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Church of England and insurer Generali join $4.3tr Net Zero Asset Owner Alliance

Church of England and insurer Generali join $4.3tr Net Zero Asset Owner Alliance

Church and Italian insurer are latest to join growing group of world's largest pension funds and insurers committed to fully decarbonising their investments by 2050

The Church of England and Italian insurance giant Generali have both committed to fully decarbonising their investment portfolios 2050, after they became the latest major additions to the UN-backed Net-Zero Asset Owner Alliance today.

The announcement, which came on the sidelines of the World Economic Forum in Davos, means all three national investment bodies linked to the Church of England would need to be aligned with limiting global warming to 1.5C, with a target to achieve net zero emissions throughout the portfolio by 2050.

The pledges include the Church Commissioners, the Church of England Pensions Board, and the Central Board of Finance Church of England Funds, all independent bodies which, between them, control investment assets of around £12bn.

The same would apply to all asssets managed by Generali Group - the third largest insurance firm in the world - which currently stand at €488bn.

Tim Ryan, chief investment officer and CEO of asset and wealth management at Generali Group, said joining the Alliance was "about walking the talk and further aligning our investment portfolio to our long term commitments". "As a financial services operator we feel the responsibility of contributing to achieving carbon neutrality by 2050," he said.  

With both Generali and the Church of England joining the Alliance - a growing coalition of the world's largest pension funds and insurers pledging to fully decarbonise their investments by 2050 - it means the total value of assets managed by its 18 members has now grown to $4.3tr. Other investor members include major players such as AXA, Aviva and Allianz.

"As part of our commitment to the Paris Agreement, the Church Commissioners are pleased formally to state our commitment to transition our investment portfolio to net zero emissions by 2050," said Andrew Brown, CEO of the Church Commissioners for England, who urged all governments, investors and companies to also set net zero emissions goals.

"Climate change is the challenge of our age," he added. "The 2020s are the decade in which we need to make decisive progress, both halting the growth in global GHG emissions and setting the world on course to achieve the goals of the Paris Agreement."

The Alliance also today revealed its governance and objectives for the coming year, which will see it focus on advancing measurement and public reporting of climate data across investments, engaging with portfolio firms on setting net zero targets, and lobbying policymakers for supportive net zero policies.

But it stressed that achieving net zero emissions in line with a 1.5C world across members' portfolios "will not be attained though divestment".

Instead, the Alliance said it would work closely with portfolio companies to change their business models, encouraging them to adopt climate-friendly practices and "ideally" set net zero emissions reduction goals.

Eric Usher, Head of the UN Environment Programme's Finance Initiative, welcomed the Church of England's pledge. "The Church of England has for a long time been at the forefront of responsible stewardship across asset classes," he said. "All Alliance members are showing an extremely high level of commitment to portfolio decarbonisation, as they hold themselves accountable on progress by setting and publicly reporting on intermediate targets in line with the Paris Agreement."

But the net zero commitments from asset managers stand in contrast to many other firms in the global financial sector in attendance at Davos this week, according to an analysis released yesterday by Greenpeace.

The activist group claimed 24 global banks attending the WEF Summit financed the fossil fuel industry to the tune of $1.4tr between the Paris Agreement being drafted in 2015 and 2018, potentially leaving them exposed to huge climate-related risks across their portfolios.

Moreover, just 10 of the banks studied account for $1tr of the total, Greenpeace claimed, including JP Morgan Chase, Citi, Bank of America, RBC Royal Bank, Barclays, MUFG, TD Bank, Scotiabank, Mizuho, and Morgan Stanley.

Tackling climate change by setting net zero emissions goals has been a major focus in Davos, but Greenpeace International executive director Jennifer Morgan said major banks, insurers, and pension funds at the summit were "culpable for the climate emergency".

"Despite environmental and economic warnings, they're fuelling another global financial crisis by propping up the fossil fuel industry," she said. "These money men at Davos are nothing short of hypocrites as they say they want to save the planet but are actually killing it for short term profit."

The report came as a new guide designed to push companies towards "exponential action on the climate emergency" was also separately launched yesterday in Davos.

The 1.5C Business Playbook, which has been produced by leading climate experts and business groups, sets out a framework for corporates to rapidly reach net zero emissions by adopting a strategy to at least halve their greenhouse gas emissions every decade towards net zero by 2050.

