Introduction to Sustainable Finance

Extract

[...] Environmental Criteria: how companies perform as a steward of natural environment Social Criteria: how companies manage relationships with employees, suppliers, customers, communities where it operates Governance criteria: companies leadership, executive pay, audits, internal controls, shareholder rights Socially Responsible Investing responsible economy by encouraging portfolio management companies to consider extra-financial criteria when selecting asset values $22.89 trillion Green Finance: financial investments flowing to sustainable development projects, initiatives, environmental products, policies encouraging the development of a more sustainable economy. Financing green investments Financing public green policies Green financial system Green investment targets: waste processing and recycling biodiversity protection water sanitation industrial pollution control climate change adaptation renewable energies energy efficiency other climate change mitigation (reforestation . ) Social Finance: savings and assets invested into social finance products. Euro10b in 2016 Offers funding to projects not fitting into classic financing circuits Social business: business with not only lucrative ends but social in nature. [...]

[...] Introduction to Sustainable Finance The Paris Agreement (December 2015): Sets a global action plan to put the world on track to avoid dangerous climate change by limiting global warming below 2°C. At the Paris Climate Conference (COP21) 195 countries adopted the binding global climate deal which will take effect from 2020. Key points: Temperatures (2100): warming below 2° and continue, to limit it to 1.5° Finance (2020/25): rich countries must provide $100b as a "floor" Differentiation: developed countries must reduce greenhouse gazes Emissions objectives (2050): rapid reductions to achieve a balance btw emissions Burden-sharing: developed countries must provide financial resources, other countries should support on a voluntary basis Review mechanism (2023): review every 5 years Climate damage: vulnerable countries suffered from climate change In June 2017, Trump announced he was pulling US out of the agreement, joining Syria and Nicaragua, only nations not part of it. [...]

[...] Market actors: Issuers: entities with green projects needing (re)funding Investors: with a mandate to invest in green assets Intermediaries: stock exchanges, index providers, rating agencies Underwriters: financial institutions arranging the issuance of green bonds External reviewers: verify the "greenness" of projects 2008 WB launches first green bond for $3.35b 2010 climate bonds initiative launch 2013 private sector issuance; municipal and local issuance takes off 2014 ICMA green bond principles established supporting increasing private sector issuance 2015 COP G20; COP21 ratified 2017 UN launches SDG Finance Lab; Bonn COP23 Issuance of GB remains small but is growing rapidly since 2007. Surge of GB attributable largely to Chinese borrowers, who accounted for $32.9b. Climate finance: growing sector in international development and environmental finance. Governments of the world making more resources available for climate finance. [...]