Digital library on sustainable finance
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In this joint report by the University of Zurich and Center for Sustainable Finance & Private Wealth, commissioned by the Swiss Federal Office for the Environment (FOEN), the impact of ESG integration on the real economy is examined. ESG integration is the most frequently used sustainable investment approach, globally and within Switzerland. This report investigates current academic literature to determine if there is an impact on the real economy, and if so, what this is.
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In this report published by the Finance for Biodiversity Initiative, the impact of biodiversity loss on sovereign debt markets in 26 nations is examined. Currently, leading credit rating agencies (CRAs) do not explicitly incorporate biodiversity and nature-related risks in their analysis and thus market stability may be undermined. This report models the effect of nature loss on credit ratings, default probabilities, and the cost of borrowing.
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This document is a publication of the Glasgow Financial Alliance for Net Zero (“GFANZ”) which aims to introduce, and provide an overview of, a set of resources published by GFANZ on 15 June 2022 to support financial institutions’ efforts to finance and enable the whole-economy transition to net zero
(the “Publication”). To fill the gap given the current absence of official policy and requirements, GFANZ has published a framework for financial institutions’ net zero transition plans, released for consultation alongside several connected resources, to encourage a common approach to credible transition planning. Collectively, these five documents comprise a set of related tools, frameworks, and other resources to support transition planning across the financial sector, with the goal of enabling and financing the real-economy transition to net-zero:
• Recommendations and Guidance on Financial Institution Net-zero Transition Plans
• Guidance on Use of Sectoral Pathways for Financial Institutions
• 2022 Concept Note on Portfolio Alignment Measurement
• Introductory Note on Expectations for Real-economy Transition Plans
• Managed Phaseout of High-emitting Assets Report
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This is the intermin report open for Consultation until July 27 2022.
This report introduces GFANZ proposed recommendations and guidance for delivering net zero transition plans for financial instiutions across the financial sector. GFANZ considers a credible net-zero plan to be a set of goals,a ctions and accountability measures to align a business' activities with net zero by 2050. This report details how such a plan consists of the following elements; foundations (objectives and priorities), implementation strategy (including products and services, activities and decision-making), engagement strategy (including clients and portfolio companies, industry, government and public sector), metrics and targets and governance (including roles, responsibilities andremuneration and skills and culture).
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Financial Institutions Net-zero Transition Plans: Recommendations and Guidance - EN
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Sectoral pathways provide the link between the science of the remaining carbon budget and the detailed steps that a specific sector could take to reduce GHG emissions to a particular level in a specified timeframe. Sectoral pathways do this by providing a benchmark on the pace and timing of GHG emissions reductions needed, identifying the interdependencies between sectors, and articulating the underlying actions that can be taken or the changes within the sector that would drive the specified transition (e.g., technology development and/or adoption, regional variations, the retirement of assets, market changes, policy levers, energy mix). Such pathways provide a useful benchmark for financial institutions to shape their lending, investment, and insurance activities, and related services, in line with the net-zero transition in particular sectors. Critically, these pathways are important for industry to set out a clear target that will drive their investments, operations, and other activities to transition to a low-carbon economy. Debate, discussion, and potential alignment on pathways can facilitate collaboration between industry and the financial services sector, together with policy makers and other stakeholders collaborating to drive decarbonization, and contribute to an accelerated, orderly transition to net zero
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Guidance on Use of Sectoral Pathways for Financial Institutions - EN
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This note aims to introduce the work that GFANZ is doing to support and accelerate the development of real-economy transition plans, by providing clarity around the expectations of financial institutions for the disclosure of transition plans, leveraging existing tools and frameworks.
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Introductory Note on Expectations for Real-economy Transition Plans - EN
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This is the concept note on the Portfolio Alignment Measurement, which aims to illustrate the foals of the Portfolio Alignment Measurement workstream, outline plans for 2022, identify barriers for the adoption of portfolio alignment metrics and to share an initial view of potential enhancements to the Key Design Judgementss as outlined in the Portfolio Alignment Team (PAT) report.
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Traditionally, sustainability and climate metrics are focused on the status quo of invested companies, while portfolio climate alignment methods incorporate forward looking metrics. Meeting critical targets such as those set by the Paris climate agreement, require a forward looking approach. Currently however, available climate alignment methods are still very diverse, partially because they are targeted to different use cases. Therefore, it is important to understand the actual incentivisation effects of these methods. This study examines potential incentives and disincentives created by portfolio climate alignment methods for aligning financial flows with the climate targets of the Paris Agreement.
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The topic of sustainability is becoming more and more important for our society and our financial sector. This teaching material takes up these and other topics in a clear way. In order to understand the dynamics inherent in this area, the concept of sustainable development is outlined using a global outline and the current European and the emergence of Swiss regulation are explained. A discussion of future challenges of the topic and modern terminology such as greenwashing is also included in this teaching material.
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Sustainable Finance Eine praxisorientierte Darstellung der Nachhaltigkeit im Banking - DE
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The Institutional Investors Group on Climate Change (IIGCC) published their 2022 report, which aims to provide an overview and tools for investors to accelerate the energy transition via their investments and engagement. The report stresses the importance of transitioning toward net-zero alignment, measuring portfolio emissions and mobilizing finance towards climate solutions.
