Executing the Global Methane Pledge is Critical

Green Finance Advisor of Friends of the Earth (HK)

To tackle climate change we need to reduce the emissions of greenhouse gases. While carbon dioxide is the primary gas by volume, accounting for 74% of annual emission, other greenhouse gases have higher global warming potential, which measure the absorbed heat of the gas. For example, methane is over 80 times more potent than carbon dioxide if we measure by a 20 years horizon. Noticeably, methane is the second most abundant GHG and is responsible for about a quarter of global warming. Lowering methane emissions is an efficient way to slow climate change.

Human activities (mainly in agriculture, fossil fuels and waste) contributed about 60% of global methane emissions. In May 2021, Climate and Clean Air Coalition (CCAC) and United Nations Environment Programme (UNEP) jointly launched the Global Methane Assessment. Based on the assessment a 45% cut of human-induced methane emissions by the end of this decade would avoid nearly 0.3C of global warming by 2040. On 18 September the US and the EU made a joint agreement to cut global methane emissions by 30 percent from 2020 level by 2030. This initiative, namely the Global Methane Pledge, will be formally launched at the UN Climate Change Conference (COP 26) in November in Glasgow. Other supporters of the Global Methane Pledge include Argentina, Ghana, Indonesia, Iraq, Italy, Mexico and United Kingdom. According to the latest IPCC report, significant ongoing reduction of methane emissions is required to keep temperature rise under control. We encouraged China and other countries to support the Global Methane Pledge. Most importantly we look forward for all signatories to demonstrate their commitments with actions.

The US-EU joint statement on Global Methane Pledge
The Global Methane Assessment from CCAC and UNEP


Visit www.foe.org.hk for more news about Friends of the Earth (HK)!
Green Finance Facebook page: https://www.facebook.com/greenfinancefoehk/
FoE (HK) LinkedIn page: https://www.linkedin.com/company/friends-of-the-earth-hk/

G20 首倡碳定價 碳排大國難再扮做

【意見交流園地】馮健鏗 Ryan Fung

全球政府貌合神離向低碳經濟轉型,各國政府也各出奇謀去應對氣候帶來的衝擊。而 G20 會議近日首次強調碳定價的重要性,也間接導致一些發展國家要求國內污染者負擔經濟責任,逐漸帶來漣漪效應。

全球要向低碳經濟轉型,就要多管齊下削碳。G20 國家之間的共識,似乎是有一些國家會設計碳定價機制,有一些國家會實施稅項政策。但澳洲、印度、俄羅斯、沙特阿拉伯和美國並未有全國範圍的碳價格,也沒有考慮正式訂立碳價格。

之前也寫過,歐盟向全球投下震撼彈,有意訂立碳關稅。未來進口歐盟的商家,必須購買特別許可證,並按歐盟碳排交易系統的碳價納稅,令逃稅不再簡單;而一些發展相對落後的國家,本來甘願犧牲環境來谷經濟,但在這條氣候貿易新規則下也勢將受到打擊,故紛紛抱怨這種徵稅會削弱其出口競爭力,造成不公平懲罰,也無奈地只能研究對策。

印尼就是其中一個受歐盟碳關稅「鞭策」,而展開碳稅討論的國家。縱使去年印尼政府曾揚言「不會為了減碳而犧牲經濟」,但上月也起草法案,定下稅價約每噸二氧化碳 5.25 美元,暫時仍有待政府通過。除此以外,有智庫認為,部分在氣候議題偏向保守的國家,如俄羅斯和土耳其,也被迫跟隨。不過,氣候議題殺入資本市場,也不是毫無憂慮。最著名的當然是 2018 年法國政府的碳稅,導致汽油和柴油價格上漲,引發「黃背心運動」。

至於碳排第一大國中國,面對這個全球議題,最新發展是國務院終於敲定,在 7 月啟動全國碳排放權交易市場。全國七個試點省的加權平均碳價,大約是 40 至 50 元人民幣,擠進一個相比其他大國相對微妙的企位。

碳定價,有些國家「堅做」,有些國家「扮做」,有些國家「不做」,也形成國與國之間出現 ESG 懸殊的現象。要看清楚一個國家是否「漂綠」(Greenwash),就應該看看當中價格的差異。而為了避免國家漂綠,國際貨幣基金組織(IMF)就提議主要排放國之間要達成碳價格下限協議。


