🧭 TNFD nature reporting milestone & EU’s €4.8B net-zero push

Hey there! 👋

Last week, we delved into the record-setting $3.5 trillion in sustainable funds, Amazon’s nuclear investments, and upcoming carbon credit auctions in the U.S. This week, we’re looking at significant steps in nature risk reporting and supply chain sustainability.

At the BIG Risk Navigator, we deliver insights on the latest sustainability, climate finance, and tech innovation trends, helping decision-makers stay ahead in building resilient, forward-thinking enterprises.

Now let’s get into the news.

• Over 500 firms with $17 Trillion AUM adopt the TNFD framework for nature risk reporting: More than 500 companies worldwide have now committed to assessing and reporting on their nature-related risk.

• EU invests €4.8 Billion from emissions trading revenues to fund net-zero projects: The investment is aiming to accelerate the deployment of cutting-edge clean technologies across Europe.

• 43% surge in companies disclosing biodiversity data, says CDP Report: Business momentum in measuring nature and biodiversity impacts is accelerating, according to CDP’s latest data.

• Standard Chartered launches ESG-linked trade loans to boost global commodity decarbonization: Standard Chartered has launched a sustainable finance variant of its Borrowing Base Trade Loan (BBTL).

• 85% of investors to prioritize sustainability as private equity accelerates net zero efforts: BCG Report: 85% of limited partners (LPs) plan to prioritize sustainability even more in the next three years.

🎯 The rise of small language models: Powering efficiency and security in the enterprise

Artificial intelligence (AI) is undergoing a fascinating transformation. While large language models (LLMs) such as ChatGPT and Claude are often discussed in headlines, a more subtle revolution is underway: Small language models (SLMs). These lean AI solutions are gaining ground in the enterprise sector, offering a compelling alternative that focuses on efficiency, security and customized features.

According to some investors, LLMs have become too generic and are stuffed with information not applicable to corporate and other enterprise customers. Jesse Middleton, general partner at Flybridge Capital, whose portfolio includes the small language model developer Arcee.AI, said that smaller models can be more effective at solving specific problems.

Why it matters for climate fintech: The shift towards SLMs aligns with the growing emphasis on responsible AI development in climate fintech.  SLMs' lower power requirements make them a more sustainable option, particularly as climate considerations become a key factor in financial decision-making. LLMs need the computational power of data centers to train and run, contributing to a significant carbon footprint. A 2021 study reported 552.1 metric tons of CO₂ equivalent for the famous GPT-3 model trained on NVIDIA V100 GPUs. SLMs not only require less computing power and energy, but also offer the ability to run locally on devices like computers and phones. In addition to being cheaper to run, small models are less costly for founders to build.

Key implications for startups: The appeal of SLMs lies in their ability to address key limitations of LLMs:

• New funding opportunities: Investors, founders and executives now say SLMs are key to hastening enterprise AI adoption and paving a path forward for survival against incumbents.

• Data security and privacy: Privacy concerns are a major hurdle for LLMs in certain industries. Startups focusing on SLMs can capitalize on their ability to run locally on devices, offering a secure alternative.

• Lower development costs: Building and running SLMs are significantly cheaper than LLMs, making AI development more accessible to smaller startups.

🎯 IntegrityNext unveils AI-powered solutions to navigate sustainability challenges in supply chains

Launched in 2016, Munich-based IntegrityNext provides a software platform aimed at enabling companies to build more transparent and sustainable supply chains, across a wide range of ESG topics. IntegrityNext announced the launch of two new solutions, Multi-Tier Supply Chain Visibility and EUDR Compliance.

Multi-Tier Supply Chain Visibility solution utilizes AI-driven insights and a large-scale sustainability dataset to provide transparency across the supply chain. It offers procurement optimization, and simplifies reporting and due diligence processes. EUDR Compliance enables users to meet the EU's new Regulation on Deforestation Free Products. Key features include automated collection and verification of supplier data, AI-driven risk assessments based on geolocation and product origin, deforestation trend analysis, and reporting capabilities, as well as upstream integration into existing ERP and SCM systems.