Defra launches natural capital tool to help businesses make greener decisions

Defra launches natural capital tool to help businesses make greener decisions

Tool is the first time evidence and guidance about UK natural capital will be accessible in one place

From today businesses, policy makers, and landowners will be able to access all the data, analysis and guidance on the UK's natural capital in one place, following the launch of the Enabling a Natural Capital Approach (ENCA) project by Defra.

The government hopes putting all the information and guidance on natural capital in one place will encourage organisations to embed nature-friendly decision making into their operations.

Natural capital is the economic value of the UK's environmental resources and the services the environment provides, such as fresh water, clean air, and wildlife. Experts hoping by placing an economic value on these services businesses and policy makers will be discouraged from damaging them in pursuit of economic growth.

The UK's natural capital is worth almost £1tr, according to latest assessment from the Office for National Statistics. But the new service arrives at a crisis point for UK nature, with an influential report last year warning wildlife is in unrelenting decline across the UK due to habitat destruction, climate change and pesticide use.

And just last week government advisory body the Natural Capital Committee warned England's natural world is deteriorating, and risks becoming a "drag" on the economy unless drastic action is taken. 

Environment Minister Rebecca Pow said today's tool will help counteract the destruction by putting the natural environment "at the heart" of decision-making. "This comes at a critical time where the protection of our environment is ever-more important in combatting climate change and reversing habitat loss," she said.

Matthew Farrow, executive director at the Environmental Industries Commission, said the ENCA will be an important tool in enabling businesses to play their part in improving natural capital across the country. "In bringing together all the relevant resources in one place, ENCA will make a huge difference to the ability of businesses and their advisers to assess how their actions and investment decisions can be aligned with protecting and enhancing the natural environment on which we all rely," he said. "EIC is delighted to have provided member cases studies for ENCA and looks forward to promoting it."

Bank of America becomes carbon neutral one year ahead of schedule

Bank of America becomes carbon neutral one year ahead of schedule

The US investment giant has switched to 100 per cent renewable electricity, cut emissions and bought offsets

Bank of America has become the latest corporate to hit carbon neutrality, with the firm announcing yesterday it has met the target a year ahead of schedule.

At the same time, the US investment giant achieved a linked target of using 100 per cent renewable electricity, it said.

Both goals were established in 2016 with a target date of 2021. The bank said it had reached the renewables target by installing on-site solar at several of its facilities and making a series of long-term power purchase agreements, adding further solar and wind capacity.

The carbon neutrality goal was achieved by slashing emissions - with scope 1 and 2 greenhouse gas emissions reduced by over 50 per cent since 2010 - combined with carbon offset purchases, from four non-profit projects across the US, Africa, Asia and South America, the firm said.

"We are delivering responsible growth by focusing on serving our clients, investing in our teammates, supporting the communities where we operate - and by addressing important societal priorities," said Bank of America chief executive Brian Moynihan.

"Being carbon neutral is core to our $300bn, 10-year environmental business initiative that is helping finance the transition to a low-carbon future."

In 2013 Bank of America committed to invest $125bn in low-carbon business activities by 2025 through its Environmental Business Initiative. In 2019, it announced it would invest a further $300bn under the initative by 2030. 

However, signs this month suggest the most progressive companies are targeting even tougher targets than carbon neutrality, with Microsoft announcing it would be "carbon negative" by 2030. Environmentalists are also wary of an over-reliance on carbon offsets, which many say help combat future emissions but do not mitigate against pollution emitted today. 

SDG500: New platform plans to pump $500m into action on the Sustainable Development Goals

SDG500: New platform plans to pump $500m into action on the Sustainable Development Goals

Coalition of private and public institutions hope the platform will help close the financing gap for the SDGs

A new investment platform launched today in Davos is set to invest $500m in businesses working to achieve the global Sustainable Development Goals (SDGs).

The SDG500, backed by a coalition of public and private organisations, NGOs and a private equity firm, is billed as a "first-of-its-kind" platform dedicated to the SDGs.

The platform's funds will be used to make debt and equity investments in early stage businesses in "emerging and frontier" markets, to spur innovation and growth in regions where firms often lack access to follow-on financing.

The platform will focus on supporting firms in agriculture, finance, energy, education and healthcare across Africa, Asia, Latin America, the Caribbean and Pacific regions. It includes provisions to protect certain portions of investors' capital, sponsored by the European Union, the African, Caribbean and Pacific Group of States, the governments of Luxembourg, Togo and Tunisia, CARE and the Alliance for a Green Revolution in Africa.

