Competitiveness, biodiversity & transition finance: get ready for the hot topics in 2025

As autumn arrives and COP29 approaches, it's time to get ready for the 2025 agenda to stay on top of a fast changing sustainability world. This month, we highlight major trends and developments in sustainable finance - from the influence of the EU Taxonomy, to banks committing to net-zero goals, to new reports on biodiversity and transition finance, etc. There is ever more publications - we highly recommend uploading them in an AI tool to extract the useful parts!

One of the highlights this month has been the publication of "A roadmap for upgrading market access to decision-useful nature-related data " . It is a useful guide for how to treat nature-related data. Another one is the Transition Finance Market Review from the UK, along with Tom Gosling 's excellent blog post analysing the Review , "A transition dog is still a dog".

The ASEAN Transition Finance Guidance Version 2 (“ATFG Version 2") was endorsed by the ASEAN Capital Markets Forum (“ACMF") and subsequently launched at this year’s ACMF International Conference. The ATFG Version 2 provides additional guidance and clarity on different types and applications of transition finance, helping to unify terminologies.

The latest EU Sustainable Finance Trends 2024 by 彭博资讯 report shows more companies aligning their investments with the EU Taxonomy, with sectors like Utilities and Real Estate directing over 60% of their capital expenditures toward sustainable projects. This shift highlights the growing role of sustainable finance in shaping Europe’s green transition

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Moreover, the Net-Zero Banking Alliance (NZBA) led by the UN Environment Programme has published the 2024 progress report, finding membership rise from 43 to over 140 banks, with 97% of members setting net-zero targets for specific sectors. Yet, many banks are still working on the detailed transition plans needed to meet these ambitious goals. While the banking sector is making strides, the transition is far from complete, with more work needed to ensure alignment with global climate targets.

News

• NZDPU : CDP and the Net-Zero Data Public Utility Expand Partnership to Power the Net-Zero Transition
• Directorate-General for Climate Action: New monitoring rules agreed for the EU ETS, including non-CO? emissions from the aviation sector
• ESG Today: IFRS Foundation Launches Guide to Help Companies Voluntarily Apply ISSB Sustainability Reporting Standards
• PR Newswire : Launch of the Taskforce on Inequality and Social-related Financial Disclosures (TISFD)
• ESG Today : Hong Kong Proposes IFRS-aligned Sustainability Reporting Standards
• Reuters : Credit Agricole CIB chooses carbon trading over gold, sources say
• Euronews : ING pledges to stop financing new upstream oil and gas projects
• LSE : LSE announces Global School of Sustainability
• ESG Today : EU Commission Warns 17 Member States Over Failure to Implement CSRD Sustainability Reporting Rules
• Hugh Wheelan: Sustainable finance think-tanks Carbon Tracker and Planet Tracker to merge as current CEOs depart
• Science Based Targets Network (SBTN) - SBTi launches website to help companies navigate climate targets?
• ESG Today - Morgan Stanley softens climate targets

Articles and recommended reading

• The Financial Times published an article by Sarah Murray on the essential role of transition finance in decarbonizing hard-to-abate industries like cement, steel, and aviation. With $13.5 trillion needed by 2050, challenges include the complexity of decarbonization, greenwashing risks, and the need for credible transition plans. Can transition finance get us to a greener future?

• ICMA published new paper on the role of commercial paper in the sustainable finance market .
• Agora Energiewende wrote a paper on Investing in the Green Deal How to increase the impact and ensure the continuity of EU climate funding
• UCL Institute for Innovation and Public Purpose releases a working paper on Financial interactions with ecosystem tipping points: evidence from the Brazilian Amazon and Indonesian peatlands.?

• Andreas Wildner and Maurits Dolmans wrote an article on Sustainable Fiduciary Duties – The time has come for financial fiduciaries to adapt to the new climate reality.
• Environmental Finance: Embedding sustainability: a call to action for banks to operationalise
• IFRS has launched a new guide to assist companies in implementing the International Sustainability Standards Board (ISSB) standards on a voluntary basis , addressing investor demand for transparent sustainability disclosures, especially in regions without regulations.
• ClientEarth released a legal analysis of the Corporate Sustainability Due Diligence Directive (CS3D), offering guidance for EU Member States on transposing the directive into national law, ensuring environmental protection and alignment with international standards and the CSRD.

?Reports and publications??

• A special report was released: "Tackling the Vicious Circle: The Interim Report of the Expert Review on Debt, Nature & Climate ", a review Review which has been conducted by an Independent Expert Group (IEG) co-chaired by Vera Songwe, former UN Under-Secretary General, and Moritz Kraemer, Chief Economist at LBBW bank and former Global Chief Ratings Officer of S&P Global (previously known as Standard and Poor’s). The Review is being supported by a Secretariat drawn from four independent research institutes: the UN Economic Commission for Latin America (based in Santiago, Chile), ODI Global (based in London, UK), the Finance for Development Lab of the Paris School of Economics (based in Paris, France) and the Africa Centre for Economic Transformation (based in Accra Ghana).
• The Transition Pathway Initiative has released a new report on the state of transition in the banking sector , revealing that 85% of banks still finance new coal projects, with 0% fully committed to phasing out coal or deforestation activities, and only 8% committed to ending project financing for new oil and gas fields.

