s largest issuer of green bonds, has just announced that it is enhancing the transparency of its reporting on Green Bonds by showing bondholders precisely what their money does.

The bank is going this direction to be in step with the Paris Climate Summit set for November 30 through December 11. There, world leaders will sign a legally-binding universal agreement to limit global warming to 2 degrees Celsius above pre-industrial levels.

Bertrand de Mazières, director general of finance, European Investment Bank, said, “Ahead of the Paris climate conference, COP 21, EIB is supporting EU’s leadership in climate policy through innovation in the green bond market.”

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“Green bond issuance has grown substantially, and has the potential to contribute significantly to addressing the 2 degree Celsius target,” said de Mazières.

Transparency and accountability are key themes of the European Union’s position for the Paris climate conference, as adopted by the EU Council on September 18.

“The Paris Agreement must provide for a robust common rules-based regime, including transparency and accountability rules applicable to all Parties…” the EU Council declared.

In harmony with this declaration, earlier this month the EIB extended its transparency effort by reporting on the allocations of proceeds from individual CABs to individual projects, beginning with allocations made in the first half of 2015.

De Mazières explained why, saying, “Granular transparency on the allocation of the CAB-proceeds helps this process by bringing investors more precise insights and promoting best practice.”

The disclosure of the allocation of individual CAB-proceeds to individual projects establishes a direct link between the two.

EIB can deliver this level of information due to an upgrade of its internal procedures and IT-infrastructure following extensive due diligence in 2014 and 2015.

Today, the bank records CAB-eligible disbursements and allocates CAB-proceeds to them on a daily, first-in first-out basis.

This enables detailed monitoring and reporting of allocations, and helps to complete the set of information available to investors.

Eila Kreivi, EIB’s director and head of Capital Markets, said, “Investors are increasingly eager to receive clear information on the use of proceeds and the impact of eligible projects. EIB’s launch of detailed reporting in these areas this year has established an important reference.”

“Transparent management and reporting are essential to further grow the green bond market,” she said. “At the same time, one must be careful not to overload issuers with administrative hurdles. Striking the right balance will be a key challenge for the market.”

EIB’s first Climate Awareness Bond pioneered the green bond segment in 2007 and the EIB is the largest issuer of Green Bonds to date.

In September 2014, together with other multi-lateral development banks, the EIB committed to maintaining a developmental role to spur further sustainable growth of the green bond market.

In response to a recommendation in the Green Bond Principles “to help establish a model for impact reporting that others can adopt and/or adapt to their needs,” the African Development Bank, International Bank for Reconstruction and Development and the International Finance Corporation (IBRD) have joined EIB in a first harmonization proposal for bonds that fund renewable energy and energy efficiency projects. It is now being circulated for discussion.

Meanwhile, the EIB is popularizing its CABs across the world, entering the Canadian market for the first-time this week.

The Climate Change Support Team, working for United Nations Secretary General Ban Ki-moon has described green bonds as very attractive to institutional investors, with demand for green bonds much larger than the supply.

EIB’s issuance of €2.7 billion equivalent in Green Bonds this year to date has brought total CAB issuance to over €10 billion and confirms EIB’s position as the world’s largest issuer of Green Bonds.


Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Featured image: shutterstock – royalty-free stock images
Slide Show images: a) Gemasolar, a 15 MW solar power tower that uses molten salt for receiving and storing energy, is located in the city of Fuentes de Andalucia, Seville, Spain. (Photo by Markel Redondo/Greenpeace under creative commons license via Flickr). b) Wind turbines generate electricity at Europoort, an area of the Port of Rotterdam and the adjoining industrial area in The Netherlands.  (Photo by Frans de Wit under creative commons license via Flickr)
Image 01: Bertrand de Mazières, director general of finance, European Investment Bank (Photo by Crédit Agricole, sometimes called the Green Bank, a French network of cooperative and mutual banks)

Financing Sustainable Development: a ‘Quiet Revolution’ Underway

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By Sunny Lewis

LIMA, Peru, October 13, 2015 (ENS) – The world’s leading development banks Friday pledged to boost climate finance by committing $100 billion a year by 2020 to help developing countries mitigate and adapt to a warming planet.

At the International Monetary Fund-World Bank Annual meetings held in Lima October 9-11, bankers explored exactly what financial support is required to keep the planet from tipping into climate catastrophe.

In Lima, they were offered the results of a two-year-long inquiry conducted by the UN Environment Programme summarized in a new report, “The Financial System We Need.”

The UNEP Inquiry  found that “a quiet revolution” is happening right now.

World Bank Vice President and Special Climate Envoy Rachel Kyte called the changes “a new generation of policy innovations that aim to ensure the financial system serves the needs of inclusive, environmentally-sustainable, economic development.”

