COP28 highlights: Leading investors commit to advancing global adoption of ISSB standards

Financial news from Dubai: MDBs join taskforce to boost climate and nature-linked sovereign financing; PRI launches net zero policy taskforce for international regulators.

More than 70 institutional investors, including Norges Bank Investment Management, have signed a statement committing to advance the global adoption or use of the International Sustainability Standards Board’s (ISSB) climate-related reporting at a global level. Thousands more investors were represented through the signatures of bodies such as the Principles for Responsible Investment (PRI). Close to 400 organisations from 64 jurisdictions signed ISSB’s declaration of support, released to coincide with COP28. The IFRS Foundation, the global financial reporting standards body that houses the ISSB, has also announced the launch of a “knowledge hub” to encourage uptake of the ISSB standards.

A series of multilateral development banks and development finance institutions, including the EIB, Asian Development and Inter-American Development Bank, have signed up to a taskforce on sustainability-linked sovereign financing for nature and climate. The group, which will meet in January 2024, will look to enable credit enhancements for sovereign sustainability-linked financing, and aims to establish a work plan to provide further support in the area. The work plan will look at exchanging best practice, co-ordinating technical assistance efforts, creating a “pipeline accelerator” for instruments, and maximising support from insurers and reinsurers. AXA, Munich Re and Willis Towers Watson are among the seven insurers and reinsurers to sign on to a statement of support for the joint declaration and taskforce.

The Principles for Responsible Investment will serve as the secretariat for the newly formed Taskforce on Net Zero Policy. The initiative has been created following the UN High Level Expert Group (HLEG) on Net Zero 2022’s report “integrity matters”, which recommended the need for a global policy environment to help the private sector transition to net zero. The taskforce, comprised of international regulators and experts, will produce research and work with governments to overcome global policy barriers to net zero.

World Bank president Ajay Banga has said the institution will focus on securitisation to scale climate finance by working with 15 banking chiefs to lower risks for investors and attract private capital for cutting emissions. At Bloomberg’s Business Forum on Sunday, Banga said the Private Sector Investment Lab (PSIL) is focused on “figuring out a model of originate-to-distribute” that would allow for deep-pocketed investors to put up large sums for climate deals. The lab, launched in June, also includes BlackRock’s Larry Fink, AXA CEO Thomas Buberl, and Noel Quinn, head of HSBC.

UNEP FI and the International Labor Organisation (ILO) have released a roadmap for banks and insurance firms to promote a Just Transition to low-carbon, resource-efficient and resilient economies. Among the suggested strategies and approaches that banks and insurers could deploy, the report recommends firms operationalise “Just Transition concepts” in institutional strategy, policies and processes, as well as develop products to address Just Transition-related financing needs. BNP Paribas, UBS, Generali, Lloyds and ING were among the firms consulted for the report.

The Emerging Market Climate Action Fund, a blended finance joint venture between Allianz Global Investors and the EIB, has said it expects to announce a third close on €385 million. Newly announced commitments include £9 million ($11.4 million; €10.5 million) from the UK Foreign, Commonwealth & Development Office and a further €33 million from KfW on behalf of the German government. Anchor investors include Folksam, Allianz and the Nordic Development Fund. The fund provides early-stage equity financing to mitigation and adaptation projects, as well as companies in emerging markets with a green business model. Allianz GI said it expects to invest in 12 funds supporting around 150 projects.

French president Emmanuel Macron and Michael Bloomberg – in his role as the UN secretary-general’s special envoy on climate ambition and solutions – have produced a proof of concept for the net-zero data public utility (NZDPU). The proof of concept delivers the architecture to allow for scaling accessibility of companies’ direct (Scope 1) and indirect (Scope 2 and Scope 3) greenhouse gas emissions, and GHG emissions reduction targets. Populated with data from hundreds of companies that disclose publicly through CDP, the proof of concept allows users to experience the initial set of features and functionality of the NZDPU. A public consultation is open until 1 March for an opportunity to provide feedback that will inform the NZDPU’s future development.

Separately, Macron has called for “an interest rate for green and an interest rate for brown”, to differentiate between activities that are favourable and harmful to the climate. Mirova CEO Philippe Zaouati wrote on LinkedIn that “it is obvious that, despite the decisions of many investors and banks to stop financing fossil fuel exports, the cost of financing these projects remains similar to the entire financial market”. He added that in 2017 there was already a proposal to introduce a “green weighting factor” in banking regulation to penalise projects harmful to the climate, and promote “green projects”.

Iceberg Data Lab (IDL) has launched a new data set that monitors and examines the performance of sovereign states against the Paris Agreement commitments. Among its findings, the fintech firm noted that when Scope 3 emissions are considered, a country’s average emissions increase by 50 percent. IDL’s announcement comes as the first global stocktake – which assesses the world’s progress on climate action – is set to conclude at COP28 this week.