Green Finance

Green Finance Briefing: Our top stories of 2022

  • Over the past year, we've covered many of the biggest challenges in finance and sustainability – from wider portfolio decarbonization strategies to internal cultural and educational shifts that are yet to take place in the world of finance.
  • As 2022 comes to an end, we take a look back at some of our biggest stories this year covering the intersection of finance, banking and sustainability.

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Green Finance Briefing: Our top stories of 2022

This year has been a big one for green finance. From net zero targets being set by banks, to the politicization of ESG, this sector remains in the early stages of development. 

As 2022 comes to an end, 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 core of the problem – the largest banks in the US continue to be the world's biggest financiers of the fossil fuel industry, and portfolio decarbonization strategies are not ambitious enough to install meaningful change. 

Continuing to finance carbon-intensive industries comes in direct contradiction with UN science-based targets, which say that in order for global warming to remain under 1.5 degrees Celsius, there needs to be no additional fossil fuel investment. 

The reality today is that we are nowhere close to where we should be in terms of understanding how valuable it is to be prepared for the future. There is a huge educational component that needs to continue developing, especially in the senior management of financial and banking organizations. A sustainability-oriented culture has yet to take hold in finance. 

Over the past year, we've covered many of the biggest challenges in finance and sustainability – from wider portfolio decarbonization strategies to internal cultural and educational shifts that are yet to take place in the world of finance. 

An intro to environmental sustainability in banking

For banks and financial institutions, sustainability initiatives present opportunities as well as 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, bringing with it a reallocation of capital away from the status quo.

The culture shift needed for the banking system to focus on climate risks

Despite the flurry of net zero commitments made by banks and financial institutions, there is still a great need for a mentality change at the senior level.

Employees often wait for top-down guidance on climate issues, but there are also many banking professionals fighting for change inside their institutions to address this.

Wall Street is running out of time for bold climate action

Big banks are making climate pledges, but more bold actions are needed in order to avoid the worst global warming scenarios, according to a new report by the IPCC.

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 started to enter the corporate agenda, rising towards the top of the priority list for an increasing proportion of banking and finance chief executives.

However, the path to sustainability is not a clear one – many executives say that there are still many uncertainties around how to implement such strategies and what the benefits would be on the bottom line.

The ESG mirage: More about the hype than values

ESG is growing increasingly popular, but the unregulated world of sustainable investments is not always what it's cracked up to be.

Moreover, the Russia-Ukraine conflict has also surfaced 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 and sustainable investing 

As ESG investing grows in popularity, it is also flooded with bad actors, leaving investors growing 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 outlined the differences between ESG and sustainable investing.

Debunking carbon credits and voluntary carbon markets

We need more funds to flow 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 that they are used mindfully.

Just look at the charts

US ESG market is significantly smaller than previously estimated

Sustainable assets amounted to about $8.4 trillion in 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 previously estimated $17.1 trillion in 2020. Methodology changes led to the difference, and comparing the numbers is like equating “apples and pears,” the industry group said.

This time around, the report did not include the assets under management of investors who stated that they practice firmwide ESG integration but did not provide information on any specific ESG criteria they used (such as biodiversity, human rights or tobacco) in their investment decision-making and portfolio construction. 

The US SIF Foundation committed to this approach after the 2020 Trends report found that ESG integration had become mainstream and was applied across trillions of dollars.

What you need to know

The rise of climate fintech

Climate fintech solutions can help manage risks, secure efficiency gains, and inform choices in the battle against climate change.  

The global climate-finance challenge

A stronger partnership between the private and public sectors can unlock new investment opportunities, manage risk, reduce the cost of capital, and mobilize the necessary financing at a much larger scale.

Vanguard self-report of greenwashing led to smaller fine, experts say

Asset manager owned up to breach of Australian regulations days before pulling out of net zero alliance.

Visa Europe builds sustainability solutions team

The new team, led by Steve King, will collaborate with clients and partners across Visa’s network to design and create sustainable tech for, and with, the broader payments ecosystem.

HSBC to stop funding new oil and gas fields as part of policy overhaul

HSBC will stop funding new oil and gas fields and expect more information from energy clients over their plans to cut carbon emissions as part of a wider update of its sector policy.

Barclays turbocharges 2030 sustainable finance target to $1 trillion

The move sees Barclays catch up with rival HSBC, which said in 2020 it aims to contribute up to $1 trillion to companies to help them transition, and JPMorgan which has set a $2.5 trillion sustainable funding target by 2030.

JPMorgan announces new climate targets covering aviation, cement

JPMorgan Chase is upping its climate ambitions, announcing a slew of new emissions reductions targets for its financing to carbon-intensive businesses, including airlines and cement manufacturers.

U.S. Fed proposes plan for banks to manage climate-linked financial risk

The U.S. Federal Reserve Board on Friday joined other key banking regulators in proposing a plan for how large banks should manage climate-related financial risks, drawing immediate dissent from one member and reservations from another.

NY Warns against new redlining in proposed climate risk guidance

New York wants banks and independent mortgage companies it supervises to undertake regular scenario analysis and other measures to help quantify and protect against risks posed by climate change, but warned against cutting lending to vulnerable communities.

Japan to ramp up scrutiny of ESG data providers with new guidelines

Japan will soon be the first country to issue guidelines for ESG data and ratings providers as global regulators step up scrutiny of firms that measure companies on their environmental, social and governance practices.

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