Financial policymakers and regulators are now integrating sustainable development into financial systems to make them respond to a 21st century facing rising temperatures and a burgeoning population in need of clean energy and clean water.

UNEP Executive Director Achim Steiner said, “UNEP’s Inquiry has for the first time compiled and analyzed inspiring initiatives from across the world that seek to better align the financial system with sustainable development, showing that there is much to be learnt from the developing world.”

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Image: UNEP Executive Director Achim Steiner (Photo courtesy UN Environment Programme)

The inquiry documented an upwelling of sustainable development momentum driven by developing and emerging nations including Bangladesh, Brazil, China, Kenya, and Peru, championed by France and the United Kingdom.

The UNEP Inquiry reports that, “Amplifying these experiences through national and international action could channel private capital to finance the transition to an inclusive, green economy and support the realization of the Sustainable Development Goals.”

These 17 goals , adopted by the UN General Assembly in September, range from ending poverty and hunger, ensuring clean water and sanitation for all, urgent action to control climate change, and responsible use of forests and oceans, to making cities safe and resilient, and ensuring gender quality and justice across the world.

The UNEP Inquiry into the Design of a Sustainable Financial System was established in January 2014 with a mandate to advance policy options linking the financial system with sustainable development.

Backed by a high-level Advisory Council of financial leaders, the Inquiry has looked in-depth at practice in more than 15 countries related to banking, bond and equity markets, institutional investment, insurance and monetary policy.

To reach its findings, the Inquiry worked with central banks, environment ministries and international financial institutions as well as major banks, stock exchanges, pension funds and insurance companies.

The Inquiry’s report presents a Framework for Action with a toolbox of 40 different measures, a set of five policy packages for banking, bond and equity markets, institutional investors and insurance, and a set of 10 next steps to promote international financial cooperation.

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Murilo Portugal, the president of Brazil’s banking association, FEBRABAN, and a member of the Inquiry’s Advisory Council, said Friday, “The Inquiry has catalyzed awareness of the need to align financial markets to sustainable development, and highlighted practical pathways to improving such an alignment.”

FEBRABAN offers three key insights based on the UNEP report:

  • Financing for sustainable development can be delivered through measures focused on the financial system, as well as the real economy.
  • A growing number of policy innovations have been introduced by both developing and developed countries, demonstrating how the financial system can be better aligned with sustainable development.
  • Systematic national action can now be taken to shape a sustainable financial system, informed by current trends and complemented by international cooperation.

Bankers and financiers in many countries are already moving towards sustainable development. The UNEP Inquiry found over 100 measures that are already in place, including:

  • In Peru, new due diligence requirements have been introduced for banks to help reduce social and environmental externalities.
  • In China, a portfolio of 14 distinct recommendations advances China’s green financial system, covering information, legal, institutional and fiscal measures.
  • Kenya has advanced financial inclusion through scaling of mobile-based payment services and is now also supporting green financing.
  • In France, new disclosure requirements on climate change have been introduced for institutional investors as part of the country’s energy transition legislation.
  • The United States is emphasizing fiscal measures to accelerate green finance and has made advances in disclosure and investor action.

Naina Kidwai, chairman of India’s branch of British banking and financial services company HSBC and director, HSBC Asia Pacific, is a member of the Inquiry’s Advisory Council.

Kidwai found the UNEP report useful, saying, “Too often the financial system and sustainable development have been tackled in separate silos. The Inquiry has shown for the first time how to systematically connect the dots, demonstrating practical ways in which we can mobilize the scale of capital needed in emerging markets, particularly for clean energy and clean water.”

Speaking in Lima, Yi Gang, deputy governor of the People’s Bank of China, said the UNEP Inquiry report “delivers a vision of embedding sustainable development into the core of financial and capital markets.”

“It should be a very useful guide and reference for many governments, financial institutions and international organizations in thinking about how to advance green finance,” said Yi.

The core definition of sustainable development is, “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

It was first defined in the 1987 publication “Our Common Future,” by the UN World Commission on Environment and Development, also known as the Brundtland Report after former Norwegian Prime Minister Gro Harlem Brundtland, who chaired the commission.

Brundtland saw that the many crises facing the planet are interlocking elements of a single crisis of the whole and saw the need for the active participation of all sectors of society in sustainable development consultations and decisions.

These elements stand forth again nearly 30 years later in the UNEP Inquiry report presented to the World Bank and IMF fall meeting in Lima.

Dr. Atiur Rahman, governor of the Bangladesh Bank, and a member of the UNEP Inquiry’s Advisory Council, said in Lima, “For the first time, the Inquiry has mapped the many innovations around the world seeking to ensure that the financial system serves its purpose of financing inclusive, green development.”


Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Featured image: Bank governors and finance ministers pose for a photograph at the IMFC meeting October 9, 2015 during the 2015 IMF/World Bank Annual Meetings in Lima, Peru. (Photo by Stephen Jaffe courtesy IMF)
Header Image: World Bank Group President Jim Yong Kim briefs the media at the IMF-World Bank Group Fall meeting in Lima, Peru, October 8, 2015 (Photo courtesy World Bank Group)
Image 03: International Monetary Fund Managing Director Christine Lagarde briefs the press at the 2015 IMF/World Bank Annual Meetings in Lima, Peru, Oct. 8, 2015. (Photo by Stephen Jaffe courtesy IMF)

Biggest Banks Back Strong Global Climate Deal

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Image: Bank of America Tower in the fog, New York City, May 2014 (Photo by David Phan creative commons license via Flickr)

 

By Sunny Lewis

NEW YORK, New York, October 2, 2015 (Maximpact News) – Six of the largest U.S. banks have called for a strong, legally-binding universal climate agreement to emerge from the United Nations Paris climate conference in December.

The big six – Bank of America, Citi, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo – said in a joint statement released Monday, “While we may compete in the marketplace, we are aligned on the importance of policies to address the climate challenge.”

“Over the next 15 years, an estimated $90 trillion will need to be invested in urban infrastructure and energy,” the banks stated. “The right policy frameworks can help unlock the incremental public and private capital needed to ensure this infrastructure is sustainable and resilient.”

Matt Arnold, managing director and head of social and sustainable finance at JPMorgan Chase, said, “Significant investments in urban infrastructure and energy will need to be made over the next two decades.”

“Governments need to take the lead in sending clear and timely policy signals to ensure these investments support and enhance sustainable economic growth and development, which includes addressing climate change,” said Arnold.

From November 30 to December 11, France will be hosting and presiding over the 21st Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21).

COP21 will be a crucial conference. There, world leaders are expected to achieve a new international agreement on the climate, applicable to all countries, with the aim of keeping the increase in global warming below 2°Celsius as compared to pre-industrial times.

“We call for leadership and cooperation among governments for commitments leading to a strong global climate agreement,” the American banks stated jointly. “Policy frameworks that recognize the costs of carbon are among many important instruments needed to provide greater market certainty, accelerate investment, drive innovation in low carbon energy, and create jobs.”

“Morgan Stanley believes that the capital markets can and must play a positive role scaling solutions to global challenges,” said Audrey Choi, managing director and CEO of the Morgan Stanley Institute for Sustainable Investing.

“The demand for financial tools that address climate change is strong and growing,” said Choi, “and we are committed to continued leadership across a range of climate-focused capital markets activity, including financing for clean-tech and renewable energy businesses, underwriting green bonds, and ensuring our wealth management clients have options to align their portfolios with their environmental goals.”

As the bank executives offered their views of a universal climate agreement to be signed in Paris and take effect in 2020, the word “opportunities” arose repeatedly.

“Climate change presents enormous challenges for global business, but addressing it also offers tremendous opportunities,” said Alex Liftman, global environmental executive at Bank of America.

Valerie Smith, director of Corporate Sustainability at Citi, said, “We are increasingly working with our clients across various sectors to not only manage and mitigate risks but also recognize opportunities associated with addressing climate change.”

“Businesses across the spectrum are evaluating the risks and opportunities associated with a changing climate – and taking action,” said Mary Wenzel, head of Environmental Affairs at Wells Fargo.

The banks said they are committing “significant resources” toward financing climate solutions but that these resources are not sufficient to meet global climate challenges.

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Image: Susan Crowley of Multilateral Consulting LLC, left, and Kyung-Ah Park of Goldman Sachs (Photo courtesy United Nations Association creative commons license via Flickr)

Kyung-Ah Park, head of the Environmental Markets division at Goldman Sachs, said, “One of the critical roles financial institutions play in helping to address climate change is to harness market mechanisms to mobilize much needed capital to facilitate the transition to a low carbon future and build greater physical resiliency. Governments can help markets by establishing a clear, stable policy framework that creates value for these investments and facilitates innovation.”

Across the Atlantic Ocean, the European Bank for Reconstruction and Development (EBRD) is scaling up its contribution to the global fight against climate change with an increase in green financing over the next five years.

Endorsed by the EBRD’s Board of Directors September 30, the bank’s new Green Economy Transition approach aims for green financing to total some €18 billion over the next five years. So, the EBRD would deliver as much green financing in the next five years as it has in the last ten.

The EBRD aims to increase its green financing to around 40 percent of total annual investments by 2020 compared with a target share of 25 percent over the previous five years.

EBRD President Sir Suma Chakrabarti said, “The international community has a unique chance this year to deliver a decisive set of measures to combat climate change. With its long experience as a leader in climate finance, the EBRD is making an important contribution to this collective stand through its Green Economy Transition approach.”

