This year has been a big one for green finance. From net zero targets set by banks to the politicization of ESG, this sector is in the early stages of development.
As 2022 draws to a close, we take a look back at some of our biggest stories this year covering the intersection of finance, banking and sustainability.
Climate change remains at the heart of the problem: the largest US banks remain the world’s leading financiers of the fossil fuel industry, and portfolio decarbonisation strategies are not ambitious enough to install meaningful change.
Continuing to fund carbon-intensive industries directly contradicts the UN’s science-based targets, which say that to keep global warming below 1.5 degrees Celsius, no additional investment in fossil fuels.
The reality today is that we are nowhere near where we need to be to understand how valuable it is to be prepared for the future. There is a large educational component that needs to be further developed, especially in the senior management of financial and banking organizations. A sustainability-oriented culture has not yet taken hold in finance.
Over the past year, we’ve covered many of the biggest challenges in finance and sustainability, from broader portfolio decarbonization strategies to internal cultural and educational changes that have yet to happen in the world of finance.
An introduction to environmental sustainability in banking
For banks and financial institutions, sustainability initiatives present both opportunities and risks, according to a new report on the current landscape of environmental sustainability in banking.
Sustainability is a business conversation: climate change is bound to create a shift in resources, which will lead to a reallocation of capital away from the status quo.
The cultural change needed for the banking system to focus on climate risks
Despite the large number of net zero commitments undertaken by banks and financial institutions, there is still a great need for a change in mindset at the top level.
Employees often expect top-down guidance on climate issues, but there are also many banking professionals fighting for change within their institutions to address it.
Wall Street is running out of time for bold climate action
Big banks are making climate promises, but bolder action is needed to avoid worst-case global warming, according to a new IPCC report.
The relationship between financial firms and the fossil fuel industry is coming under increased scrutiny as pressure mounts to create clean energy alternatives.
How banking CEOs are focusing on sustainability
Sustainability has begun to enter the corporate agenda, rising to the top of the priority list for a growing proportion of banking and finance chief executives.
However, the path to sustainability is not clear: many executives say there are still many uncertainties about how to implement these strategies and what benefits they would have on the bottom line.
The ESG mirage: more about hype than values
ESG is increasingly popular, but the unregulated world of sustainable investing isn’t always what it’s cracked up to be.
In addition, the conflict between Russia and Ukraine has also brought up some uncomfortable truths about the current ESG landscape, as Russian state-owned assets were found in ESG funds.
“Look under the hood”: the difference between ESG investing and sustainable investing
As ESG investing grows in popularity, it is also inundated with bad actors, leaving investors wary of greenwashing and overwhelmed by the flurry of options.
At the Banking on the Planet conference, investors shared how they think about ESG and highlighted the differences between ESG and sustainable investing.
Debunking carbon credits and voluntary carbon markets
We need more funds to go towards climate solutions, and carbon markets can facilitate this by creating investable carbon assets. But we need to ensure that carbon credits are of the highest quality and used wisely.
Just look at the charts
The US ESG market is significantly smaller than previously estimated
Sustainable assets totaled about $8.4 trillion by 2022, representing 12.6% of the $66.6 trillion in total US assets under professional management, according to the US SIF Foundation.
The figure also represented a significant reduction from the $17.1 trillion previously estimated in 2020. Methodology changes caused the difference, and comparing the numbers is like comparing “apples and pears,” the industry group said.
This time, the report did not include the assets under management of investors who claimed to practice ESG integration across the firm, but did not provide information on any specific ESG criteria they use (such as biodiversity, human rights or tobacco) in their investment decision. making and building wallets.
The US SIF Foundation committed to this approach after the 2020 Trends Report found that ESG integration had become mainstream and applied across trillions of dollars.
What you need to know
The rise of climate fintech
Climate fintech solutions can help manage risks, ensure efficiency gains and inform choices in the battle against climate change.
The global challenge of climate finance
A stronger partnership between the public and private sectors can unlock new investment opportunities, manage risk, reduce the cost of capital and mobilize the necessary finance on a much larger scale.
According to the experts, the self-reporting of the cutting edge of greenwashing resulted in a smaller fine
The asset manager owned up to the Australian regulatory breach days before exiting the zero alliance.
Visa Europe creates a sustainability solutions team
The new team, led by Steve King, will collaborate with Visa network customers and partners to design and build sustainable technology for the broader payments ecosystem.
HSBC to stop financing new oil and gas fields as part of policy review
HSBC will stop financing new oil and gas fields and wait for more information from energy customers about its plans to reduce carbon emissions as part of a wider update to its sector policy.
Barclays turbocharges 2030 sustainable finance target to $1 trillion
The move brings Barclays into line with rival HSBC, which said it aims to provide up to $1tn to companies by 2020 to help them transition, and JPMorgan, which has set a sustainable funding target of $2.5 trillion by 2030.
JPMorgan announces new climate targets covering aviation, cement
JPMorgan Chase is upping its climate ambitions, announcing a series of new emissions reduction targets for its financing of carbon-intensive companies, including airlines and cement makers.
US Fed proposes plan for banks to manage climate-related financial risk
The U.S. Federal Reserve Board joined other key banking regulators on Friday in proposing a plan for how big banks should manage climate-related financial risks, drawing immediate dissent from one member and reservations from one other
NY warns against new red lines in proposed climate risk guidance
New York wants the banks and independent mortgage firms it oversees to conduct regular scenario analyzes and other measures to help quantify and protect against the risks posed by climate change, but warned against reducing lending to vulnerable communities.
Japan to increase scrutiny of ESG data providers with new guidelines
Japan will soon be the first country to issue guidelines for providers of ESG data and ratings as global regulators step up scrutiny of companies that measure companies on their environmental, social and governance practices.