Mostafa Monira Firdouse, Green Finance Advisor, FoE (HK)
Over the past decade, there has been a big increase in the
use of climate-friendly technologies, which has been even better than expected.
Renewable energy sources like solar, wind, and hydropower have become really
important and widely available.
The amount of renewable energy being produced globally has
stayed steady and has even gone beyond what was expected in 2019. The capacity
for renewable power has almost doubled between 2015 and 2020, with solar panels
and wind turbines growing the most. Which are often initially financed by
blended finance mobilizing private capital at a scale.
These technologies have the potential to reduce up to 90% of
human-made emissions by 2050. But there’s still a gap between how ready these
technologies are and how much they’re being used commercially. Only 10% of
their potential is being fully used. Climate technologies are also more
expensive to develop than other technologies, and recent interest rate
increases have made it even harder to afford them. While there has been a lot
of interest from investors in climate technologies in recent years, it’s been
harder to get financing in 2023.
Climate technologies need more money than venture capital
firms usually provide, and they’re riskier than private equity and
infrastructure funds are willing to support. To make these technologies more
widely available, we need a different approach to financing that takes into
account their unique characteristics, like the fact that they’re new and
sometimes expensive upfront.
We also need public-sector support to lower the cost of
capital and attract private investment. Blended finance models, which combine
public and private money, are important for funding riskier projects in the
early stages, however, each dollar of blended finance should be tagged with a new
types of funds, like infrastructure growth capital and industrial venture
capital funds, to meet the financing needs of climate technologies.
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Check out the above calendar for the fantastic green finance events for Jan to Mar 2024! Interested to join and know more about the events? Click the links below for details:
GST顯示我們需要迅速加大對能源轉型的投資，推廣可再生能源，同時擺脫化石燃料。它特別強調了向發展中國家提供資金的迫切需要，以避免繼續依頼化石燃料基礎設施。於金融領域中，格拉斯哥淨零金融聯盟（Glasgow Financial Alliance for Net Zero, GFANZ） 於2021年4月與「淨零競賽」運動 （Race to Zero campaign） 合作，努力協調金融體系各個領域，加速實現全球淨零經濟轉型，並跟進成員轉型的進展。然而，缺乏可獲取、高質量和可比較的氣候數據，仍然是實現全球淨零經濟最大障礙之一。持份者主要關心的是如何確保氣候數據的一致性、且易於獲取和比較，以確保氣候考慮能充分融入決策和各種策略之中。
事實上，在2021年10月28日的「一個地球」 （One Planet Summit），一個討論保護全球生物多樣性的高峰會中，法國總統埃馬紐埃爾·馬克龍 （Emmanuel Macron） 和聯合國特使邁克爾·R·布隆伯格（Michael R. Bloomberg）倡議成立了「氣候數據指導委員會」（Climate Data Steering Committee, CDSC）。該委員會於2022年9月發布了初步建議，呼籲創建一個「淨零數據公共事業」 （Net Zero Data Public Utility, NZDPU）。根據CDSC的進展報告1，NZDPU的概念驗證最重要的一環是提供免費氣候轉型相關數據、增強一致性和透明度，以滿足用戶需要。概念驗證提供了基礎架構，以量度公司的直接（範圍1）和間接（範圍2及範圍3）溫室氣體排放，以及減排目標資料的可獲取性。概念驗證使用了來自全球環境披露系統碳披露專案（Carbon Disclosure Project, CDP）的數百家公司的數據，使用戶可以體驗NZDPU初期的特點和功能。NZDPU的設計嚴格遵循溫室氣體盤查議定書裡的方法2，相對氣候相關財務揭露工作小組（Task Force on
Climate-related Financial Disclosures, TCFD） 的披露範圍，NZDPU較專注於排放披露。NZDPU將會致力克服用戶由現有數據，轉到使用經CDSC檢測的氣候相關數據的難題。簡而言之，NZDPU將成為全球第一個集中、免費、開放的私營部門氣候轉型相關數據儲存庫。這個新的數據門戶能讓投資者和監管機構了解哪些公司在履行承諾方面所取得的進展，同時也賦予公眾權力，使公司承擔責任，言行一致。
The 28th Conference of the Parties of the
United Nations Framework Convention on Climate Change (UNFCCC), more commonly
referred to as COP28, is the largest annual international meeting on climate
organized by the United Nations. Government representatives from 197 countries come
together and attempt to agree on action for the climate crisis which has also gathered
financial actors, corporates and civil society. This article would briefly
address one of the key outcomes regarding climate data for net zero and its
implications.
Following a year of increased frequency of extreme
weather events and record breaking in temperature, the stakes for COP28 this
year always reaches a high records. The Global Stocktake (GST) was the world’s
first exhaustive check-up on progress towards meeting the objectives of the
2015 Paris Agreement, and the outcome showed that global greenhouse gas (GHG)
emissions levels have exceeded interim targets and are off-target for the
near-term goals of 2030: global GHG emissions need to be cut by 43% by 2030 and
60% by 2035 from 2019 levels, aiming for net zero GHG emissions by 2050. This
has far-reaching implications for maintaining the 1.5°C target of the Paris
Agreement as a realistic option. Also, this calls for governments to work on
updating Nationally Determined Contributions (NDCs) for 2035, and yet there are
other technical, financial and political actions that are necessary to correct
the course of global GHG emissions before time runs out.