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The Intergovernmental Panel on Climate Change (IPCC) working group III published its new report with an updated global assessment on climate change mitigation progress and pledges and examines global emission sources. The costs, risks and opportunities of low-carbon technologies are examined using climate modelling to project these along with market data. Finally a number of potential system transformation are explored.
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This paper represents the first steps in science-based net-zero standard for financial institutions (SBTi-FI) that sets out principles definitions, metrics and target formulation considerations. The document discusses the results of a number of surveys and workshops conducted in December 2021, which span topics ranging from feedback on the five proposed principles for net-zero, the role of carbon credits, fossil fuel financing and metrics and methods.
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Foundations for Science-Based Net-Zero Target Setting in the Financial Sector - EN
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The Inter-agency Task Force on Financing for Development report for 2022 demonstrates that 3.5 percent of revenue is used by developed countries to pay interest on their debts, while developing countries use 14 percent of revenue. 60 percent of LDCs and low income countries are at a high risk of debt distress, which is twice the percentage as in 2015. The report recommends different actions to bridge this gap.
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Financing for Sustainable Development Report 2022: Bridging the Finance Divide - EN
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This report examines the role of national central banks’ (NCBs) in-house credit assessment systems(ICAS) and looks at a possible integration of climate and environmental-related (C&E) risks beyond conventional financial indicators. The report concludes that the ICAS assessment is highly suited towards climate and environmental (C&E) risk integration and is a less biased and more consistent source of data than many private-sector ESG providers offer.
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In this report by SwissBanking the role of banks in Switzerland's buildings' energy efficiency and the pace of renovation needed to meet climate goals in the real estate sector is analyzed. Banks can provide financial incentives to motivate renovation and as such the Swiss Bankers Association (SBA) has named 4 areas the priority for banks looking to improve their climate efficient mortgages: more comprehensive client consulting, classification and climate-efficient mortgages, creating a suitable regulatory framework, improved data availability and a higher level of digitalization.
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Climate-efficient mortgages – The ins and outs Opportunities for greener property financing - DE
Climate-efficient mortgages – The ins and outs Opportunities for greener property financing - FR
Climate-efficient mortgages – The ins and outs Opportunities for greener property financing - EN
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In this final report on the Social Taxonomy, the EU Commission Platform on Sustainable Finance provides a structure for a social taxonomy, its relationship with the environmental taxonomy and other sustainability objectives such as governance and the regulatory landscape. The two key features of the social taxonomy are: 1) the distinction between inherent social benefit, i.e. job creation, and additional social benefits and 2) the social taxonomy cannot be based on science.
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The EU Commission Platform on Sustainable Finance Final Report on Social Taxonomy - EN
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The authors suggest creating a Swiss green Investment Bank (SGIB), with the mandate to enthuse financial players to act and to aid the international climate finance efforts. In this report the required characteristics of such a bank are explained and potential actions are explored.
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This report is published by the Working group II of the Intergovernmental Panel for Climate Change (IPCC). The current and modelled impacts on climate, ecosystem and biodiversity and potential risks are documented. This SSF summary highlights the financial aspects of this report. Read the summary for policymakers here.
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Dr. Julian Köbel and Adrien-Paul Lambillon, from the Centre for Sustainable Finance and Private Wealth at the Department of Banking and Finance of the University of Zurich, published this new piece of research, which explores sustainability-linked bonds (SLBs). These are types of bonds that have a coupon linked to the issuer achieving a sustainability target and are an important and promising mechanism for impact investing.
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Who Pays for Sustainability? An Analysis of Sustainability-Linked Bonds - EN
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Financial Centres for Sustainability (FC4S) published their fourth annual State of Play report, which collects input from 29 financial centers around the globe. The report highlights seven key insights on how financial centres are mobilizing their capital, resources, connectivity and expertise. SSF contributed this report by completing the questionnaire for Zurich as a financial centre.
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FC4S State of Play Report 2022: Leading Financial Centres Stepping Up Sustainability Action - EN
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n 2022, Schroders commissioned alan. agency and iResearch to conduct an independent online survey of 23,950 people who invest from 33 locations around the globe, spanning across Europe, Asia and the Americas, surveyed between 18 February and 7 April 2022.
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Schroders Global investor Study 2022: Sustainability Report - EN
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The Net-Zero Asset Owner Alliance has published new rules on how investors should calculate and set targets on climate within their portfolio on allocate capital supporting decarbonisation. The report also aims for a 16-29% reduction in asset class-level remissions reductions by 2025 and the inclusion of Scope 3 emissions in net-zero considerations.
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In this new study by the World Benchmarking Alliance, 1000 companies from around the world, including 15 Swiss companies, are evaluated based on social aspects of their business including human rights, decent work and ethical conduct. Only 1% of these companies are adequately demonstrating socially responsible business conduct.
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The demand for oil is provoking significantly increased investment into new oil, however, this goes against global production reductions required to meet “well below 2°C” scenarios of the Paris Agreement. The result could be short-term signals resulting in risky over-investment and impacted shareholder value. The extent of the risks and financial loss is explored via various scenarios in this report.
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Following the Glasgow Leaders’ Declaration on Forest and Land Use, a commitment signed by 141 countries, including Switzerland, this report by Forest 500 provides evidence that many companies are ignoring the issue of deforestation and are not prepared for future regulatory changes. Forest 500 tracks policies and performance of the financial sector linked to deforestation in supply chains and investment.
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