• Agora Energiewende 's new report on "Investing in the Green Deal " stresses the need for urgent action to fill the looming climate funding gap after 2026. To meet climate neutrality by 2050, the EU will require significant investments of over €460 billion annually.
• United Nations Environment Programme Finance Initiative (UNEP FI) have published a new document - Guidelines for banks "Getting Started in the Agricultural, Forestry and Mining Sectors ".
• CETEx (Centre for Economic Transition Expertise) published a new report on deforestation : "Hidden harms: the economic and financial consequences of deforestation and its underlying drivers". It examines one risk in depth (deforestation).

• ESMA published its 2024 EU Carbon Markets report , providing key insights into the functioning of the EU ETS and emphasizing declining carbon prices due to reduced demand and increased supply from additional allowance auctions, as well as a concentration of auction participants.
• The Net-Zero Banking Alliance has released its 2024 Progress Report . Key findings highlight membership has grown from 43 to over 140 banks, with 97% of members setting their first sectoral targets and over 80% establishing full targets in carbon-intensive sectors. So far, 76 banks have published net-zero transition plans, with 30 more expected in 2024.

• The Transition Pathway Initiative has released a new report on the state of transition in the banking sector , revealing that 85% of banks still finance new coal projects, with 0% fully committed to phasing out coal or deforestation activities, and only 8% committed to ending project financing for new oil and gas fields.
• Positivemoney , in partnership with WWF, issued the Nature's Nudge: The Role of Collateral Frameworks in the Transition Towards a Sustainable Economy report, calling on the ECB to address biodiversity loss and ecosystem collapse alongside climate risks. The report recommends that the ECB tighten rules on environmentally harmful assets and apply higher haircuts to discourage financing unsustainable activities.
• Tilia Impact Ventures has released its 2023 Impact Report , detailing how their investments in purpose-driven companies across Central and Eastern Europe are addressing urgent environmental and social challenges.
• The International Energy Agency has published the World Energy Outlook 2024 , offering critical insights into the global energy landscape, exploring the growing importance of clean energy transitions, the challenges of energy security amid geopolitical tensions, and the need for increased clean energy investment, especially in emerging markets.
• IPPR published a report looking at climate change impacts on national security, showing the knock on effects and build up of potential risks across the system: "The security blind spot: Cascading climate impacts and tipping points threaten national security

• The Global City UK has released a new report, Scaling Transition Finance: Findings of the Transition Finance Market Review , exploring the vital role of finance in driving the global shift to a low-carbon economy. It offers key recommendations to unlock capital, support decarbonization in high-emitting sectors, and enhance public-private collaboration, with a focus on overcoming barriers and supporting emerging markets.
• The ECB released a working paper, Climate Risk, Bank Lending, and Monetary Policy, ?revealing that banks charge higher rates to high-emission firms and favour those committed to reducing emissions, with tighter monetary policies further raising rates for polluting companies.

Online community insights

• Linkedin post : Peter McMullin AM "The OECD Predicts That There Can Be No Net Zero Without SMEs. Here’s Why."
• Linkedin post : Colectivo | Collective Impact "Unpacking VSME Standards: Empowering SMEs for a Sustainable Future (Part 1)"
• Linkeding post: StarGrowth Project -? Handbook for SMEs on Sustainability and Digitalization
• Linkedin Post : Mariana Sarmiento on Biocredit and habitat banks
• Linkedipost: Dirk Schoenmaker ?on Shareholder primacy or stakeholder governance?
• Linkedin Post : Sabine Mauderer shares a new report by Network for Greening the Financial System (NGFS) on “The green transition and the macroeconomy: a monetary policy perspective”.
• Linkedin post: David Carlin on the Net-Zero Banking Alliance report.
• Linkedin post : Juraj Kotian highlights on his CEE Bond Market Report that inflation in CEE should be contained next year, with further rate cuts expected in Hungary, Poland, and Serbia.
• Linkedin post : Ulf G. Erlandsson Presenting Transitioning global public funds
• Linkedin post : Hayden Morgan writes on “Scaling Transition Finance” findings report
• Understanding supply chain emissions: a LinkedIn post from Tayyab Shafique

Podcasts

• "Cleaning Up" podcast has an episode on whether President Trump, if elected, could roll back the IRA. The host, Bryony Worthington , sits down with Ethan Zindler, the Climate Counselor to US Treasury Secretary Janet Yellen. Zindler provides a rare insider's perspective on the implementation of the Inflation Reduction Act, the Treasury's new Climate Hub, and the department's evolving role in tackling the economic and financial implications of the climate crisis. Zindler addresses the tensions between fossil fuel interests and clean energy priorities, as well as the Treasury's efforts to engage with international partners and ensure an equitable clean energy transition.

• Sustainability Uncovered episode 22: SME finance, sustainable sports and hydrogen racing cars
• Travers Smith 's "Sustainability Insights ... in conversation" podcast episode with Tom Gosling , Harald Walkate and Simon Witney discusses the role of responsible investment in improving risk-adjusted returns, in aligning values, and in solving real world problems.
• The "Sustainability Insights" podcast also has an episode on the role of governments in transition finance.

Events

October

• On Wednesday, 30 October, 09:00 15:00 Raiffeisen Bank Romania hosted its Sustainability Inspiration Day. It is a half-day conference exploring sustainability in business and finance. Registration and more information on the website: https://sustainabilityinspirationday.ro/

November

• Budapest, Hungary – 18 – 20 November 2024: SME Assembly 2024 - SMEs: Shaping Europe's Future will feature high-level panels and interviews, expert round tables, interactive workshops, informative masterclasses, and numerous networking opportunities.
• The COP29 Azerbaijan will take place 11 - November in Baku, Azerbaijan.