From Paris Agreement to Net Zero

Michele Leung, Green Finance Advisor of Friends of the Earth (HK)

The Paris Agreement aspires to keep global temperature rise to only 1.5°C by 2100. According to the Intergovernmental Panel on Climate Change (IPCC), limiting global warming to 1.5°C or 2°C would require “rapid and far-reaching” transitions in land, energy and industry etc. It is quantified that global net human-caused emissions of carbon would need to fall by about 45 percent from 2010 levels by 2030, reaching ‘net zero’ around 2050. Hence in other words, to achieve the goal of the Paris Agreement , global emissions in the real world must be Net Zero no later than 2050.

Many countries have made commitments on Net Zero. For example, we have Net Zero Asset Owner Alliance that the asset owners gather and set targets for emissions reduction of their equity and corporate bond portfolios. Other large pension funds are likely to follow suit to make plans on their decarbonization and to put allocations to support low carbon transitions. They also drive a lot of momentum by systematically engage with the top emitters in their portfolio and/or request a detailed analysis and reporting on companies’ targets and associated trajectories from their managers.

Meanwhile, the Network for Greening the Financial System (NGFS), is a network of 83 central banks and financial supervisors that aims to accelerate the scaling up of green finance and develop recommendations for central banks’ role for climate change. It is anticipated they will soon define and require climate stress tests to be run by the banks under their oversight.

With the 2021 United Nations Climate Change Conference, also known as COP26,  scheduled in this November, there are expectations that more regulations will come in place. For example, it will lead to several countries announcing mandatory TCFD reporting.

After all, tackling climate change should not be only about reporting or ticking the box exercise but should also develop climate strategies. Forward looking metrics are essential as backward metrics do not capture future risk. Some investors may think that the available metrics might not be accurate and investment ready. It is undeniably that climate change is inherently uncertain and the application to finance is still maturing, yet being pragmatic with exclusions is the key. In absence of data disclosure, scientific modeling and granular assessment would be helpful in filling the data gap. Many asset owners and asset managers around the world are already doing so, have you get started?


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「綠色比特幣」?!?! Chia ?!

Green Finance Advisor of Friends of the Earth (HK)

在比特幣 (Bitcoin) 採取的工作量證明(Prove of Work, PoW)共識機制下,為了追求強大的算力,加上冷卻系統所需,挖礦是能源密集(energy intensive)的活動,因此比特幣是否比傳統金融體系更加環保,始終是爭論不休的議題。《BBC》報導,劍橋大學最近提出的分析報告結果指出,比特幣一年下來消耗的能源總量,要比阿根廷、荷蘭、瑞士等國家消耗的還要多,約每年121.36 太瓦時(TWh)。假如把比特幣視為一個國家,其耗電量將躋身世界前 30 大 (https://digiconomist.net/bitcoin-energy-consumption) 。

近來熱烈討論的「綠色比特幣」之稱的奇亞幣Chia,只需消耗硬碟及網路資源,比起比特幣的ASIC挖礦大幅降低了資源消耗。由於Chia挖礦主要倚賴的是現今世界下供應過剩的磁碟空間,取代大量電力耗損、用途單一的ASIC硬體來進行驗證和交易,最終實現綠色、低能源消耗的去中心化的「綠色」特性。Chia 奇亞幣採用的是一條全新的公鏈,與以往的 POW 或是 POS 不同,它提出的概念叫 Proof of Space and Time (時空證明 PoST),藉此可以在確保安全的情況下降低“挖礦”的能源耗損。 其實,Chia 連挖礦的概念也改變了,在它的系統設計中,挖礦不叫挖礦,而叫“種植”(farming),又是一個綠色的概念。 有興趣的讀者可以去官網研究一下 (https://www.chia.net/greenpaper/)。


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The Value Of Mangroves

Alexandra Tracy, Green Finance Advisor of Friends of the Earth (HK)

We are all familiar with the mangrove forests that line our coasts, but perhaps not everyone is aware of the tremendous value that they provide to ecosystems around Asia. Mangroves grow in shallow water, and have a unique filtration system which makes them one of the few plants that can survive in salty conditions. Mangroves are hubs of biodiversity, providing homes for fish, crabs, birds and hundreds of plant species.

Mangroves also have thick roots, which play a key role in protecting coastlines from erosion and creating natural buffers against storm surges. Following a study of 59 subtropical countries, scientists at the University of California Santa Cruz estimated that mangrove forests prevent over $65 billion in property damage every year, and help shelter more than 15 million people.