"The launch of SDG500 is a unique milestone for the impact investing industry," said Jean-Philippe de Schrevel, founder and managing partner at Bamboo Capital Partners, which will manage the six funds on the platform. "We have never seen a coalition from the private and public sector come together to achieve the SDGs on this scale before."

A report from the UN in October warned a vast shortfall in financing is threatening progress against the SDGs, with UN executives calling for private finance to help bridge the $2.5tr a year financing gap. In particular, there is not enough cash to support early and mid-stage companies working on sustainable technology to scale in developing markets.

That's what the SDG500 platform wants to address, said Schrevel. "The missing middle financing gap is real, and it is suffocating early stage enterprises which have the potential to transform some of the world's poorest and most underdeveloped regions," he said. "We believe that by working together to finance and scale these businesses, we can achieve the SDGs and take another step closer to a better, more sustainable future for all."

Alongside Bamboo Capital Partners, coalition members include the United Nations Capital Development Fund, International Trade Centre, International Fund for Agricultural Development, CARE, Smart Africa, and Stop TB Partnership. The IDB Lab of the Inter-American Development Bank is an interested party.

Citizens' Assembly set to craft UK strategy for Net Zero

Citizens' Assembly set to craft UK strategy for Net Zero

110 members of the public will travel to Birmingham this weekend for the first in a series of weekend workshops to help establish how radical the UK could be in pursuing net zero

Strangers from all walks of life will gather in Birmingham this weekend to form the UK's first nationwide Citizens' Assembly on climate change, with a brief to use its meetings over four weekends to chart a course towards net zero emissions for the nation.

The Assembly has been convened by a cross-party group of six House of Commons Select Committees in a bid to take the pulse of the British nation on the climate crisis. The plan was conceived after the UK government announced last summer it would ramp up the UK's emissions targets for 2050 to net zero, a significant increase on the previous goal to deliver an 80 per cent cut in emissions against 1990 levels. Experts agree that to get to net zero emissions inside just three decades will require immediate and far-reaching action to cut emissions simultaneously across transport, industry, housing, agriculture, and energy. 

To grasp the challenge ahead, the Assembly will spend this weekend learning about the science of climate change and the threat it poses for the UK, before meeting three more times in February and March to examine some of the solutions that would be needed to reach net zero emissions in more detail.

Organisers hope the resulting recommendations will give politicians the confidence to implement bold policies to curb emissions, amid criticism that successive governments have put off politically awkward decisions such as pushing homeowners to retrofit their houses or halting the sale of fossil-fuelled vehicles. The key subjects up for discussion are expected to focus on how to cuirb emissions from transport, buildings, agriculture, domestic energy, and consumption.

"This Citizens Assembly is going to come up with recommendations that are going to be invaluable to both government and Parliament on how we get to net zero by 2050," said Sarah Allan, head of engagement at Involve, the NGO organising the Assembly.

However, the Assembly has been convened by Parliament, not government, and there is no guarantee its recommendations will be put into practice by ministers. Parliament has paid £120,000 for the event out of its research budget, with an additional £200,000 donated each by the European Climate Foundation and the Esmée Fairbairn Foundation.

Climate change is a tricky subject for public debate, as its complex scientific underpinnings demand a relatively high level of initial knowledge. The debate has also suffered from political controversy, with historic questions over the role of humans in causing climate change exploited by vested interests to whip up opposition to policy measures.

Yet as the science becomes increasingly accepted, and the impacts of rising temperatures more visible through extreme weather events around the world, the public in the UK has become broadly supportive of climate action. YouGov polling data last year suggested people in the UK view the environment as the third most pressing issue facing the nation.

Climate Assemblies are seen as an opportunity to orchestrate a more measured and detailed debate with members of the public on how best to address the issue of carbon emissions. They have already been used by the French and Irish governments to assess public appetite for environmental policies, and although it will not be bound by the Assembly's recommendations, the UK government has promised to consider the results. "Having committed to end our contribution to climate change entirely by 2050 we will need input from all across the UK, so I look forward to seeing what conclusions the assembly reaches later this year," Business Secretary Andrea Leadsom said.

More broadly polilcymakers, businesses, and investors will all be cognisant of how proposals put forward by the Assembly could shift the "Overton Window" around which policies are deemed acceptable by the public, potentially helping to build cross party support for bolder regulatory measures and increased spending on clean infrastructure.

