Categoría: Banking

Link: https://www.thenationalnews.com/business/economy/2023/10/04/difc-hailed-for-acting-as-growth-catalyst-for-global-sustainable-finance-market/

Date: 4th October 2023

Media: The National News

What happened?

The Dubai International Financial Centre is playing the role of a catalyst to boost sustainable finance globally, becoming a green funding center as the market for sustainable financing, emitting ESG Bonds (environment, social and governance bonds) and influencing neighboring regions to adopt sustainable finance practices. Green bonds are on the rise in Gulf Cooperation Council (GCC) countries, with companies in Dubai and Abu Dhabi issuing them for eco-friendly projects.

Whom and where it affects?

The DIFC role in sustainable finance affects primarily the Middle East region, particularly Dubai. Although, we could see a global effect in the sustainable finance market as investors grow an interest in looking for these types of projects.

What sort of public or private institutions are involved?

Among the public institutions, we have: DIFC (Dubai International Financial Centre), Nasdaq Dubai, Masdar (Abu Dhabi Future Energy Company), Abu Dhabi National Oil Company (ADNOC) or Taqa, Aldar Investment Properties, Commercial Bank of Dubai (CBD) and GCC (Gulf Cooperation Council) governments. 

Among the private institutions, we have: Abu Dhabi Commercial Bank, Majid Al Futtaim Holding, Aldar Investment Property and Aldar Investment Properties

Why is it important for Banking and Finance?

This situation is important for Banking and Finance because the global sustainable finance market, which was valued at $3.65 trillion in 2021, is projected to hit $22.48 trillion by 2031. This means that there will be about $19 trillion worth of projects that will need financing.

What do you think will be the consequences in the foreseeable future?

These developments are expected to contribute to a more sustainable and environmentally responsible financial landscape in the region and beyond. The consequences in the foreseeable future could be as follows:

1. Continued Growth in Sustainable Finance: The DIFC’s efforts to promote green and islamic bonds or sukuk, as well as its status as the largest ESG islamic bonds market, will likely lead to sustained growth in sustainable finance.

2. Increased Investment in Green Projects: With the rise of green and sustainable bonds and sukuk, there will likely be increased investment in environmentally friendly projects. This will contribute to the development and expansion of renewable energy, clean technology, and sustainable infrastructure.

3. Regional Influence: Dubai’s leadership in sustainable finance is likely to influence neighbouring countries in the Middle East to adopt similar practices.

4. Accelerated Transition to Renewable Energy: Sustainable financing will play a critical role in financing the adoption of renewable energy and related projects. State initiatives such as Dubai’s Clean Energy Strategy 2050 and the UAE’s Net Zero 2050 will likely accelerate the transition to renewable energy sources.

SDG: 7 Affordable and Clean Energy

Keywords: Sustainable Finance, Dubai International Financial Centre, ESG, GCC.

Link:

https://www.theguardian.com/business/2023/oct/03/sam-bankman-fried-ftx-crypto-trial-start

Date: THU, OCT 05 2023

Media: TheGuardian

• What happened?

Bankman-Fried, founder of the FTX cryptocurrency exchange, was charged with financial crimes. 

Through some reports, it came to light that FTX could not give customers their funds and forced the company to file for bankruptcy. In which the following month Bankman was arrested on conspiracy and fraud charges for diverting billions of dollars in investments, as well as money in risky operations and other illegal things.

He was also charged by the Manhattan attorney’s office, where he was responsible for using client funds to pay the bill for loan expenses at Alameda, as well as the purchase of high-priced real estate, and making extensive political donations.The FTX hedge fund was Alameda.

The Bankman-Fried financial downturn began in November 2022, in which it came to light that Alameda had billions in FTX-owned cryptocurrencies, and that it was also used as support for loans to FTT. When the CEO of FTX’s top competitor Finance said he was going to sell his $50 million in FTT. At that time all customers of both FTT and FTX took their money immediately, in which they feared they would see a total collapse throughout the industry. That’s when FTX went bankrupt.

• Whom and where it affects?

It mainly affects Sam Bankman who is the guy in charge for the fraud and all the customers of cryptocurrency that he had and that he made lose a lot of money. And this issue affects the area of cryptocurrencies making them lose a lot of value and also the banks that are working with such crypto coins. 

• What sort of public or private institutions are involved?

All the banks that work with the FTX crypto since they probably made a lot of people that invested in the coin  lose money, the lawyers buffet that are in court against Sam Bankman and also the company that Sam founded. 

• Why is it important for Banking and Finance?

Due to the collapse of FTX, many clients, lenders and investors lost millions of dollars, a possible burst of cryptocurrency bubble, hinting at the high level of volatility that cryptocurrencies can have. Therefore, many people, upon seeing this great drop, decided to transfer their funds from different types of cryptocurrency exchanges to banks or different entities that pose a lower risk.

• What do you think will be the consequences in the foreseeable future?