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Image: Sir Suma Chakrabarti, president of the European Bank for Reconstruction and Development in London, September 2013 (Photo courtesy Foreign and Commonwealth Office creative commons license via Flickr)

Across the Pacific Ocean, Asian Development Bank (ADB) President Takehiko Nakao announced September 25 that his bank will double its annual climate financing to US$6 billion by 2020, up from the current $3 billion. Nakao said ADB’s spending on tackling climate change will rise to around 30 percent of its overall financing by the end of this decade.

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Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Investment Court Could Restore Trust in Dispute Resolution

By Sunny Lewis

BRUSSELS, Belgium, September 25, 2015 (Maximpact News) – Europeans no longer trust the way the EU resolves disputes between investors and states, says European Trade Commissioner Cecilia Malmström. The Swedish politician proposes to restore that trust by establishing a “modern and transparent” Investment Court System to replace the existing investor-state dispute settlement (ISDS) arbitration model.

The Investment Court would be part of all Europe’s ongoing and future trade negotiations, particularly the Transatlantic Trade and Investment Partnership between the European Union and the United States now under negotiation.

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EU Trade Commissioner Cecilia Malmström debates with Members of the European Parliament the best dispute resolution system for investors in the context of the Transatlantic Trade and Investment Partnership. (Photo © European Union 2015 – European Parliament creative commons license)

 

The existing ISDS system enables an investor to bring a dispute before an arbitration tribunal. It operates on an ad hoc basis with arbitrators chosen by the disputing parties.

Instead, Malmström proposes a permanent tribunal of 15 publicly appointed, highly qualified judges and an accompanying six-judge appellate panel.

ISDS provisions appear in trade agreements such as the North American Free Trade Agreement and in such international investment agreements as the Energy Charter Treaty, but there is widespread disatisfaction with the ISDS system.

“From the start of my mandate almost a year ago, ISDS has been one of the most controversial issues in my brief,” blogged Malmström on her official site last week. “I met and listened to many people and organizations, including NGOs, which voiced a number of concerns about the old, traditional system.”

“It’s clear to me that all these complaints had one common feature – that there is a fundamental and widespread lack of trust by the public in the fairness and impartiality of the old ISDS model,” she wrote. “This has significantly affected the public’s acceptance of ISDS and of companies bringing such cases.”

Malmström has her eye on eventually establishing a permanent international investment court.

But a senior U.S. trade official has criticized the proposal.

Stefan Selig, U.S. undersecretary for international trade at the Commerce Department, told Agence France Presse in May that the United States prefers the ISDS mechanism because it “increases the security of companies willing to make investments…”

EU investors are the most frequent users of the existing system. To Malmström this means that the EU must take responsibility for reforming and modernizing the system.

“Some have argued that the traditional ISDS model is private justice,” she wrote. “What I’m setting out here is a public justice system – just like those we’re familiar with in our own countries, and the international courts which Europe has so actively promoted in the past.”

In crafting the proposal, Malmström has engaged in extensive public consultations, followed by detailed discussions with the 28 EU Member States, the European Parliament, national parliaments and stakeholders.

Setting up an Investment Court System would create trust, Malmström believes, if it is “accountable, transparent and subject to democratic principles.”

Judges, not arbitrators, would decide cases, and the judges would be publicly appointed. “We will guarantee there is no conflict of interest,” wrote Malmström.

Proceedings would be transparent, hearings open and comments available online, and a right to intervene for parties with an interest in the dispute would be provided.

And an Appeal Tribunal would form an essential part of the Investment Court System.

On September 16 Malmström made the proposal public and sent it to the European Parliament and the Member States.

EU First Vice-President Frans Timmermans likes the idea, which he says breaks new ground.

“The new Investment Court System will be composed of fully qualified judges, proceedings will be transparent, and cases will be decided on the basis of clear rules. In addition, the Court will be subject to review by a new Appeal Tribunal,” Timmermans explained. “With this new system, we protect the governments’ right to regulate, and ensure that investment disputes will be adjudicated in full accordance with the rule of law.”

“I’m convinced that this system will also benefit investors,” Malmström wrote. “These changes will create the trust that is needed by the general public, while encouraging investment.”

An overview of the proposal Transatlantic Trade and Investment Partnership  and a reader’s guide to the proposal Guide to the Draft text on Investment Protection and Investment Court System in the (TTIP) is also available.

Featured Image: Trade Commissioner Cecilia Malmström discusses the Transatlantic Trade and Investment Partnership at a breakfast with women of the ALDE party, the Alliance of Liberals and Democrats for Europe Group, July 9, 2015 (Photo courtesy ALDE Group via Flickr creative commons license)

Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.