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Sustainable Finance Bingo – Emerging Concepts

Recently we’ve attended a bunch of conferences and webinars, so have outlined our main takeouts in terms of emerging concepts in Sustainable Finance and the key connected questions to stretch your thinking.

Just Transition:

How can Sustainable Finance be used to help developing and emerging countries fund the combating of climate change? (they didn’t cause most of the problems we now have but are being impacted the most negatively – sensationally unfair!)

Adaptation & Resilience:

We need to prepare for climate change and a dollar spent now will save multiple dollars in the future. This is harder to finance of course, as it covers aspects such as: how to combat floods, how to deal with extreme heat, etc, – whereby there is no immediate cashflows/returns.

Nature Positive (biodiversity):

This is how companies can contribute to reducing biodiversity loss and to ensure that a company’s operations actually benefits biodiversity and is net net positive for nature. How do we measure and fund this?

Carbon Markets:

The role that carbon markets will play on the road to net zero is a hotly debated one.  There are regulated carbon markets and then voluntary markets. We should think about voluntary markets as a back up and not to distract from direct mitigation activities.

It’s all about quality – Additionality, Permanence, no Connected Negatives.

Emerging questions are: How can we trade these between countries and what quality level is high enough?

Market References:

More than ever there are great market references raining upon us: SBTi Flag (Agri), Climate Bond Initiative (Chemicals and also Cement) and also Hydrogen criteria. How can we include hard to abate sectors in the market: using common understanding and references so we are on the same page.

Check these references out and think how the structure of these criteria can apply to other sectors.

Natural Gas:

Is gas really going to take over the world and derail transition? Recent discussions have shown us that whilst the EU includes gas in its taxonomy, the criteria is substantial (check out a recent blog from CBI), where it clearly states (we thought this was the case but legislation is always hard to read) – new gas must replace coal, is limited in size and emissions profile.

Criteria is so conditional that we don’t see many investments happening anyway.

In Conclusion

More issues and concepts will continue to emerge. The above are some recurring issues and themes that keep coming up.

Hopefully Sustainable Finance can be a vehicle to drive and address many of these issues or to support and fund alternatives.


Tags: , , Last modified: February 26, 2023