Why it matters for climate fintech: Climate tech startups typically engage in the production and distribution of innovative products. The supply chains for such products are inherently complex due to the need for specialized components, adherence to strict environmental regulations, and the often unpredictable nature of sourcing sustainable materials. Studies show that on average, 90% of emissions in the value chains result from sources not owned or controlled by it (Scope 3 emissions). For climate tech startups, the adoption of AI-powered Multi-Tier Supply Chain Visibility tool and EUDR Compliance offers a pathway to more sustainable, efficient, and competitive operations.

Key implications for startups: Looking ahead, the Al-powered IntegrityNext solutions can  help climate tech startups for the sustainable supply chain:

• Partnerships and collaborations: Startups can collaborate with established players like IntegrityNext to leverage their expertise and market reach.

• Data-driven insights: By leveraging AI and data analytics, startups can extract valuable insights from supply chain data to inform decision-making and identify emerging risks.

• Regulatory compliance: Staying abreast of evolving regulations, such as EUDR and CSDDD, is crucial for startups. IntegrityNext's solutions can help them navigate these complex regulatory landscapes.

🎯 Carbon accounting startup IN BOLD PRINT raises $1m 

IN BOLD PRINT, a minority women-owned, venture-backed startup in Chicago, raised $1 million in pre-seed funding for their carbon accounting technology. VC414 led the funding round and was joined by other climate-conscious investors. Schreiber Foods and Palermo’s Pizza, customers of IN BOLD PRINT, partook as strategic partners. 

Two vibrant and talented women, Ashley Pradhan and Cierra Valor, founded IN BOLD PRINT in 2021. The company's goal is to make carbon tracking easy for businesses of all sizes, particularly focused on small and medium-sized business (SMB). Their carbon accounting platform provides easy-to-use dashboards and reports and works similarly to popular accounting tools. This allows businesses to provide their stakeholders with accurate emissions data and help them make informed decisions on ESG and sustainability.

Why it matters for climate fintech: 

The financing happens at the right time when new regulations, such as the recent California ruling, are making it mandatory for businesses to report their carbon emissions. These apply to suppliers and partners, too. When more and more businesses comply with the new regulations, there is a demand for sustainability reporting tools. The IN BOLD PRINT's carbon management platform offers small to mid-sized companies in the consumer goods space to measure their carbon emissions and grow their revenue by leveraging impact.

Key implications for startups: 

The success of IN BOLD PRINT highlights several key implications for startups in the climate tech space:

• Focus on SMBs: There is a significant market opportunity in helping SMBs adopt sustainable practices. By providing user-friendly tools and affordable solutions, startups can address the specific needs of this segment.

• Data-driven sustainability: Leveraging data analytics and AI to track and measure emissions can provide valuable insights for businesses. 

• Regulatory compliance: As regulations around sustainability reporting tighten, startups can position themselves as compliance partners for businesses, offering solutions to meet regulatory requirements.

🎯 Over 500 firms with $17 Trillion AUM adopt TNFD framework for nature risk reporting

✅ Key Insights

• Total of 502 companies and financial institutions are now committed to TNFD-aligned risk management and reporting since January 2024.

• Organizations from 54 jurisdictions and 62 sectors, including 129 financial institutions with $17.7 trillion in assets under management.

• TNFD framework operationalizes Target 15 of the Global Biodiversity Framework, promoting corporate reporting on nature-related risks.

The Taskforce on Nature-related Financial Disclosures (TNFD) announced at COP16 in Cali, Colombia, that over 500 organizations have committed to aligning their risk management and corporate reporting with TNFD recommendations. This marks a 57% increase since the initial announcement in January 2024.

Read more.

🎯 EU invests €4.8 Billion from emissions trading revenues to fund net-zero projects

✅ Key Insights

• The EU allocates €4.8 billion from emissions trading revenues to fund 85 innovative net-zero projects in 18 countries.

• Net-Zero Projects expected to reduce emissions by approximately 476 million tonnes of CO₂ equivalent over ten years.

• Funding supports clean technologies in energy-intensive industries, renewable energy, energy storage, carbon management, and net-zero mobility.

