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

Investors around the world are looking at ways to decarbonise their portfolios and setting targets for themselves to meet over the next ten, twenty or thirty years.

The number one strategy for most investors must be to reduce emissions across the portfolio by reallocating capital among higher and lower carbon assets, and working with investee companies on their own transition to a greener business model.

Some industries, however, are going to be more challenging and very costly to decarbonise, and will continue to be emissions heavy in the short to medium term.  This will probably mean that by 2030, say, there will be residual emissions remaining in companies in the portfolio.  One response is to divest.  Another is to use carbon offsets to neutralise the greenhouse gases that they are creating.

Offset markets still have a way to go

Mandatory carbon markets have been around for years (see the European Union, North America and now China).  But the voluntary carbon credit market has really grown significantly in just the last few years, as large companies like IBM, Amazon and Microsoft have looked to carbon offsets as part of the solution to meeting their net zero targets.

Given its relatively early stage of development, the voluntary carbon market today faces big challenges in attracting investors.  Carbon credits (generated by activities as diverse as renewable energy, forestry, sustainable farming or preserving landscapes and coastlines) are not standardised.  Collecting data from these projects can be difficult, the methodology for verifying the credits is not consistent and the benefits are often not well defined.

A lack of trust in the market causes investors to be cautious about participating.  This, in turn, means that the market will continue to lack the liquidity necessary for efficient trading.  Greater transparency and oversight will be very important for building investor appetite, as will the development of better risk management services and financing alternatives.

But the future could be huge

McKinsey estimates that the need to meet corporate commitments could push global demand for high quality carbon credits in the voluntary carbon market up by at least fifteen times by 2030.  Indeed, if the current structural issues can be addressed, and substantially more liquidity created, the market size by then could be as much as US$50 billion, according to the Taskforce on Scaling Voluntary Carbon Markets, a private sector grouping.

Climate Impact X

A new venture in Singapore aims to tackles the shortcomings and create a voluntary carbon marketplace with the necessary transparency and liquidity to attract investors at scale.  The four partners behind the new platform – the Singapore Exchange, Temasek, DBS Group and Standard Chartered – will leverage their own expertise and Singapore’s strong regulatory reputation to develop a global exchange for trading trusted, high quality carbon credits.

CIX will offer two digital platforms tailored to the needs of different buyers and sellers.  Its carbon exchange will facilitate the sale of carbon credits in large volumes through standardised contracts, mostly to multinational corporations and institutional investors.  Alongside this, a project marketplace will enable the purchase of carbon credits directly from specific projects developing natural climate solutions.

The marketplace will allow a broader range of project companies to participate in the voluntary carbon market by offering credits to global buyers, including corporates looking to meet their sustainability objectives.  Every transaction will be backed by detailed information on the additionality, benefits and carbon impact of the underlying project.

For both platforms, CIX will utilise satellite monitoring, machine learning and blockchain technology in order to increase transparency and ensure the availability of trustworthy data on the quality of the carbon credits being traded.

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NET ZERO – Optimism 101

Mostafa Monira Firdouse, Green Finance Advisor of Friends of The Earth (HK)

Climate Change – ‘Will we revert to historic norms after the pandemic? OR WILL IT BRING ABOUT SOME LONG-LASTING CHANGES? Do we know yet?’ – These were some of my concerns in my last blog; HERE. I expect to get some of my answers from COP-26.

Why am I optimistic

The pandemic has forced every single business, regardless of size or sector, to rethink. Not all businesses are proactive or even have plan to manage future disruptions, whether they be climate, disease or policy-related. The pandemic has disrupted everything, but so will the net-zero transition. Global emissions are projected to fall by 8% in 2020 as a result of Covid-19.

Transition: The shift to a net-zero global economy is already well underway and implies a complete transformation of almost every sector. We are seeing a major scale-up of clean power, a shift to electric mobility, and a push towards more efficient electric buildings. Zero-emission fuels promise to transform processes in the industrial and manufacturing sectors, and agriculture is moving towards regenerative practices and more climate-friendly diets. Along with solutions to cut emissions, we will need a huge scale-up in carbon removal solutions such as reforestation, peatland and mangrove restoration, and direct-air capture technologies.

Rise of green financing: Another reason for optimism is the renewed focus on the green agenda from investors, a notoriously risk-averse sector. More than $50bn of green bonds were issued globally in September 2020, making it a record month despite the economic impact of Covid-19, BloombergNEF has revealed. Around $270bn of green bonds were issued in 2019, making it a record-breaking year. If the trends seen in September persist, 2020 could break records once more. Race to Net Zero: Finally, supercharging public-private efforts in the race to net-zero. The Alliance of CEO Climate Leaders steps up and calls on G7 and other world leaders to accelerate a just transition.

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香港地球之友綠色金融顧問 黃思靈






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Upcoming Events on Green Finance/ 今期綠色金融活動一覽

Check out the above calendar for the fantastic green finance events for October! Interested to join and learn more about green finance? Browse the links below to check out the upcoming events on Green Finance.


[1] Global Trends in Corporate Tax Disclosure – An Investor Perspective

[2] PRI Digital Conference

[3] Friends of the Earth (HK) Executive Certificate ESG Courses Application Deadline

[4] Route to Net Zero: Asia

[5] COP26: Industrial Transition to Net Zero How can business and the investment sector come together to achieve global decarbonisation?

[6] CESGA® Scholarship Programme Application Deadline

[7] CESGA® Exam December Intake Deadline

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為了應對氣候變化,我們需要減少溫室氣體的排放。雖然二氧化碳是主要溫室氣體,佔年排放量的 74%,但其他溫室氣體具有更高的全球升溫潛能值 (衡量氣體吸熱的能力 )。如果我們以 20 年為期限來衡量,甲烷的升溫潛能值是二氧化碳的 80 倍以上。值得注意的是,甲烷是第二大溫室氣體,佔全球暖化成因的四分之一。降低甲烷排放是減緩氣候變化的有效方法。

人類活動(主要與農業、化石燃料和廢物相關)約佔全球甲烷排放量的 60%。 2021 年 5 月,氣候與清潔空氣聯盟 (CCAC) 和聯合國環境規劃署 (UNEP) 聯合啟動了全球甲烷評估。根據評估報告,如果人為造成的甲烷排放量能減少 45%,到 2040 年我們將可避免攝氏0.3度的全球變暖。

9 月 18 日,美國和歐盟達成一項合作協議,承諾幫助在2030年前將全球甲烷排放量從 2020 年的水平上減少 30%。這協議被稱為“全球甲烷承諾”,將在今年十一月在格拉斯哥舉行的聯合國氣候變化大會(COP 26)上正式啟動。全球甲烷承諾的其他支持國家包括阿根廷、加納、印​​度尼西亞、伊拉克、意大利、墨西哥和英國。根據最新的 IPCC 報告,需要持續大量減少甲烷排放以控制溫升。我們鼓勵中國和其他國家支持全球甲烷承諾。最重要的是,我們期待各簽署國以行動體現承諾。


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