auctusESG | Insights | October H2 2024
Data dashboard
The global push for biodiversity conservation is gaining momentum. Businesses are now at the forefront of this movement, facing new reporting standards like ESRS 4, TNFD, and ISSB that demand greater transparency and accountability in biodiversity-related practices. This shift is complemented by technological advancements in AI and data analytics, enabling more precise biodiversity monitoring and assessment.
The ongoing COP16 highlights the urgent need to address the financing gap for biodiversity conservation, which is estimated between US $598–US $824 billion annually. Target 19 of the Kunming-Montreal Global Biodiversity Framework (KMGBF) calls for raising US $200 billion each year, including US $30 billion from international sources. Innovative financial strategies, such as the voluntary biodiversity offset market, are emerging to bridge this gap and support conservation projects. This market aims to mobilise private investments and align financial flows with biodiversity goals. Closing this financing gap is essential for transitioning to a nature-positive economy, ensuring that ecosystems are preserved and restored effectively for future generations.
Read more here. South Pole
News roundup
Urgent call for action at COP16 amid funding challenges?
At COP16 in Cali, Colombia, President-designate Susana Muhamad stressed the critical need for increased funding for biodiversity initiatives, highlighting a stark contrast between military spending and conservation budgets. Experts called for integrated policies that link biodiversity conservation with climate action, urging nations to commit to halting deforestation by 2030. The conference also emphasized the importance of supporting indigenous peoples as key custodians of biodiversity, advocating for their inclusion in decision-making processes and resource mobilisation strategies to enhance conservation efforts.
Read more here. Citizen Digital
Only 10% of nations meet biodiversity commitments ahead of COP16
As the COP16 biodiversity conference approaches, only 10% of countries have fulfilled their biodiversity pledges, raising alarm. The National Biodiversity Strategy and Action Plans Tracker (NBSAP) reveals that only 20 nations have revised their plans since COP15, with just nine submitting updates by June 2024. Advocates stress the need for ambitious targets and clear action plans to combat biodiversity loss. Challenges include inadequate funding and poor intergovernmental coordination, highlighting the urgency for effective commitments to protect ecosystems by 2030.
Read more here. Down To Earth
Avaana Capital secures US $135 million for climate fund
Avaana Capital has successfully raised US $135 million to launch a climate fund aimed at supporting sustainable businesses in India. The fund will focus on sectors like renewable energy, electric mobility, and waste management. Avaana's strategy includes investing in companies that drive environmental sustainability while generating competitive returns. The firm aims to leverage this capital to address climate challenges and promote green innovation across the country, aligning with global sustainability goals.
Read more here. The Economic Times Jessica Rajan Pranav Mukul
Standard Chartered launches sustainable finance variants for trade loans
Standard Chartered has introduced sustainable finance variants of its Borrowing Base Trade Loans (BBTL), aimed at enhancing trade loan flexibility. This initiative integrates environmental, social, and governance criteria into the financing process, allowing businesses, particularly in the commodity sector, to secure loans against diverse collateral. The program offers differential pricing for companies meeting sustainability targets, such as reducing carbon emissions and increasing renewable energy usage.
Read more here. Standard Chartered
Hong Kong Monetary Authority launches sustainable finance action plan
The Hong Kong Monetary Authority (HKMA) has introduced a Sustainable Finance Action Plan aimed at enhancing green and sustainable finance in the region. This initiative includes establishing a framework for green bonds, promoting climate-related disclosures, and fostering collaboration among stakeholders. The plan emphasizes the importance of aligning financial practices with sustainability goals to support Hong Kong's transition to a low-carbon economy. The HKMA aims to position the city as a leading hub for sustainable finance in Asia.
India's dismal ranking in global nature conservation index
India has been ranked 176th out of 180 countries in the inaugural Global Nature Conservation Index (NCI) 2024, scoring just 45.5 out of 100. This positions India among the five lowest performers, alongside Kiribati, Turkey, Iraq, and Micronesia. The NCI evaluates conservation efforts based on land management, biodiversity threats, governance, and future trends. Key issues highlighted include inefficient land management, significant habitat loss (23,300 sq. km from 2001-2019), and inadequate marine protections, with only 0.2% of waterways safeguarded. The report calls for urgent reforms to address these pressing environmental challenges.