瀏覽香港地球之友網頁 www.foe.org.hk 了解更多
綠色金融 Facebook 專頁: https://www.facebook.com/greenfinancefoehk/
香港地球之友 LinkedIn 專頁: https://www.linkedin.com/company/friends-of-the-earth-hk/

ESG: A Report for Public Companies and the Implications for Private Companies

Green Finance Advisor of Friends of the Earth (HK)

Year to date 2021 has been a banner year for ESG investing where many would argue the coronavirus kicked off a sustained shift of flows and invest interest into ESG themed investments. Flows into ESG themed investment products has reached historic highs and performance of ESG related investments have also proven to outperform traditional investments, busting one of the biggest refrains investors had regarding ESG investing in which many believed ESG investing is only in name and does not produce material benefits in performance for investors. As of August 31, 2021, the MSCI World ESG Leaders index registered 19.8% in return versus the MSCI World index at 18.3%, an outperformance of 1.5% in absolute terms and 8.2% in relative terms. The P/E of the ESG Leaders index stands at 24.82 versus 23.87 for the traditional index, which is a 4% premium over the traditional index. Last but not least, the Sharpe ratio since Sep 28, 2007 is 0.48 for the ESG Leaders index versus 0.47 for the traditional index. These data point to the arrival of ESG investing in the public markets as a mainstream and no longer a wished for but seemingly unattainable reform of the capital markets. This should ensure those public companies who have a demonstrated better ESG implementation and compliance cheaper access to capital and in turn help them to grow more competitively compared to those with a poorer ESG record, which cumulatively should have an incremental impact in achieving ESG goals such as mitigating global warming (MSCI, 2021).

However, it is not enough if public companies are complying with the ESG requirements whilst private companies are not impacted, in fact as the trend in the past decade has been for companies to stay private for longer, enjoying a highly active private equity market and multiple rounds of fundraising, regulators would be amiss if they fail to encourage ESG compliance for private companies. Yet being unlisted companies without quarterly reporting burdens make enforcing ESG frameworks on private companies trickier. There are two ways with which ESG compliance can be enforced for private companies, (i) LPs demanding more disclosure and making ESG scrutiny part of the investment process, and (ii) through value chain relationships, such as a public company demanding a private supplier to provide ESG related disclosures so the public company can comply with its own ESG commitments, for example a public garment manufacturer may demand a private cotton supplier to supply the public company with ESG data, and make ESG compliance a supplier selection criteria. Broad examples of greenhouse gas emissions throughout the value chain can be seen in figure 1 below.

Figure 1. GHG Emissions Throughout the Value Chain

For enforcing compliance through LPs, the European Commission implemented sustainability-related disclosure requirements which were first announced in 2018 in March 2021. The requirements are targeted at asset managers and financial advisors for disclosures about what actions they are taking on sustainable investing topics. In the US, the SEC announced the creation of a climate and ESG task force in the Division of Enforcement to develop initiatives to proactively identify ESG-related misconduct, which will find and hold responsible those who make unsubstantiated claims (Wiek, 2021).

For enforcement through the value chain, the recent merger of Sustainability Accounting Standards Board (SASB) Foundation and the International Integrated Reporting Council (IIRC) to form the Value Reporting Foundation supports the SEC’s increased interest and initiative in the area of sustainability-related financial disclosures. The standards provide a consistent, comparable, and reliable sustainability information that is material to investment decision making, and has participation from 225 asset owners and asset managers representing approximately $72 trillion in assets under management from around the world (Cohen, 2021).

It is certainly encouraging that public markets adoption of ESG practices are now well accepted and established, however we as advocates for the environment should continue to push for full adoption in private markets in order to expedite to correct the trend in rising global temperatures, as we cannot lose more time in combating climate change, a monumental challenge that will take every incremental change to overcome.


Visit www.foe.org.hk for more news about Friends of the Earth (HK)!
Green Finance Facebook page: https://www.facebook.com/greenfinancefoehk/
FoE (HK) LinkedIn page: https://www.linkedin.com/company/friends-of-the-earth-hk/

掌握ESG趨勢與投資, 建立ESG專業及未來 – 香港地球之友 x 香港大學專業進修學院ESG 課程

掌握ESG趨勢與投資, 建立ESG專業及未來

最新的ESG概念和發展是怎樣?
如何通過ESG增強企業韌性和競爭力?
如何將ESG分析應用於投資規劃中?
如何用可持續投資重塑未來?

