April 2018: In the context of mobilising policy actions with regard to sustainable finance, the European Parliament and Commission are considering introducing a Green Supporting Factor (GSF) or Brown Penalty (BP) for capital reserve requirements. The objective of this working paper is to identify the potential impacts of introducing a GSF or a Brown Penalty.
Feb. 2018: Testing the Japanese listed equity market alignment with the 2°C climate goal – Energy technology diversification assessment relative to the IEA 2°C scenario
On 28 February, 2018, the 2° Investing Initiative (2°ii) released a report analysing the alignment of the Japanese stock market with the Paris Agreement on climate change, in partnership with Professor Jusen Asuka of Tohoku University, Dr. Michiyo Morisawa, Director of the CDP Japan office and Head of PRI Japan, Pr. Yoshihiro Fujii, Representative Director of Research Institute for Environmental Finance (RIEF), and the Institute for Global Environmental Strategies (IGES). Based on a comparison of the Tokyo Stock Price Index (TOPIX) with the International Energy Agency (IEA) 2°C scenario, the Japanese listed companies of the TOPIX appear to be globally misaligned with the 2°C climate goal. It means that investors exposed to the TOPIX index are, so far, not in line with the commitment of the Japanese Government to keep global warming well below the +2°C limit. These results call for investors to define more informed investment strategies towards decarbonization, and for policy makers to better incentivize the financial sector so that it can contribute effectively to the fight against climate change.
In this project 2ii collaborates with banks to extend the existing 2°C scenario analysis framework to corporate lending portfolios including a road-test with participating banks of the methodology developed in the course of the project.
Jan 2018: An overview of the current state of the household credit market. We argue that household credit has so far been an overlooked topic in climate finance. While there are some tentative steps from early movers to assess the climate impact of various types of household credit much potential remains to be unlocked.
Read our paper “A Taxonomy of Climate Accounting Principles for Financial Portfolios” published in the sustainable finance special issue of the journal Sustainability.
The project offical titled as”KliFin-Scanner” (Climate finance product scanner for retail investors and banks) aims to develop a non-financial objectives questionaire for retail investors. This quesitonare will allow retail investors to create their individual non-financial objectives investment profile, which can then be matched to financial products. The questionaire and the corresponding matching software will be integrated in a free-to-use information website available to all retail investors in Germany. They will open-source and be available as white label solution for integratino in bank own infrastructe. The project runtime is 01.01.2018 – 30.06. 2020.
November 2017: The ISO 14097 “Framework and principles for assessing and reporting investments and financing activities related to climate change,” was proposed by the French standardization body AFNOR and approved by ballot in January 2017. The convenors are Stan Dupré (CEO of 2° Investing Initiative – commissioned by AFNOR) and Massamba Thioye (UNFCCC secretariat), with AFNOR acting as secretariat.
Out of the Fog: Quantifiying the alignment of Swiss pension funds and insurances with the Paris Agreement
October 2017: Our latest report of the PACTA project “Out of the Fog: Quantifiying the alignment of Swiss pension funds and insurances with the Paris Agreement” analyses Swiss pension funds and insurances and was done in cooperation with the Swiss Federal Office for the Environment (FOEN) and the State Secretariat for International Financial Matters (SIF).
Non-Financial Message in a Bottle: How the Environmental Objectives of Retail Investors are Overlooked in MIFID II – PRIIPS Implementation
October 2017: Retail investors hold significant amounts of assets and are therefore an important decision maker for the allocation of financial resources. Mobilising retail investors to take investment decisions in line with international climate goals could be an important factor in closing the funding gap to meet emission reduction goals. The report’s objective is to formulate recommendations to reform the investment advice in line with Europe’s long-term funding needs. It is divided in three parts. The first part aims to provide a detailed analysis of the status quo. It starts by setting out the current demand for green savings products according to existing surveys. It then analyses in detail the prevalent structure of retail investment products with the aim to see if the current process is able to capture the demand. It concludes with an overview of how current trends of automatization and increasing use of Fintech are likely to impact investment advice processes. The second part provides a regulatory analysis of the MIFID II directive as well as the new PRIIPS regulation in order to assess the potential impacts that this new regulatory environment may have. The third part provides recommendations to public and private sectorstakeholders on how to better take into account the non-financial investment objectives in investment advice.