Global Climate News

Robeco, a Dutch asset manager, has expanded its engagement in climate and nature, focusing on natural resource management, deforestation (expanding from palm oil to soy, beef, leather, paper and pulp), biodiversity, and human capital management. They are also initiating new themes on transition minerals (supply chains in electric vehicle batteries) and protecting shareholder rights from weakening regulations.

Danish companies are increasingly integrating ESG metrics into their financing, with sustainability-linked loans (SLLs) becoming a key instrument. The Nordic market for SLLs grew to approximately EUR 11 billion in 2021. Companies like A.P. Møller – Maersk, Pandora, and Coop Danmark have adopted SLLs, linking borrowing costs to sustainability targets. Nordea expects Danish companies to have sustainability-linked loan agreements worth around DKK 200 billion within three years.

The European Union proposed a European Green Bond Standard (EuGBS) to increase the convergence of green bonds internationally. The ECB recommended that the EuGBS should become mandatory for newly issued green bonds within 3-5 years to enhance market functioning and strengthen the green credibility of the EU green bond market. The EuGBS requires supervision of external reviews by ESMA and taxonomy alignment of use of proceeds. The global supply of green bonds in 2021 nearly doubled compared to 2020.

The article discusses the suitability of sustainability-linked bonds (SLBs) versus transition bonds for addressing the energy transition. It argues that SLBs, being forward-looking and focused on KPI improvements, are better suited than transition bonds, which only ensure projects are 'not as dirty as they could be'. The author acknowledges the nascent stage of the SLB market and the need for clearer definitions of 'material' and 'ambitious' but advocates for prioritizing SLBs.

Swedish real estate company Wallenstam, owning 66 wind turbines, is self-sufficient in renewable energy. They prioritize five UN Sustainable Development Goals, focusing on sustainable cities and communities. A stakeholder analysis showed surprisingly aligned priorities across groups, with social issues ranking highly. Individual electricity and water metering reduced consumption by 10-25%.

Denmark has issued green government bonds of around DKK 26bn (around 4.5% of the total Danish government bond market) to fund the green transition. The government plans to issue more green bonds in the future.

US-based Climate Access Fund (CAF) launched the Solar4Us @ Henderson-Hopkins project, installing a 808-kilowatt solar array on a Baltimore school. This community solar project will provide discounted electricity to approximately 150 low-to-moderate income households, saving subscribers an estimated $1.1 million over the panels’ lifetime. The project also includes job training and educational opportunities.

Egypt: The Suez Canal Bank participated in a $108 million financing for MAFI to build a fruit and vegetable processing plant in Sadat City. The project aims to produce concentrates and frozen fruits and vegetables, with 100% of the products intended for export. This supports Egypt’s economic growth and sustainable development goals.

\"Six of the largest US banks (JP Morgan, Morgan Stanley, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs) have withdrawn from the UN-backed Net Zero Banking Alliance (NZBA). The withdrawal, following years of speculation, may be linked to the incoming Trump administration's anti-ESG stance. These banks cited a focus on the NZBA's partner organization, GFANZ, and maintained their individual net-zero commitments by 2050. Three smaller US banks remain in the NZBA.\"

Grenada: The Green Climate Fund, through GIZ, has approved a project to improve water resource management and resilience to climate change, benefiting over 100,000 people by 2024. This includes building 16 storm-proof water storage facilities and improving water efficiency. Renewable energy will also be implemented for the National Water and Sewerage Authority, co-financed by the BMU.

China has implemented its first energy law, promoting green and low-carbon transition and including hydrogen energy. The government set 10 key energy priorities for 2025, including accelerating renewable energy and implementing the energy law. Over 300GW of renewable energy capacity was installed in 2024. A 3tn yuan ($411bn) stimulus package is planned, largely for EVs and green energy. China approved the world’s largest hydropower dam in Tibet, with an annual output of 300 terawatt hours. EV sales surged in 2024, exceeding 4.3m vehicles for BYD alone. A trade-in subsidy for EVs was renewed.

\"International parties discussed marine carbon dioxide removal (mCDR) activities under the London Convention and Protocol. While some progress was made, no concrete action was taken. Differing opinions on commercial activity and governance were expressed among parties including Germany, the Netherlands, the UK, and the US. The parties agreed to continue work and evaluate options for appropriate action, including considering both potential risks and benefits of mCDR techniques.\"

MSCI, a leading provider of ESG ratings, reported USD 250 million in ESG business revenue, with USD 150 million from ESG ratings and climate solutions. Their ESG business has shown a 30% compound annual growth rate over the last decade. The company's approach focuses on measuring long-term, material risks, using alternative data sources beyond self-reported information from companies. MSCI observes increasing corporate engagement with ESG issues, particularly in the last three years, with a response rate of roughly 75% from companies in the MSCI World Index.

The Loan Market Association (LMA), along with the European Leveraged Finance Association, is working to provide guidance on incorporating ambitious, meaningful, and sincere ESG targets into leveraged financing. This follows a recent trend of increased ESG considerations in leveraged loans, driven by investor pressure and the direct impact of ESG factors on credit risk. The LMA, along with its US and Asia Pacific counterparts, recently updated the Sustainability-Linked Loan Principles to include mandatory external verification of ESG performance.

China's energy and climate actions in 2025 will focus on balancing economic growth with decarbonization. Renewables will be scaled up, while coal power will undergo transformation. The national carbon market will expand to include more sectors. China's climate plan for the next 10 years will be released, and its ambition will be tested against geopolitical challenges.

The UK launched the Global Clean Power Alliance, bringing twelve countries together to accelerate clean energy deployment and green job creation. The UK also committed to increasing its defence spending to 2.5% of GDP and pledged continued military aid to Ukraine (\"3 billion a year\"). Further, the UK is developing legislation for a new sanctions regime targeting irregular migration, and is reforming the FCDO to better connect its work to domestic priorities.

During the COVID-19 crisis, interest in sustainable investments grew. Sustainable Choice products now make up almost 25% of all new investments by private customers. One product, Sustainable Balanced Funds, reached €1 billion in net flows 19 months after launch.

The Nordic region reached a record year-to-quarter volume of approximately USD 46.5bn in sustainable bond issuance during the first nine months of 2023. Finland surpassed its previous full-year sustainable bond volume record, totaling approximately USD 6.7bn by the end of Q3 2023. However, Nordic Q3 sustainable loan volume decreased by 16% quarter-on-quarter and 21% year-on-year.

Denmark plans to introduce a phased agricultural CO2e tax from 2027 to reduce greenhouse gas emissions by 70% by 2030. This follows a similar tax for the industrial sector. The IMF highlights the need for a 25-50% reduction in greenhouse gas emissions by 2030 to meet climate goals, requiring massive increases in low-carbon investments.

Nordea, a Nordic financial services group, launched a green securities financing framework to support real estate companies' green initiatives. The framework allows companies to obtain green-labeled financing for sustainable projects using their liquid assets as collateral. This complements other green financing products and contributes to Nordea's own green bond asset pool, aligning with its net-zero emissions target by 2050.