首次與大專院校合作推出ESG持續進修課程 – 香港地球之友 x 香港大學專業進修學院

作為推動本港ESG教育的先行者,香港地球之友首次與香港大學專業進修學院合作推出ESG專業課程,通過一連五個星期的課程,學員可以從中認識ESG的概念與因素,了解ESG投資機遇與可持續發展投資市場及產品,研究企業在ESG方面的表現及洞悉其投資價值。

課程詳情如下:

課程制式 : 兼讀制
開課日期 : 2021年9月25日至10月23日(逢星期六)
教學語言 : 粵語
課程費用 : HKD 5100
修業期 : 5個星期
*本課程為「持續進修基金 CEF 認可課程」, 最高可退還上限 80%, 即$4,010 學費

課程詳情: https://bit.ly/3kwYFQo

查詢
綠色金融拓展團隊

電郵 : esg@foe.org.hk
電話 : (852) 3184 1510


瀏覽香港地球之友網頁 www.foe.org.hk 了解更多
綠色金融 Facebook 專頁: https://www.facebook.com/greenfinancefoehk/
香港地球之友 LinkedIn 專頁: https://www.linkedin.com/company/friends-of-the-earth-hk/

Biodiversity and Business

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

Biodiversity is vital to most long term business survival.  Businesses need natural resources and ecosystem services as inputs into their production processes. They also depend on healthy ecosystems: networks of plants, animals and microbes which support life by dealing with waste, maintaining soil, air and water quality and much more.

Research by the World Economic Forum suggests that US$44 trillion of economic value generation – or more than half of the world’s total gross domestic product – is dependent on nature and natural ecoservices.

Negative business impacts on biodiversity

But businesses can have major negative impacts on biodiversity and natural habitats.  Direct effects are often connected with land use and waste generation, which can lead to habitat loss, land degradation and erosion or air, soil and water pollution.  Species loss may be compounded by the introduction of non-native species which can disrupt surrounding ecosystems.

The potential for damage to previously pristine areas in South East Asia is considerable.  Four of the world’s “biodiversity hotspots” are located in the region, which is home to many unique species.  In addition to the business itself, construction of associated infrastructure, such as roads and railways, can often harm or destroy the habitats of animals and plants in the area.  They may also make poaching and illegal resource extraction easier.

Moreover, the indirect impacts of a business on biodiversity may also be highly damaging, and are often most difficult to identify, manage and control.  For example, they may arise out of sourcing and production of goods and services associated with the company’s supply chain.  They might be caused by the use or disposal of the company’s products by partners or consumers.  Or they might come from changes in behaviour by employees or local communities which leads to problems such as unplanned migration or increased demand for natural resources.

A company’s failure to consider biodiversity and ecosystems could lead to disruption to supply of essential commodities, economic loss from floods or fires and even scarcity of food products.  As well as these practical problems, biodiversity loss can pose reputational, regulatory and financial risks to businesses.

How business can be part of the solution

Happily, businesses can learn to develop better relationships with biodiversity and healthy ecosystems.

The first step is to understand a company’s potential impacts on the environment, both directly and through its supply chain, and the potential opportunities to improve its performance.  These assessments may cover an analysis of the geographical localities – in particular, any biodiversity hotspots – that may be affected by the company’s operations, as well reviewing its upstream and downstream activities, including the extraction or production of the materials used in the business.

Using this analysis of biodiversity impacts, a business can define its priorities and set goals for improvements.  These may include targets for sustainable sourcing or promoting regenerative farming practices within the supply chain.  Some companies are also seeking to limit their land occupancy or to protect critical habitat around their operations, for example, by creating ecological corridors that allow for the movement of species.

Companies also can play an important role in protecting biodiversity by supporting external conservation efforts.  The United Nations Environment Programme estimates that investment in biodiversity, climate change and land restoration efforts (which currently stands at a little over US$130 per year) needs to triple in real terms by 2030 and increase four times by 2050 if the world is to meet its climate change, biodiversity and land degradation targets.  Currently, private finance makes up only 14 percent of the total investment, leaving enormous scope for business to do more.


Visit www.foe.org.hk for more news about Friends of the Earth (HK)!
Green Finance Facebook page: https://www.facebook.com/greenfinancefoehk/
FoE (HK) LinkedIn page: https://www.linkedin.com/company/friends-of-the-earth-hk/