Read more here. Down To Earth Kiran Pandey
Spotlight
NCQG and the Global South: What’s at stake and why it matters
The New Collective Quantified Goal (NCQG), deemed to be a pivotal framework emerging from the Paris Agreement, is touted to be one of the most discussed topics ahead of the COP29. The necessity for this goal cannot be overstated, particularly for the Global South, which faces the brunt of climate change impacts.
Originating from commitments made in 2009 to mobilise US $100 billion annually by 2020, the NCQG seeks to replace this insufficient target with a more ambitious and needs-based financial framework, ensuring that the financial support provided to developing nations is aligned with their specific climate challenges and priorities. Developing countries require substantial financial resources, estimated around US $5.8 to US $13.6 trillion cumulatively by 2030, to effectively address climate change impacts and implement low-carbon solutions.?
Exploring the Relevance and Necessity of an NCQG Fund
A major challenge for developing nations is navigating the complexities of accessing international climate finance. These challenges manifest as high transaction costs, accreditation barriers, debt concerns, limited funding and inconsistent policy conventions. Addressing these issues necessitate reforms that improve access and enable effective climate financing for sustainable development. The NCQG aims to simplify this process by improving accessibility and seeks to empower developing countries to mobilise the necessary resources for impactful climate action.
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Developing countries are calling for dedicated sub-goals targeting adaptation, loss, and damage financing to ensure these crucial areas receive adequate support. In this context, the NCQG’s potential inclusion of funding for climate-induced loss and damage is essential. Such a move would address the pressing need for resources to manage immediate climate impacts while supporting long-term resilience-building strategies.
The relevance and necessity of the NCQG (Nationally Determined Contributions) are critical in the context of the Global South, where nations are confronting significant climate challenges, including rising sea levels and extreme weather events. Many of these countries lack the fiscal capacity to fund necessary transitions to sustainable energy systems. This financial constraint limits their ability to invest in infrastructure and adaptation measures essential for resilience against climate impacts. Substantial international financial support is crucial for enabling these nations to pursue low-carbon pathways and enhance their development efforts while addressing climate vulnerabilities effectively.
Potential hurdles & the way ahead?
While the NCGQ holds significant promise, it also faces potential drawbacks. The negotiation process has advanced gradually, but the challenges remain, particularly with disagreements over specific financial targets and contributions. Moreover, concerns persist that funds may continue to be offered as loans rather than grants, potentially increasing the debt burden on developing nations. Critics caution that without strict guidelines defining climate finance and robust accountability mechanisms, the NCQG risks repeating past shortcomings.
While private sector involvement is essential for mobilising additional resources, it requires a balanced approach. Over-reliance on private investments may lead to an emphasis[MH1]? on profit generation, potentially sidelining the needs of vulnerable communities in need of support for effective climate action.
The NCQG represents a critical opportunity for the Global South to secure much-needed climate finance. Despite challenges in its negotiation and implementation, its successful adoption at COP29 could redefine international commitments to climate justice. It is imperative that developed nations honour their responsibilities and ensure that this new goal translates into tangible support for those most affected by climate change.
Featured events
Financial Times ‘Energy Transition Summit 2024’ – 22nd to 24th October
The Financial Times Energy Transition Summit, now in its 9th year, serves as a pivotal gathering for leaders in the energy, finance, and technology sectors, focusing on the urgent need for a sustainable energy transition. The summit brings together CEOs and decision-makers to discuss critical themes such as the implications of the COP28 agreement on fossil fuel transitions, the bifurcation of energy systems, and the role of critical minerals in future energy infrastructure. This year's summit emphasizes navigating geopolitical uncertainties while capitalizing on emerging opportunities in the green economy.
View agenda and events here. Financial Times
The 29th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change
COP29, set to take place in Baku, Azerbaijan from November 11-22, 2024, will be a critical juncture for global climate action. Key focus areas include the establishment of a New Collective Quantified Goal (NCQG) for climate finance, building momentum for stronger national climate commitments (NDCs), and assessing progress on existing pledges related to cities, energy, food systems, and forests. The conference is being billed as the "finance COP," with emphasis on aligning climate finance contributions with estimated global needs and enhancing private sector involvement. Attendees can look forward to discussions on innovative financing mechanisms, strategies for scaling up adaptation efforts, and concrete steps to achieve commitments made at previous COPs. Additionally, COP29 will be crucial for setting clear expectations for the next round of NDCs due shortly after the conference, potentially shaping the trajectory of global climate action for years to come.
Get more information here. COP29 Azerbaijan
Insights digest
auctusESG thought leadership
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Market trends and reports
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