auctusESG | Insights | June 2024
Data dashboard
NASA - National Aeronautics and Space Administration data indicates that average global temperatures reached record highs each month from June 2023 to May 2024, marking an unprecedented streak. This extreme rise in temperatures was influenced by a strong El Ni?o that began in spring 2023. According to NOAA: National Oceanic & Atmospheric Administration scientists, there is a 49% chance of La Ni?a developing between June and August, and a 69% chance between July and September, which could partially mitigate the average global temperatures.
Read more here. Sally Younger .
Soaring temperatures are particularly costly for developing economies. A one-degree increase can reduce growth by 1-2% in lower-income countries. This rise impacts agriculture and manufacturing, leading to fewer investments, lower outputs, reduced labor productivity, and increased inequalities.
Read more here. The Times Of India , Dr. Srijana Mitra Das .
News roundup
UK financial institutions triple investments in clean energy projects
In 2023, UK financial institutions tripled their investments in clean energy projects to $2.3 billion, leading global financial centers in growth rate. The top five centers—UK, USA, France, Germany, and Japan—saw a 59% increase in clean energy investments from 2022. Almost all tracked financial services firms now have formal climate commitments, with the focus shifting to implementing these commitments and ensuring they effectively support the transition to net zero.
The surge in clean energy investments by major financial hubs signals a growing recognition of the financial risks posed by climate change and the opportunities presented by the green energy transition. These investments not only support the decarbonisation of the energy sector, but also indicate a broader shift in the financial industry's approach to sustainability. As financial institutions integrate climate considerations into their decision-making, it sends a clear signal to the energy sector that the market is demanding accelerated adoption of renewable and low-carbon technologies. This, in turn, will drive further innovation and investment across the energy value chain, ultimately shaping the future of the global energy landscape. Globally, this trend underscores the financial sector's pivotal role in facilitating the transition to a more sustainable, climate-resilient economy.
Read more here. City of London Corporation , Climate Policy Initiative
ISSB advances harmonisation of global sustainability reporting standards
As part of the ISSB’s two-year work plan, the IFRS Foundation has now assumed responsibility of the Transition Plan Taskforce (TPT) disclosure framework. This move supports the application of IFRS S2’s requirement for entities to disclose transition plans and aims to reduce fragmentation in climate-related disclosures.
Additionally, IFRS has signed an agreement with the GHG Protocol to ensure compatibility between their GHG reporting standards. The agreement includes governance arrangements for the ISSB’s involvement in updates to the GHG Protocol standards, with an ISSB representative serving as an observer on the GHG Protocol Independent Standards Board. These steps are part of the ISSB’s ongoing efforts to streamline sustainability reporting.
For financial institutions, this means they will need to align their climate-related disclosures with these emerging frameworks, ensuring transparency around their transition plans and GHG emissions. This standardisation of sustainability reporting will enable financial decision-makers to better assess climate risks and opportunities, ultimately supporting more informed capital allocation and investment decisions. Globally, this signals the financial sector's pivotal role in driving the transition to a low-carbon economy, as consistent ESG data becomes a fundamental input to investment analysis and portfolio management.
Read more here. ESG Today , Mark (Moshe) Segal .
Agriculture a significant contributor to the rise in nitrous oxide emissions over the past 40 years
A new study published in the Earth System Science Data journal showed that agriculture has been a major driver behind a 40% rise in human-cause nitrous oxide emissions over the past 40 years, in part due to the growing demand for meat and dairy. Further, the agriculture sector was responsible for 74% of nitrous oxide emissions between 2010 and 2019. In the past 4 decades, human-caused nitrous oxide emissions have risen by between 130-157% in India, China and Brazil.
The sharp increase in agricultural emissions highlights the need for financial institutions to incorporate climate transition risks into their lending and investment decisions. Banks and investors need to assess the emissions profile of their agricultural portfolios and work with borrowers to implement more sustainable farming practices. This presents opportunities for sustainable finance products that incentivise emission reductions in the agriculture sector as part of the broader climate transition. Addressing nitrous oxide emissions from agriculture is crucial for meeting the goals of the Paris Agreement.
Read more here. Carbon Brief , Orla Dwyer .
97% of Corals Dead in the Northern Great Barrier Reef
At least 97% of corals on a reef in the northern Great Barrier Reef have died during a severe bleaching event, marking one of the most devastating impacts ever recorded. Scientists are calling for more studies to assess the full extent of coral mortality across the reef system. This bleaching event was the 5th such event in the past 8 years, subjecting the reefs to extreme heat stress resulting in devastating impacts.
This catastrophic loss in the Great Barrier Reef has severe implications for financial institutions and the need for ocean governance financing initiatives. As coral reefs are vital to marine ecosystems, their degradation threatens biodiversity, local economies that rely on reef-related tourism and fishing, and the overall health of the oceans. This underscores the urgent imperative for financial institutions to accurately assess and mitigate climate-related risks to their investment and lending portfolios. Innovative sustainable finance mechanisms, such as conservation financing, debt-for-nature swaps, and blue bonds, will be critical to funding reef restoration, improving land management practices, and supporting the transition to a low-carbon, climate-resilient ocean economy. Proactive ocean governance that mobilises public-private capital is essential to reversing the decline of these irreplaceable natural assets.
Read more here. The Independent , Stuti Mishra .