The consequences for Sam and its company are pretty clear, and they´ll be fraud and bankruptcy and probably a prison sentence for the accused; as for the banking activity, all the banks that worked with the crypto currency will have to rebuilt their financing since they lost a lot of money according to the crypto coin as well as the customers that had money invested on the FTX coin. As for the crypto world it could be seen as a warning of what could happen to them if they don’t do things right.

Keywords: FTX, Cryptocurrency Bubble, Sam Bankman, Exchange.

LINK:https://www.esgtoday.com/clarity-ai-launches-methodology-to-build-sfdr-aligned-indexes-and-etfs/

Date: 05th of October 2023

Media: ESGtoday

What happened?

Clarity AI, a sustainability technology platform, recently launched a methodology to aid index and ETF providers in creating and promoting products compliant with the European Union’s Sustainable Finance Disclosure Regulation (SFDR). Clarity AI employs machine learning and big data to offer environmental and social insights, analyzing a vast dataset encompassing companies, funds, countries, and local governments. Their Sustainable Index and ETF methodology help providers align with the EU’s Sustainable Investment definition, allowing assessment against sustainability criteria and regulatory thresholds related to UN Sustainable Development Goals, EU Taxonomy, and SFDR Principle Adverse Impact indicators.

Whom and where it affects?

Clarity AI’s Sustainable Index and ETF methodology affects:

• Index and ETF Providers
• Exchange-Traded Funds
• Financial Market Participants
• Companies and Organizations
• Regulatory Bodies
• Consumers and General Public

What sort of public or private institutions are involved?

The EU and UN are involved and in addition, Clarity AI uses machine learning and big data to deliver environmental and social insights to investors, organizations, consumers, and governments. As of September 2023, the Clarity AI platform analyzes 70,000 companies, 430,000 funds, 201 countries and 199 local governments.

Why is it important for Banking and Finance?

The Clarity AI platform and methodology are crucial tools for the banking and finance sector because they enable institutions to comply with regulations, meet investor demands, manage risks, gain a competitive edge, and align with global sustainability trends. These factors are critical in the ever-changing landscape of responsible management.

What do you think will be the consequences in the foreseeable future?

The consequences of the Clarity AI platform and methodology in the future are uncertain but can be expected to include:

• Enhanced compliance with sustainability regulations, reducing regulatory risks.
• Increased attraction of investors seeking sustainable investment options.
• Improved risk management by considering environmental, social, and governance (ESG) factors.
• Potential competitive advantages for institutions offering sustainable financial products.
• Opportunities for global expansion as sustainability becomes more widespread.
• Encouragement of innovation in financial products and services.
• Positive environmental and social impacts, such as reduced carbon emissions and improved social equality.

These outcomes depend on factors like regulatory changes, investor preferences, and institutions’ commitment to sustainability principles.

Keywords

Clarity AI, Sustainable Finance Disclosure Regulation (SFDR), Sustainable Development Goals (SDGs), Exchange Traded Funds (ETF), Big Data, Innovation.

• What happened?

Walmart invested more than one billion dollars in renewable energies, sustainable buildings and circular economy.

Walmart announced the release of its first Green Bond Impact Report, indicating that the company has allocated $1.1 billion in green bond proceeds, with top investment areas including renewable energy, sustainable buildings, and waste reduction and circular economy initiatives.

• Whom and where it affects?

Eligible categories for investment under Walmart’s green bond framework include renewable energy, high-performance buildings, sustainable transport, zero waste, and circular economy, water stewardship, and habitat restoration and conservation.

• What sort of public or private institutions are involved?

The only institution that it is involved in this new is Walmart because all the finance  is destined to many different projects around the company.

• Why is it important for Banking and Finance?

Because with this kind of initiatives of green bonds like Walmart’s one, other companies that are not just banking or financial entities could entry in the financial market too offering this kind of sustainable products for investors who wants to be part of sustainable projects including circular economy ones. The better the results of these green bond initiatives, the more companies and banks institutions will begin to market them.

• What do you think will be the consequences in the foreseeable future?

The consequences in the future include achieving zero emissions across operations by 2040 without the use of carbon offsets, powering facilities with 100% renewable energy by 2035, and electrifying and zeroing out emissions from its full vehicle fleet by 2040.

SDG Number (Sustainable Development Goals): 7, affordable and clean energy.

Keywords: sustainable buildings, circular economy, allocate, green bond, framework, stewardship.

Link: Investors grapple with complexities of biodiversity | Financial Times (ft.com)

Date: October 26, 2022

Media: FINANCIAL TIMES.

What happened?

“Irreversible consequences for the environment, humankind, and economic activity, and a permanent destruction of natural capital.” That is how the World Economic Forum characterises biodiversity loss in its 2022 Global Risks Report. The main reason is because humans are growing more crops, using more water and cutting down forests.

Who and where it affects?

It affects the biodiversity of planet earth. This mean that it affects humanity, natural capital, animals, the enviroment, etc. About 1 million animal and plant species are at risk of extinction, according to the UN.

What sort of public or private institution are involved?