In addition to all these virtues, mangroves are some of the most effective carbon sinks in the world. Carbon stored in coastal ecosystems differs from that in forests and grasslands in that additional biomass accumulates from organic matter being washed up by the tide. The saltwater inhibits the breakdown of the organic material (which would otherwise produce methane). As a consequence, mangroves can sequester up to ten times more carbon than terrestrial forests, according to Conservation International.

However, mangroves are under threat. Rising sea levels and temperatures, as well as human impacts such as pollution and erosion, have caused rapid deterioration in coastal and marine areas. The most extensive mangrove coverage in the region is located in Indonesia, where it spans some 14,000 square miles. But sadly, up to 20 percent of Indonesia’s annual emissions total is created by loss and conversion of mangrove areas to aquaculture. Across Asia, mangrove destruction has reached around 95,000 acres every year.

Capturing the value

The concept of forest carbon is well known and recognised by payments through the global REDD+ programme and the voluntary carbon markets. Recently, the idea of “blue carbon” – carbon sequestration by marine and coastal ecosystems – has also begun to gain traction in international carbon credit markets.

Mangrove restoration is the most well developed kind of blue carbon credit project to date. Scientists at the National University of Singapore recently concluded that about 20 percent of the world’s mangrove forests are suitable for such projects, and possibly half of that could be protected with inexpensive carbon credit prices starting at $5 per ton.

A number of mangrove projects are in development or operating already, covering sites in Africa, Asia and South America. One of the largest efforts to date is the Delta Blue Carbon Project located in 350,000 hectares of tidal wetlands on the south east coast of Sindh in Pakistan. It aims to reforest more than 200,000 acres of mangroves and absorb two million tons of carbon dioxide equivalent every year.

Growing corporate demand for blue carbon

A number of corporates are already active in investing in the voluntary markets for blue carbon through buying offsets. Companies in industries such as shipping and tourism have been early entrants, as they can put money into conserving the landscapes on which they have a direct impact, while offsetting their own emissions. MSC Cruises, for example, recently announced that it will offset all carbon dioxide emissions from its fleet marine operations through a carbon offset portfolio focused on restoring ocean and coastal habitats.

As an indication of the growing momentum around blue carbon, over the past year, a number of big name brands have launched mangrove protection and restoration projects to help combat their greenhouse gas emissions. For example, Procter and Gamble has partnered with Conservation International on the Palawan Protection Project in the Philippines, which will safeguard 31 species of mangroves on almost 110,000 acres of forests. Earlier this year, Gucci announced its Muskitia Blue Carbon REDD+ project to protect over 12,000 acres of mangroves in Honduras. And Apple is involved in two large projects in Columbia, also with Conservation International, which together could sequester over two million metric tons of carbon dioxide.

The market for private investment is still relatively new, and carbon accounting frameworks need to be modified to facilitate the widespread uptake of blue carbon into the voluntary offset market. The efforts of specialists, such as Blue Ventures in Madagascar, as well as corporates like Apple, who have been pushing for a rigorous methodology to underpin blue carbon projects, will stimulate project development and attract greater interest from investors.


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6月5日 – 世界環境日特刊:以可持續金融修復地球

香港地球之友董事及綠色金融事務召集人 張振宇

上週六是世界環境日。「以可持續金融助修復地球」是我們在2021年世界環境日的願景。毫無疑問,踏入21世紀2020年代,如何應對氣候變化以及全球所面對的社會、經濟和環境問題是迫在眉睫的挑戰。

重整

香港地球之友將(1)減碳、(2)綠色與可持續金融、(3) 城市綠化以及(4)循環與可持續發展列為四大關注議題。三年前,我們已經推出了香港地球之友的促進亞洲綠色金融發展藍圖,因為我們相信結合可持續金融與環境政策是應對氣候變化以達致2050 年碳中和的最有效方法。

重振

根據我們去年進行的一項調查顯示,香港公眾對於綠色及可持續金融的認識和了解非常不足。為了提升業界及公眾人士對綠色金融的認識,我們定期組織圓桌會議、網絡研討會、培訓課程等一系列「綠色金融 與你同行」活動。同時,我們非常榮幸能創立全港第一個綠色金融網誌,號召來自各行各業的ESG專業人士組成綠色金融顧問團,就時下ESG議題論述觀點並提供專業的意見。