Spotlight
Heatwaves
The period from June 2023 to May 2024 witnessed multiple heatwaves due to the strong El Ni?o with regions across the globe impacted -
South and Southeast Asia
El Ni?o brings hotter and drier conditions in South and Southeast Asia, worsening heatwaves and extending dry periods. This severe impacts agriculture, reducing crop yields and increasing wildfire risks. Bangladesh, Indonesia, Malaysia, Philippines, Thailand and Vietnam reported prolonged heatwaves causing disruptions in output, education and labor productivity. Read more here.
Temperatures in north India soared to almost 50 degrees Celsius, recording more than 40,000 heatstroke cases and over 140 deaths. Animals and birds were also affected. This was further coupled with growing water shortage in cities such as Bengaluru. Read more here.
In 2023, near-surface temperatures were notably higher than average, largely due to El Ni?o conditions, which contributed to India's weakest monsoon in five years and the lowest August rainfall since 1902. Additionally, the World Meteorological Organization's (WMO) 2023 report highlights the severe impacts of extreme weather events, including Cyclone Mocha, which displaced 1.7 million people across South Asia, mainly Myanmar and Bangladesh, and exacerbated food insecurity. Read more here.
Europe
Countries such as Greece, Italy, Spain, Turkey and Cyprus have witnessed soaring temperatures exceeding 40 degrees Celsius, impacting residents, business activity and tourism in the continent. The UK was also not left behind, with temperatures rising beyond 20s degrees Celsius and a forecast for humid and hotter weather. Read more here.
Polar region
Rapidly diminishing Arctic ice could lead to a complete absence of ice in the polar region by 2040. This loss not only impacts global temperatures but also generates weather extremes, threatens coastal communities, jeopardizes food stability, leads to wildlife decline, and poses the risk of methane release from permafrost.
Antarctica also witnessed a record-breaking heatwave with temperatures being 40 degrees Celsius above normal. Although this was termed as a black swan event by scientists, it has had long-term irreversible impacts on the region's ecosystems.
The WMO has indicated an 80% likelihood that global mean near-surface temperatures will surpass 1.5°C above pre-industrial levels for at least one year between 2024 and 2028. The WMO also reports an 86% chance that at least one year in this period will be warmer than the record year 2023.
Way forward
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This indicates the need for futureproofing the global economy, beginning from climate-proofing sectors which are at the centre of such temperature catastrophes, such as agriculture, water and livelihoods. Strengthening effective water management through integrating drought risk management mechanisms and plans, promoting water reuse, sustainable soil and land use management are all critical to adapting to the rising heatwaves. Examples of directives issued for bolstering water management can be found here.
On the other hand, heat action plans (HAP) that outline preparedness measures, emergency response plans and protection for vulnerable populations also need to be institutionalised. These plans, multi-sectoral in nature, involve coordinated efforts across various sectors to effectively manage and mitigate the impacts of extreme heat conditions. Accelerating HAPs at the national, state and local government level and incorporating nature-based solutions (such as green roofs or expanding tree canopy cover) in hotspots would aid in managing extreme heat. Examples of cities having such mechanisms in place to tackle heat can be found here.
Featured events
Decoding Climate-tech Solutions for Financial Institutions in Emerging Markets
Under the aegis of London Climate Action Week , auctusESG, in collaboration with Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) , Association of Development Finance Institutions of Malaysia (ADFIM) , and Coalition for Disaster Resilient Infrastructure (CDRI) hosted a webinar that explored cutting-edge tech-enabled solutions for integrating climate-related financial risks into the fabric of financial institutions, addressing the unique challenges and opportunities within rapidly evolving economies.
Speakers included:
Watch the event here.
What Lies Ahead for Climate and Trade? Scenarios and Strategies for Climate Competitiveness
Namita Vikas , Founder and Managing Director, auctusESG speaks at the India Global Forum 's 6th annual flagship Pathways to a Limitless Future event. Namita addresses the threat of the lack of resources and capacities in financial institutions in emerging markets to decarbonise their portfolios at the speed which is expected and the rising transition risks they face in the wake of regulations such as the European Union 's Carbon Border Adjustment Mechanism.
Developing countries do not have the wherewithal, the capacities or the resources to decarbonise, at the speed they are required to. This therefore, becomes a threat from a trade standpoint...Financial institutions are decarbonizing, placing borrowers at the core asking for science-based transition plans, credible strategies, and thorough due diligence
Speakers included:
Watch the event here.
Insights Digest
This section will curate the latest publications and relevant reports that illuminate key developments and insights in the field of sustainable and climate finance, climate risks and transition opportunities.
auctusESG Thought Leadership
Read more here. Contributor: Rashika Singh
Read more here. Contributor: Sunidhi Singh .
Read more here. Contributor: Satabdi Mohapatra .
Read more here. Contributor: Ekta Verma .
Market trends and reports
Read more here. Climate Bonds Initiative , Sean Kidney .
Read more here. 汤森路透 , Huw Jones .
Read more here. ESG News .
News roundup further analysis
Read more here. The Conversation U.S. , Hanqin Tian , Eric Davidson , and Pep Canadell .
Read more here. World Economic Forum .
Engage with auctusESG for more insights!
Co-Founder EuroKids, Leadership Coach, Venture Capitalist
4 个月Great read! Keep up the good work, auctusESG
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5 个月Great curation ??
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5 个月Smita Khedkar? It will definitely be very interesting read.
Associate Professor at MGV's KBH Dental College & Hospital
5 个月Eager to read more!