Breaking news – Sustainable Finance - September 2024

What’s new in sustainable finance?


🇪🇺 The European Central Bank (ECB) highlighted the growing legal and financial risks linked to nature degradation, emphasizing its significant impact on the economy and financial sector. Central banks and supervisors are increasingly integrating nature-related risks into their mandates, as these risks threaten essential ecosystem services and could lead to economic instability. The rise of nature-related litigation, following climate litigation trends, targets both states and corporations, pressuring them to address biodiversity loss and environmental damage.
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🔍 According to the Transition Pathway Initiative (TPI) Centre, around 30% of the largest global greenhouse gas emitters have set long-term climate targets aligned with limiting warming to 1.5°C, but none have detailed plans to achieve these goals. While the share of companies with such targets has increased from 7% to 30% since 2020, most lack intermediate targets and actionable strategies. The report finds significant gaps in corporate transition planning, with no company meeting all transition indicators. High-emission sectors like mining and steel show better alignment with climate goals, while food and oil & gas lag behind.
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🌏 The Financial Conduct Authority gave UK fund managers more time to meet the sustainability naming and marketing rules. The deadline has been extended from December 2024 to April 2, 2025. The FCA rules are designed to ensure fund names and marketing materials are fair, clear and not misleading. This temporary flexibility allows for firms using sustainability or impact-related terms in fund names to adjust disclosures and labels.
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🇪🇺 The European Central Bank (ECB) highlighted progress since 2019 in managing climate risks in the real estate sector, especially in real estate lending. Frank Elderson, a member of the Executive Board of the ECB stressed the importance of accurate data, particularly on buildings' energy efficiency, for managing credit risk. He urged banks to improve data collection and pointed to upcoming legislative changes, such as the revised Energy Performance of Buildings Directive, which will enhance data availability. Frank Elderson concluded by emphasizing the need for reliable data and ongoing collaboration between banks and supervisors to address climate-related risks effectively.
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🇺🇸 The SEC has disbanded its Climate and ESG Task Force, which was established in 2021 to focus on ESG enforcement actions. The agency says the task force's expertise has been integrated across its enforcement division and it remains committed to tackling misleading ESG claims. However, the SEC has faced criticism, particularly from Republicans, accusing it of overstepping its mandate by focusing on sustainability issues. Legal challenges have also paused the SEC's climate disclosure rules.
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🇪🇺 European Commission President Ursula von der Leyen introduced the "Green Coupon Facility" to help green bond issuers in smaller countries by subsidizing interest payments, addressing high borrowing costs. The program builds on the €1 billion Global Green Bond Initiative to expand green bond markets in developing countries. She also discussed enhancing the €300 billion Global Gateway infrastructure initiative to strengthen supply chains and announced a collaboration with Canadian Prime Minister Justin Trudeau to promote global carbon pricing.
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