The European Commission has selected 85 innovative net-zero projects to receive €4.8 billion in grants from the Innovation Fund, aiming to accelerate the deployment of cutting-edge clean technologies across Europe. This marks the largest funding round since the fund’s inception in 2020, boosting total support to €12 billion and increasing the number of projects by 70%.

Read more.

🎯 43% surge in companies disclosing biodiversity data, says CDP Report

✅ Key Insights

• 43% increase in biodiversity data disclosures since the Global Biodiversity Framework (GBF) adoption in 2022.

• 33% of global stock market companies now report water data to CDP, with a 22% reduction in water use.

• Fewer than 10% of companies assess their business’s dependency on biodiversity, posing financial risks.

Business momentum in measuring nature and biodiversity impacts is accelerating, according to CDP’s latest data. This progress comes as global leaders convene for COP16 in Colombia to discuss the Kunming-Montreal Global Biodiversity Framework (GBF) implementation. For the success of the GBF, robust corporate disclosure is essential, and CDP’s data is critical to driving accountability.

Read more.

🎯 Standard Chartered launches ESG-linked trade loans to boost global commodity decarbonization

✅ Key Insights

• The new sustainable Borrowing Base Trade Loan (BBTL) helps commodity sector clients transition to greener business practices.

• The solution is available in key markets including the US, UK, UAE, South Africa, Singapore, and Hong Kong.

• The sustainable finance variants integrate ESG criteria, offering benefits such as lower pricing for companies hitting sustainability targets.

Standard Chartered has launched a sustainable finance variant of its Borrowing Base Trade Loan (BBTL), reinforcing its commitment to decarbonizing the commodity sector. The BBTL is a secured revolving credit facility tailored to meet the specific needs of businesses, allowing them to borrow against a pool of collateral like cash, inventory, or receivables. It provides clients with flexible financing while consolidating transactions under a single loan.

Read more.

🎯 85% of investors to prioritize sustainability as private equity accelerates net zero efforts: BCG Report

✅ Key Insights

• 85% of limited partners (LPs) expect to increase their focus on sustainability in the next three years, pushing private equity (PE) firms to prioritize ESG goals.

• Only 22% of PE-owned companies have a decarbonization strategy, but those that do are reducing emissions faster than public companies.

• 77% of PE-backed companies now have at least one woman in the C-suite, compared to 64% of public companies.

The private equity (PE) industry is steadily advancing its sustainability efforts, driven by increasing investor expectations and the commercial benefits tied to ESG initiatives. With over $8.7 trillion in assets under management, PE firms are leveraging their influence to integrate sustainability into their investment strategies.

Read more.

How can sustainable investors benefit from artificial intelligence?

Prof. Dr. Dirk Söhnholz is the CEO of Söhnholz ESG GmbH, and a respected professor of Asset Management at the University of Leipzig. In this article, he provided some answers to the tricky question: how should AI-based sustainable investments be implemented?

✅ Highlights 

• Same return, lower risks with sustainable AI investing?

• Portfolio construction: is AI a threat for active or passive sustainable investments?

• Conclusion:  Few downsides but many upsides of AI-based sustainable investments

It seems obvious that AI can help to target marketing better to individual requirements including those of sustainable investors. Custom marketing may become cheaper and more convincing. AI may also be used to support individual bond or shareholder engagement with target companies. Adding custom AI-based sustainability services to a technology such as the one provided by Say Technologies may be the way to go in the future.

Read more.

Temenos hits sustainability goal for cloud-native banking

✅ Highlights 

• Temenos: Record highwater benchmark for transaction volume

• Banks: The end of proprietary data centers and the age of the cloud

Temenos hits a sustainability benchmark for its cloud-native core banking platform, which runs on Microsoft Azure, highlighting architecture progress. This comes after the fintech launched its first Responsible Generative AI solutions for core banking. The benchmark, performed by Microsoft, simulated a client using Temenos’ Retail Enterprise Services with 25 million customers and 38 million accounts, which resulted in 12 million loans being processed in a single instance.

Read more.

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