In addition to TNFD’s (Taskforce for Nature-related Financial Disclosure) framework, other initiatives are under way to set targets and provide guidance for business and investors. Among them is a global biodiversity framework (GBF) that the UN is developing. Meanwhile, almost 100 investors with collective assets totalling €14tn have signed the Finance for Biodiversity pledge, which was launched in 2020. Signatories commit to five steps: to share knowledge; to engage with companies; to assess impact; to set targets; and to report publicly on the biodiversity impact of their investments.

Why is it important for banking and finances?

It is important for finances because not taking into account the effect of the loss of biodiversity can mean a significant risk in the portfolios, that is, they may not be setting the appropriate prices, which could mean a great loss. In short, it is a possible financial impact that is difficult to quantify. 

What do you think will be the consequences in the foreseeable future?

The consequences are undefined, but as we said in question 4, it could mean a significant risk to portfolios, as they may not be priced appropriately, which could mean a big loss. In addition, if investors and companies engage as set out in the targets, it would help climate change. 

SDG: 14. Underwater life, 15. Terrestrial ecosystem life.

link: https://www.esgtoday.com/mercedes-benz-secures-e11-billion-sustainability-linked-loan-tied-to-climate-goals/

Date: Wed. Oct. 26 2022

Media: ESG Today

What happened?

The German company, Mercedes Benz, secured an 11 billion € sustainability-linked loan for its sustainable strategy “Ambition 2039” (they want to offer carbon neutral cars). 

Whom and where it affects?

The news specifically affects a German car company, Mercedes Benz. But it also affects the rest of the companies that compound the automotive industry. The fact that Mercedes started to use this type of financing loan, shows to the sector how the company’s future moves will continue being and how they have to react to compete in a changing world that is increasingly concerned about climate change and the CO2 emissions.  

What sort of public or private institutions are involved?

Directly is involved Mercedes ( a private company). Banks are also involved since they are the ones who provides the credit.

However, in 2014, the Spanish government also gave Mercedes 27 million dollars for its plant headquartered in Vitoria, allocated to promote sustainable industrial activity, so public institutions were involved in this plan of the company as well.

Why is it important for Banking and Finance?

Because it starts a trend for the automotive industry and how to finance their change to a new type of cars that produces less pollution and CO2 emissions, highlighting it’s not all about creating a cleaner car, but also about the way it is financed.

What do you think will be the consequences in the foreseeable future?

From our point of view, companies will be aware about the profitability of Mercedes, observing if this type of financing it’s not only worth it to climate change, but is also profitable to the company, keeping in mind how investors will react. If the industry concludes that this type of loans are worthwhile, it will result in an increase of sustainability-linked loans in the long term future. 

Keywords: Mercedes Benz, sustainable-linked loans, automotive industry, CO2 emissions

SDG: 9. Industry, innovation and infrastructure: inclusive and sustainable industrialization, 11. Sustainable cities and communities: affordable and sustainable transport systems and 12. Responsible consumption and production: sustainable management and use of natural resources.

Reuters. (2022, 12 October). Spain’s BBVA ups sustainable finance target 50% to 300 bln euros. https://www.reuters.com/markets/europe/spains-bbva-ups-sustainable-finance-target-50-300-bln-euros-2022-10-12/

What happened?

On October 12th, Spain’s BBVA raised its sustainable financial target from 200 billion euros to 300 billion euros for the period between 2018 and 2025. This was announced by the lender’s chairman, Carlos Torres. The aim is to decrease global carbon emissions by 30% by 2030 and also reduce the dependence on fossil fuel industries resulting from the global energy market crisis.

Whom and where it affects?

This announcement affects Spain and its oil and gas clients in its credit portfolio. Also, it has a positive effect on clean energy companies, because they will be able to borrow more money if they need and if the global carbon emissions are reduced it will also benefit the entire Spanish society providing them with clean air.

What sort of public or private institutions are involved?

The main institution involved is BBVA (Banco Bilbao Vizcaya Argentaria) as it ‘s the one leading this proposal. Moreover, all the institutions and companies that operate in the energy sector are involved in one way or another as they will have either positive or negative repercussions.

Why is it important for Banking and Finance?

Sustainable finance plays a key role in the European Green Deal. Sustainable finance is important in achieving international climate and sustainability policy goals. It directs private investment in the transition to a climate-neutral, climate-resilient, resource-efficient and equitable economy. Finance can make an important contribution to ensuring a sustainable recovery after the Covid-19 pandemic, directing investments and redirecting them towards technologies and companies with low environmental impact.

What do you think will be the consequences in the foreseeable future?

There is a need to increase attention and interest in environmental issues such as the exploitation of natural resources, pollution and the loss of biodiversity in the hope that in the future we will not have very serious consequences due to advanced climate pollution. In addition investing in sustainable long-term investments is economically reasonable and does not necessarily lead to a lower return for investors.

Keywords: BBVA, sustainable finance, clean energy, Spain.

SDG: 7. Affordable and clean energy, 12. Responsible consumption and production, and 13. Climate action