此外,我們認為要提升香港金融從業員的綠色金融專業水平,才能避免綠色金融產品當中潛在的「漂綠」(greenwashing) 風險。有見及此,香港地球之友夥拍歐洲金融分析師聯合會(EFFAS)推出了香港首個國際認證的ESG分析師認證(CESGA®),提升業界專業水平。

同時,我們與多個國際機構建立全球聯盟,通過他們的專業知識和合作,提升香港在綠色金融方面的定位、標準和競爭力,藉此加強香港作為國際金融中心的全球地位和領導地位。

香港地球之友世界基準聯盟 (WBA)、聯合國可持續保險原則倡議 (UN PSI)、歐洲財務分析師學會(EFFAS) 和由德國漢堡大學所領導的著名可持續金融研究小組(SFRG) 建立伴伴關係, 成為其於亞洲的盟友。綠色與可持續金融在國際金融市場日益受到關注, 我們相信與這些伙伴的合作將能夠更進一步推動香港綠色金融的進程。

重置與重塑

今天是世界環境日。在嚴峻的疫情影響下,當全球正在思索如何能夠復蘇經濟,我們也應思考如何在這個機遇下, 重塑循環經濟模式, 運用適當的金融工具, 創造「碳中和」的未來。

著名環保人士保羅‧霍肯 (Paul Hawken) 在其著作《商業生態學》( The Ecology of Commerce ) 當中寫到:

「我們可以很容易建立一個建基於修補未來,而不是透支未來的經濟體系。我們也可以創造屬於未來的財富,而不是掠奪自未來的財富。」

讓我們重塑一個綠色及可持續的未來!


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June 5 – World Environment Day’s Special: Restore the Earth with Sustainable Finance

Anthony Cheung, Board Governor & Green Finance Convenor Friends of the Earth (HK)

Tomorrow is the World Environment Day of a New Decade. “Restore the Earth with Sustainable Finance” is our vision of the 2021 World Environment Day. A top priority concern of this New Decade, undoubtedly, is the urgency to tackle Climate Change and the socio-economic and environmental impacts that we all face.

Reprioritize

Friends of the Earth (HK) has reprioritized Decarbonization, Green & Sustainable Finance, Urban Forestry and Regeneration & Sustainable Development as its core focus. We launched our Green Finance Roadmap and campaign 3 years ago. We believe coupling Sustainable Finance with Environment Policy is an effective way to incentivize decarbonization in Asia and actualize Hong Kong’s carbon neutrality goal by 2050.

Revive

According to a stakeholder opinion survey we conducted last year, public awareness and understanding of green & sustainable finance is low in Hong Kong. In order to revive stakeholders and public interest in Green Finance, we have organized our regular Green Finance Connect Series, with Roundtables, Webinars, Training Courses and the first Green Finance Blog in Asia. We are proud and grateful for the input of many local and global green finance experts as advisors, bloggers and contributors.

In addition, we believe it is crucial to upgrade Hong Kong’s green finance expertise and to counter ESG greenwashing.

In this regard, Friends of the Earth (HK) has joined hands with the European Federation of Financial Analysts Societies (the EFFAS) has launched the internationally certified ESG Analysts Accreditation (CESGA®), the first of its kind in the Asia Pacific region.

Reinforce

We are undoubtedly keen to reinforce Hong Kong’s global standing and leadership as an international financial centre. Building global alliance with international institutions and stakeholders to leverage their expertise and collaboration to raise Hong Kong’s positioning, standards and competitiveness in Green Finance is a strategic approach. 

That is why Friends of the Earth (HK) has reached out and successfully partnered and become allies with the World Benchmarking Alliance (WBA), United Nations’ Principles for Sustainable Insurance Initiative (the UN PSI), the EFFAS and the renowned Sustainable Finance Research Group (SFRG) led by the University of Hamburg in Germany. Green & Sustainable Finance is an evolving business; and it is without doubt that we need mutual empowerment.

Repurpose & Reshape

Tomorrow is World Environment Day. While we consider how to recover from the global pandemic, let us also deliberate how to Repurpose Finance and how to Reshape a Circular Economy and a Carbon Neutral Future.

On this note, let me end with a quote from Paul Hawken, author of Ecology of Commerce:

“We can just as easily have an economy, that is based on healing the future, instead of stealing it. We can create assets for the future, or take the assets of the future…”

It’s time to Reshape a “Green and Sustainable” Decade!


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