Members of the Assembly were selected at random, with 30,000 initial invitations sent out to take part. Participants who responded to the call and were free for all of the weekend meetings were then screened to ensure the final group represented the UK population in terms of their age, gender, race, educational background, where they live, and how concerned they are about climate change. Participants were not screened to exclude people who work in the fossil fuel industry or those with extreme opinions, although elected members of parliament, their staff, and paid members of political parties were not eligible.

Given the UK's ageing population, the Assemnly include more over-60s than any other age group, while 19 members of the Assembly said they are either not at all or not very concerned about climate change. Allan said it was vital to include potential climate sceptics in the debate. "It is really important that [the Assembly] is representative of the UK population," she said. "Those people, just because they are sceptical about climate change, doesn't mean they are going to be impacted by the steps the government makes to get to net zero too, and they shouldn't have their voice denied them."

Over the four weekends Assembly members will hear presentations from academics, think-tanks, NGOs, and industry voices, carefully vetted by four expert advisors: Committee on Climate Change chief executive Chris Stark, Lancaster University Professor Rebecca Willis, Jim Watson, professor of energy policy at University College London, and Lorraine Whitmarsh, professor of environmental psychology at University of Cardiff.

Over the course of the sessions Assembly members will be presented with an - as yet undefined - "menu" of options to choose from for cutting emissions. These could include measures to curb polluting behaviours such as the introduction of a frequent flier tax, or government intervention such as a ban on the sale of fossil fuel vehicles or a nationwide mandatory home retrofit programme.

Participants will be able to request an earlier net zero target date than 2050, or suggest decarbonisation policies not included in the pre-set options, organisers said. As such calls from Extinction Rebellion for a 2025 net zero goal, which they argue would be in line with the scale of the climate crisis, could be up for discussion despite scepticism from some expert advisors about the feasibility of such a target.

However, net zero by 2050 should not be seen as an easy target, insisted Watson. "Even if you stick with 2050, and you don't go to 2030 or whenever, you have got a hell of a job to turn around this economy and get to net zero," he said. "The amount of work you have to do in the next five to ten years is huge."

The Assembly is expected to produce a set of recommendations to be published in early April, which will be considered by the Select Committees and are "very likely" to prompt a parliamentary debate in the House of Commons.

President Macron has promised to put the "unfiltered" findings of the French climate assembly to the national Parliament, implement them through an executive decree, or put them to a national vote. The UK government has not gone so far in promising to endorse or enact the Assembly's findings, but it is almost certain to provide real food for thought as ministers grapple with the serious decarbonisation challenges that lie ahead. The net zero by 2050 goal is already written into UK law, but how far the UK public is prepared to go to deliver it is about to become much clearer.

BNP Paribas launches innovative carbon offset investment fund

BNP Paribas launches innovative carbon offset investment fund

The fund extends a European version which has already reached €300m in assets under management since its launch in March last year

BNP Paribas has this week launched an innovative global investment fund that aims to combine financial returns from the world's equity markets with a positive impact on climate change.

The THEAM Quant World Climate Carbon Offset Plan Fund extends a European version of the strategy which launched in March last year. It will be managed in the same way, pursuing a systematic investment strategy that selects only companies with high Environmental Social and Governance (ESG) standards, robust energy transition plans, and lower carbon footprints than their benchmarks.

The remaining carbon footprint of the portfolio will be offset every quarter through the purchase of Verified Emission Reduction Certificates, issued by the Project Kasigau Corridor REDD+ project in Kenya, which protects more than 200,000 hectares of endangered dryland forest, BNP said.

The European version of the strategy has already reach €300m in assets under management (AuM) since its launch last year, bringing total assets of THEAM Quant Climate Care and Sustainable Development Goals linked solutions to €1bn, the firm added.

The Theam Quant World Climate Carbon Offset Plan Fund, which has received the Belgium Febelfin label, is registered for sale in Belgium, France, Italy, Luxembourg, Switzerland and United Kingdom, where it aims to spearhead a fresh wave of climate-friendly investment through 2020. Leading European insurance companies including Allianz, Cardif, and HDI Assicurazioni have supported the investment, BNP's latest innovative attempt to combine environmental benefits with high performance on the world's markets.

In 2018, the bank launched ClimateSeed, a carbon offsetting platform helping connect investors with on-the-ground projects to cut carbon emissions. It has also led the way in developing innovative green financial products. In September last year for example, it loaned €105m to consumer products firm Bunzl, with the interest rate tied to Bunzl's success in cutting carbon emissions.

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