Check out the above calendar for the fantastic green
finance events for January 2022! Interested to join and learn more about green
finance? Browse the links below to check out the upcoming events on Green
As the unprecedented year
of 2021 draws to a close, the impact of COVID-19 continues to wreak havoc
across the globe, during which climate change and social inequality are viewed
by many as some of the biggest worries according to the latest survey conducted
by Ipsos across 28 countries.1
Global warming has been
identified as a key contributor to extreme weather events, which have caused an
estimated USD170 billion of economic damages this year.2
In the wake of all the devastating
weather events this year, many countries are determined to reduce their carbon
footprint, and pledges are made to achieve net zero target by mid-century. Whilst
climate change continues to be one of the focal points, social and governance matters
have also been the subject of discussions by business and investor communities.
Looking ahead in 2022, it
is likely COVID-19 will continue to be the top priority for the global
communities, where coordinated efforts will be made in attempts to irradiate
the diseases, but increased focus will also be placed to address some of the
other concerns including social inequality and carbon neutrality.
Governments will likely establish
rules and regulations in order to track carbon emissions and to develop green economies.
ESG education and engagement will be considered as the critical components to
drive the development of green finance with the intention to address the
In order to keep up with
the latest compliance requirements globally, demands for ESG talent has risen
substantially and a noticeable shortage of ESG trained professionals can be
observed on the market place.3
In order to bridge the gap, The European Federation of Financial
Analysts Societies (EFFAS) has partnered with Friends of the Earth (HK) to
promote the industry recognized ESG professional credential, the Certified
Environmental, Social and Governance Analyst (CESGA®) programme aimed at
addressing such shortcoming. The number of CESGA® graduates from Hong Kong currently
ranked amongst top 5 in 53 regions worldwide and ranked first in the Asia
Friends of the Earth (HK) will continue to promote ESG professional education in 2022 with the objective to incubate more professional talents and help mobilize the industry to take action in creating a greener and sustainable future.
Green Finance Advisor of Friends of the Earth (HK)
While climate change stays
in the focus of the society and investors, we are glad to see more discussion
around the topic of nature and biodiversity. In fact climate and nature are
impacting each other. Climate change has driven the increase in wildfire,
drought and other hazards happening in nature. On the other hand, the weaker ecosystems
of our sky, land and ocean have impacted the ability of the nature to
regulating climate. Having a stronger nature can certainly help us mitigate
climate change. We need big and quick actions from both the corporations and
the governments to help recover our ecosystems.
Noticeably, climate action
failure, biodiversity loss and natural resource crises are among the long-term
existential threats for the world according to The Top Global Risks Reports
2021 from the World Economic
Forum. (And we believe that these three risks are very likely to stay as the
world’s major threats in The Global Risks Report 2022, which is scheduled to be
published in this month.) According to the report from The World Bank, the
collapse of the ecosystem would cost US$2.7 trillion annually (or 2.3% of
global GDP) and some countries would be hard hit. In 2021, a group of 34
executives from global financial institutions, corporates and market service
providers were appointed to the Taskforce on Nature-related Financial
Disclosure (TNFD). The Taskforce members will help develop a framework for corporations
to assess their nature-related risks and opportunities.
TNFD will adopt the same structural
approach of TCFD’s four pillars (governance, strategy, risk management and
metrics & targets) to guide companies operate and report nature-related
issues. That being said, companies face more challenges when assessing their financial
impact related to nature than those related to climate. This is underpinned by
the complexity and the scope of nature-related issues. We have developed a widely
accepted set of metrics for measuring climate risks (such as greenhouse gas
emissions from Scope 1 to 3 and carbon prices). But there is no single set of one-size-fit-all
metrics for assessing nature-related topics. Each nature-related topic (e.g. land
degradation, biodiversity and water pollution) will need to be assessed by its
own set of metrics.
It is important for corporations
and nations to understand and access their nature risks and the associated
financial impacts. While TNFD will take some time to be launched for wider
adoption (by 2023), corporations and nations do not need to wait. There are
plenty of tools available to help them assess nature related impact. The
web-based ENCORE, developed by Natural Capital Finance Alliance in partnership
with UNEP-WCMC, is a useful tool to facilitate financial institutions assess dependencies
and impacts on natural resources for major industries. The Global Forest Watch
is another online platform that provides tools and near real-time data for
monitoring forests. We see no lack of tools for measuring nature-related impact
but there a lack of effort among companies and governments to drive substantial
positive impact on our nature.
Same as climate change, nature depletion and biodiversity loss are systemic risks that affect everyone of us. In 2022, the second part of the United Nations Biodiversity Conference (COP15) is expected to be held and to conclude the Post-2020 Global Biodiversity Framework. The Framework aims to work on 21 targets and 10 milestones for 2030. The goal is to put the earth on the path to recover its nature and biodiversity. We urge businesses and governments to take bold moves to manage and reduce their nature risks and to drive positive changes to our ecosystems.
Michele Leung, Green Finance Advisor of Friends of the Earth (HK)
According to the statistics, automobile manufacturers
contributed approximately 13%* of total global carbon emissions. Vehicle
tailpipe emissions represented nearly 80% of this carbon footprint, which presents
the industry’s biggest challenge in decarbonization.
Due to its large carbon footprint, more regulators who focus
on climate change are shifting their attention to auto industry. In the recent
COP 26, declarations were made by government to work towards all sales of new
cars and vans being zero emission by 2040 or earlier. Similarly, in China, the ’14th
Five-Year’ New Energy Automobile Industry Development Plan is a critical period
for the transformation and upgrading of China’s auto industry. It is targeted
to reach 20% share of passenger new electric vehicles sales by 2025. The
ambition is to reach 100% of passenger vehicles electrified in 2035.
The growth of electric vehicles market is exponential. According to International Energy Agency (IEA), based on current trends and policies, it projects the number of electric cars, vans, heavy trucks and buses on the road worldwide to reach 145 million by 2030, which represents nearly 14 times the number observed in 2020. China, in particular, is leading the market with its new electric vehicle penetration rate rose to 13% in 2021.
However, one should note that while electric vehicles do not
generate tailpipe emissions, the batteries used to power them are charged via
electricity grids which may not be emission free. National grid emissions
depend on a range of energy source mix, including coal and renewables. The fact
is, this reallocation of emission from tailpipe to grid is still considered and
categorized as Scope 3 Category 11 under the Greenhouse Gas Protocol, migrating
from indirect use-phase to direct use-phrase emission. According to an industry
research paper^, it is found that if all vehicles were replaced with electric
equivalents, that industry average Scope 3 Category 11 emissions would have
been reduced by 31%, though it is a significant reduction, it is still far from
the ideal “zero-emission”.
Nevertheless, accelerating the proliferation and adoption of zero emission vehicles is an important step for automobile manufacturers to decarbonize their carbon footprint and the world to achieve Net Zero. In parallel, investors are getting more interested in corporates’ electric vehicles strategies. When evaluating the auto industry, in addition to carbon footprint, investors should also be aware of the ESG risks stemming from social aspects. Investors should pay attention to the product recalls and impacts of Over The Air (OTA) updates under product safety. Investors should also consider how the companies manage their supply chain impacts (especially along the Original Equipment Manufacturer (OEM) model and upstream), as well as the restructuring and talent requirement practices under labour management.
*In 2019 alone, automobile manufacturers constituents of the MSCI ACWI Index as of May 2021 were responsible for nearly 4.7 gtCO2e, approximately 13%2 of total global CO2 emissions.
^ MSCI ESG Research “Electric Vehicles and the Elusive Road to “Zero Emissions”’ by Yu Ishihara, June 2021