Breaking news – Sustainable Finance - December 2024

What’s new in sustainable finance?


🌏 A United Nation report calls for $2.6 trillion by 2030 (or $1 billion daily) to restore over 1 billion hectares of degraded land and build resilience to drought. This investment would address a $278 billion annual funding gap, with current spending far below the $355 billion needed annually. Land degradation already costs the global economy $878 billion yearly, but every dollar invested in restoration generates up to $8 in returns through improved productivity, resilience, and ecosystem services. Africa faces the largest financing need, requiring $191 billion annually to restore 600 million hectares. Unlocking private funding and repurposing harmful subsidies are key to bridging the gap and achieving sustainable land restoration.
👉🏻 https://lnkd.in/eTr9wtRg

🇪🇺 The European Parliament and Council have reached a provisional agreement to extend the phasing-in period for the EU Deforestation Regulation (EUDR) by 12 months, which the European Commission welcomes as a balanced solution. The law will now apply from December 30, 2025, for large companies and June 30, 2026, for small and micro-enterprises, allowing more time for all stakeholders to prepare. The Commission will continue refining guidelines and clarifications to support smooth implementation, including finalizing the country benchmarking system by June 2025. The EUDR, in force since June 2023, requires companies trading products linked to deforestation to conduct due diligence, addressing a major driver of climate change and biodiversity loss.
👉🏻 https://lnkd.in/d9VANHeb

🔍 The ECB published a working paper, Going NUTS: The Regional Impact of Extreme Climate Events Over the Medium Term, analyzing the economic and demographic effects of extreme climate events across 1,160 EU regions. Heatwaves and droughts reduce medium-term output, while the impact of floods depends on regional income levels—high-income regions benefit from reconstruction, but less wealthy areas face lasting losses. The paper highlights population decline and adaptation spending in affected regions, which further lower productivity, stressing how climate change amplifies existing economic disparities in Europe.
👉🏻 https://lnkd.in/ez3H32M5

🇪🇺 An European Banking Authority (EBA) staff paper evaluates how banks' financing aligns with the Paris Agreement’s target of limiting global warming to well below 2°C. Moving beyond traditional risk assessments, it focuses on banks' contributions to global warming through their corporate lending activities. The analysis finds that the implied temperature rise of non-SME corporate loan portfolios from selected EU banks averages between 3.7°C and 4.1°C — well above the Paris targets. No banks studied are on a compatible pathway. The paper underscores the relevance of this approach for assessing both transition risks and environmental impact, aligning with the EU’s double materiality framework under the CSRD.
👉🏻 https://lnkd.in/eDTJVJNM

The UK Financial Conduct Authority (FCA) has shared examples of good practices to guide firms in meeting the Sustainability Disclosure Requirements (SDR) and investment label standards. These examples illustrate compliance approaches for its four investment labels, informed by prior applications. Since 31 July, firms have been able to use these labels. Ahead of the 2 December deadline, four funds have announced plans to adopt an FCA label, required for those using terms like "impact" or "sustainable" in their names to avoid changing their branding.
👉🏻 https://lnkd.in/e8Skcfxw

On 5 December, the UK Sustainability Disclosure Technical Advisory Committee (TAC) finalized its recommendations to the government on adopting international sustainability disclosure standards. TAC rejected a proposal to add a new disclosure requirement on financed emissions but suggested a minor change to IFRS S2, allowing finance firms to use alternative industry classification systems. The committee also advised removing the transition relief in S1 for late sustainability disclosures and extending the transitional period for disclosing sustainability-related risks.
👉🏻 https://lnkd.in/efH9Gzfy

🇪🇺 The European Central Bank (ECB) released a working paper examining the urgent need to strengthen climate adaptation amidst rising global temperatures and increasing extreme weather events, particularly in Europe. The paper highlights the growing financing gap and the challenges of implementing effective adaptation strategies. It also emphasizes that adaptation investments can yield "triple dividends" by reducing damages, generating economic gains, and delivering socio-environmental benefits. This paper contributes to the understanding of climate adaptation as a vital defense against escalating climate risks and supports the development of robust financial strategies to enhance resilience.
👉🏼 https://lnkd.in/eS2imPZb

🌏 The IPBES Transformative Change Report stresses the need for urgent, systemic shifts to halt biodiversity loss. It identifies key drivers such as disconnection from nature, inequality, and unsustainable practices. The report outlines five strategies for transformative change, including conserving biocultural diversity, reforming economic systems, and fostering human-nature interconnectedness. Immediate action could unlock $10 trillion in opportunities and create 395 million jobs by 2030. It calls for coordinated action from governments, civil society, and various sectors to meet global biodiversity goals.
👉🏼 https://lnkd.in/dab8yugv

🇪🇺 The EU Platform on Sustainable Finance has proposed Investing for Transition Benchmarks (ITBs) to promote sustainable capex aligned with the EU taxonomy, targeting 100% compliance by 2040. These benchmarks aim to guide pension funds, insurers, and foundations in allocating capital toward climate transition. 
Despite concerns about concentration risks, the Platform views ITBs as complementary to existing frameworks, supporting long-term sustainable investments.
👉🏻 https://lnkd.in/e89kXdZe