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- 🧠Navigate the latest ESG challenges & opportunities in August
🧠Navigate the latest ESG challenges & opportunities in August
Uncover key ESG developments, including Goldman Sachs' exit from Climate Action 100+, and the World Bank's groundbreaking $225M Amazon Reforestation Bond.
Bhuva Shakti
August 22, 2024 • Estimated Reading Time: 9 minutes
Hey there 👋
Last week, we explored the EU’s latest sustainability directive and its impact on corporate reporting, as well as Quinbrook’s success in raising $3 billion for the Net Zero Power Fund.
These updates are reshaping the landscape of climate fintech and ESG, offering new insights into the opportunities and challenges facing our industries.
And I have some exciting community updates for you! The registration link for the Wallet Max Emerald Summit is now live!
Register here to join a vibrant community of impact investors, climate tech innovators, and executive women at this year's Summit, happening on September 20th, 2024 in New York City.
This year's theme focuses on increasing venture capital fundraising and project finance for climate startups, especially those led or owned by women in the sustainability, inclusion, education, and technology sectors. Expect insightful keynote talks, interactive workshops, and valuable networking opportunities.
As always, the BIG Risk Navigator is here to equip you with the latest news and expert insights to help you stay ahead in the rapidly evolving world of sustainable business.
Whether you're focused on fintech, ESG, or climate innovations, this newsletter is your go-to source for navigating the risks and seizing the opportunities that lie ahead.
Thank you for being part of our growing community of forward-thinking leaders committed to driving positive change. Let's dive into this week's updates!
Goldman Sachs latest to depart Climate Action 100+: Goldman Sachs exits Climate Action 100+ amid rising political pressure on ESG initiatives.
Twenty two US states’ challenge FASB’s climate rule integration: US states opposed the FASB over the SECs climate-disclosure rules in accounting standards.
Standard Chartered introduces ESG-Linked Cash Account: A new ESG-linked Cash Account for corporate banking clients to reward for meeting the ESG targets.
World Bank launches $225M Amazon Reforestation Bond: World Bank’s largest-ever outcome bond designed to tie financial returns directly to the success of reforestation projects in the Amazon.
EU rolls out Ship Financing Portal to support shipping’s green transition: A portal to access financial tools needed to drive fleet renewal and retrofitting, enhance efficiency, and reduce environmental impact.
🎯 Goldman Sachs latest to depart Climate Action 100+
✅ Key Insights
Goldman Sachs Asset Management had $2.6 trillion in assets under supervision as of March 31.
GSAM's departure follows recent exits by Mellon, Vert, and Water Asset Management.
Republican lawmakers raise concerns about potential antitrust violations related to climate-focused collaborative efforts.
Goldman Sachs exits Climate Action 100+ amid rising political pressure on ESG initiatives. Despite its departure from Climate Action 100+, Goldman Sachs has reaffirmed its dedication to sustainable investing and the management of climate-related risks.
🎯 Twenty two US states’ challenge FASB’s climate rule integration
✅ Key Insights
Physical risks not being material for roughly 99% of commercial and residential loans, and transition risks non-material for 98% of corporate loans.
The US Federal Reserve’s climate scenario analysis revealed significant data gaps, indicating a potential challenge in accurately assessing climate-related financial risks.
Republican-led regions, urge FASB to avoid politicizing GAAP by incorporating climate standards.
Financial officers from 22 US states have expressed opposition to the FASB over the proposed inclusion of the SECs climate-disclosure rules in US accounting standards. The officers contend that for the majority of loans, climate-related risks are not substantial enough to merit inclusion in the standards.
🎯 Standard Chartered introduces ESG-Linked Cash Account
✅ Key Insights
Rewards for Sustainability: Clients earn benefits by meeting ambitious ESG targets.
Performance-Based Incentives: Interest rates and fees are tied to ESG achievements.
Strategic Roll-Out: Initial launch in Hong Kong and Singapore, with global expansion planned.
The ESG-linked Cash Account ties the interest rates and fee structures directly to the clients’ performance in ESG-related activities. This innovative approach ensures that the financial incentives are aligned with sustainable development goals, encouraging companies to set and pursue ambitious targets that surpass industry benchmarks and their previous achievements.
🎯 World Bank launches $225M Amazon Reforestation Bond
✅ Key Insights
Largest World Bank outcome bond: $225M Amazon Reforestation-Linked Bond ties financial returns to carbon removal and reforestation.
Innovative investment model: Mobilizes private capital to support Amazon reforestation, enhancing biodiversity and socioeconomic development.
Broad investor support: Global investors like HSBC, Nuveen, and T Rowe Price back the bond, citing its measurable environmental and financial benefits.
The World Bank has priced its largest-ever outcome bond, a $225 million Amazon Reforestation-Linked Bond, designed to tie financial returns directly to the success of reforestation projects in the Amazon. Unlike traditional carbon credit bonds, this innovative bond links returns to the generation of Carbon Removal Units (CRUs) from the reforestation of Brazil’s Amazon rainforest, making it a groundbreaking approach to mobilizing private capital for environmental impact.
🎯 EU rolls out Ship Financing Portal to support shipping’s green transition
✅ Key Insights
Portal is designed to improve access to financing for the shipping sector and the wider maritime industry.
For facilitating access to finance for green technologies, the portal aligns with the EU's broader climate goals.
It offers a comprehensive overview of available grants, loans, and other financing options from EU, member states, and private institutions.
The European Commission recently unveiled the Ship Financing Portal which provides businesses and organizations with a repository of available financial tools needed to drive fleet renewal and retrofitting, enhance efficiency, and reduce environmental impact.
Energy as the New Currency
Alex Hong, Director at AEIR (Singapore), highlights the potential of tokenization of energy for investing in renewable energy projects. By purchasing energy tokens and encouraging the advancement of solar, wind, and other renewable energy sources, investors may take part in the energy transformation.
✅ Highlights
Accelerating renewable energy adoption
Challenges and considerations
Energy democracy and the smart grid
Global and regional implications
Conclusion and call to action
Energy tokenization has the potential to greatly improve energy cooperation in the Global South. Furthermore, the decentralization of energy generation and delivery can be aided by energy tokenization. Countries can share risks, utilize their combined resources, and promote cross-border energy trading by establishing a unified energy currency.
Spotlight on ESG success stories of Colombian portfolio companies
✅ Highlights
Grupo Tropi: Blending technology and tradition in Colombian distribution
Mareauto-Alivo: Transforming transportation with inclusivity across the Andes
Enhanced Business Performance resulting from Investment
Community impact
Environmental commitment
Integrating ESG principles into business strategies improves performance. Two Colombian companies, Tropi and Mareauto-Alivo, through investment have experienced transformative growth, enabling them to scale their operations and enhance their impact. Tropi and Mareauto-Alivo are portfolio companies of Kandeo Asset Management. Kandeo, a partner in impact investment with Sarona, has over a decade of expertise as a fund manager in Mexico, Colombia, and Peru. To date, it has USD 427 million AUM in two private equity funds dedicated to investing in businesses that offer financial services to underserved populations with growth potential and one debt fund.