It specifically calls out the urgent need
to get financing to developing countries in order to avoid locking-in fossil
fuel infrastructure. For what concerns financial actors, there are initiatives
that track progress of members of the Glasgow Financial Alliance for Net Zero
(GFANZ), which was launched in April 2021 in partnership with the “Race to Zero
campaign”, to coordinate efforts across all sectors of the financial system to
accelerate the transition to a global net-zero economy. Nevertheless, the lack
of accessible, high-quality, and comparable climate data remains one of the
most significant barriers to achieving a global net-zero economy. A primary
concern of stakeholders is ensuring that climate data is consistent and easy to
access and compare, to ensure that climate considerations can be fully
integrated into decision-making and strategies.
Indeed, in the “One
Planet Summit” initiative on 28 October 2021, which focus on
global biodiversity, the President of France, Emmanuel Macron, and UN Special
Envoy, Michael R. Bloomberg, launched the Climate Data Steering Committee. This
committee published initial recommendations in September 2022 calling for the
creation of a Net Zero Data Public Utility (NZDPU). As outlined in the Climate
Data Steering Committee (CDSC) progress report 1, the NZDPU proof of concept is a significant milestone
towards making climate transition-related data freely available in one place
with enhanced consistency and transparency to serve user needs. The proof of
concept delivers the foundational architecture to allow for scaling accessibility
of companies’ direct (Scope 1) and indirect (Scope 2 and Scope 3) GHG
emissions, and GHG emissions reduction targets. Populated with data from
hundreds of companies that disclose publicly through Carbon Disclosure Project
(CDP), the global environmental disclosure system, the proof of concept allows
users to experience the initial set of features and functionality of the NZDPU.
The design of the NZDPU closely follows the GHG Protocol methodology 2, which has a much narrower
scope than the Task Force on Climate-related Financial Disclosures (TCFD), as
it focuses specifically on emissions disclosures. The NZDPU will also focus on
trying to overcome the existing data challenges experienced by users of climate
transition-related data and identified by the CDSC. In simple words, the NZDPU
will be the world’s first global, centralized, free, and open repository for
private sector climate transition-related data. This new data portal will allow
investors and regulators to see which companies are making progress on their
commitments, while also empowering the public to hold companies accountable for
backing up words with action.
A public consultation opens through March
1, 2024 will give stakeholders an opportunity to provide feedback that will
inform the NZDPU’s future development. It is believed that net zero data from
NZDPU could close the gap on investors’ data needs to estimate climate risk and
further push Net Zero Investors financing to reach net zero targets.
Nevertheless, the real outcome on the NZDPU remain conscious as there are
multiple jurisdictions have seen considerable progress relating to disclosure
of climate-related information, internationally consistent mandatory disclosure
rules and standards have not been implemented globally with plenty of grey
zones, which are pending to solve. Meanwhile, it is recognized that there are
boundaries to disclosing specific climate transition-related metrics, and
further development is needed to address remaining methodological and data
challenges.
2.
See “Recommendations for the Development of the Net-Zero Data Public Utility”
(CDSC, 2022)
Article
is written by EFFAS Certified Environmental, Social, and Governance Analyst
(CESGA). CESGA is highly recognized in Europe and globally which has been
steadily increasing in the worldwide. If interested in enrolling, please refer
to https://bit.ly/3tFUQ1M.
Michele Leung, Green Finance Advisor of Friends of the Earth (HK)
Global regulators are stepping
up on the supply chain ESG assessment and disclosure, both from the
environmental and social perspectives. Supply chain ESG risks would be far
reaching and complex; yet transparency around direct and indirect suppliers is
still opaque.
EU regulators introduced “do no
significant harm” principle, which requires assessment of companies, and their
economic activities should not support or carry out actions that cause
significant harm to any environmental or social objectives.
Most recently, the European Council
and the European Parliament reached a provisional deal on the corporate
sustainability due diligence directive (CSDDD)[1] ,which
aims to enhance the protection of the environment and human rights in the EU
and globally. It aims to “set obligations for large companies regarding actual
and potential adverse impacts on human rights and the environment, with respect
to their own operations, those of their subsidiaries, and those carried out by
their business partners.” Notably, this directly does not only apply to EU
companies but also for non-EU companies, provided they have over €150 million
net turnover generated in the EU.
Specifically on the social
perspective, human rights and labour practice are often come into the
spotlight. When evaluating on labour
standard, companies are often analyzed on the management and transparency of
their supply chain, while the working standards in the regions of operation are
also being considered. These are often assessed
according to the Ten Principles of UN Global Compact and UN Guiding Principles
on Business and Human Rights.
On the other hand, from the
environmental perspective, centering the key themes of climate change and
biodiversity, the key topics include raw materials sourcing, deforestation, carbon
and water footprint. For example, on raw material sourcing, companies are
evaluated on the environmental impacts of the raw materials used in their
products and their management efforts around sourcing policy and commitments are
being considered.
Under the EU’s new anti-deforestation
law[2], “any
operator or trader who places commodities like cattle, wood, cocoa, soy, palm
oil, coffee, and some of their derived products, such as leather, chocolate on
the EU market, or exports from it, must be able to prove that the products do
not originate from recently deforested land or have contributed to forest
degradation”. It is posing a huge challenge to the food product industry, as
ingredients are often sourced from emerging markets, which the monitoring and
reporting would be difficult, and traceability is a challenge.
In conclusion, transparency around supply chain ESG risk is crucial as it enables
companies and investors to manage risks and navigate regulatory requirements. Supply
chain should be better managed to mitigate the risk of operational disruption,
reputational damage, possible liabilities, and financial loss.
