What role can finance play in the green recovery? EIT Climate-KIC and UNEP Finance Initiative ask leading thinkers to weigh in

AMSTERDAM, 02/09/2020 – EIT Climate-KIC, in partnership with the UNEP Finance Initiative, is releasing “Aligning finance for the net-zero economy: New ideas from leading thinkers”, a series of papers that contribute to the debate on how financial institutions can support a just transition to a net-zero emissions economy by 2050.

 

Stakeholders in financial markets, capital and investment are key players in tackling climate change, supporting solutions for climate adaptation, and reducing global greenhouse gas emissions. But to enable our economy and society’s transition to net-zero, finance requires a fundamental overhaul. Financial portfolios, for instance, need to align with a well below 2-degree emissions pathway, incentivising green growth, sustainable development, and systems transformation. Produced and supported by EIT Climate-KIC, in partnership with UNEP Finance Initiative (UNEP FI), the series “Aligning finance for the net-zero economy: New ideas from leading thinkers” aims to inspire financial actors to move from climate risk disclosure to alignment. The series delves into current assumptions around alignment with climate frameworks such as the Paris Agreement and the UN Sustainable Development Goals and develops ideas for how alignment can best be achieved.

“EIT Climate-KIC has supported innovation to mainstream climate in financial markets, democratise climate risk information, and foster bankable green assets for ten years,” says Kirsten Dunlop, CEO of EIT Climate-KIC. “We are committed to the transformation of core finance to deliver a regenerative, low-emissions economy and sustainable society. Against the backdrop of economic crisis, the inexorable onset of climate emergency and geopolitical fragmentation, financial institutions have an unprecedented opportunity and a responsibility to provide the leadership, investment stimulus and risk mitigation needed for transformation. We are honoured to partner with UNEP FI to provide food for thought as to why and how this might be done.”

The first paper of the series, “Achieving Alignment in Finance ” is authored by Dr Ben Caldecott, founding Director of the Oxford Sustainable Finance Programme and an Associate Professor at the University of Oxford. It examines how financial institutions can move beyond climate risk management towards much closer alignment with climate outcomes.

The second paper “Transformations Required for 1.5°C Alignment and Global Sustainability ” is written by Dennis Pamlin, founder and CEO of 21st Century Frontiers and Senior Adviser to the Research Institutes of Sweden. Pamlin, who is also a member of EIT Climate-KIC Advisory Council, discusses the transformations that are needed in the global economy and the finance sector to meet the Paris Agreement objectives, as well as the opportunities that these transformations represent for both sectors.

In addition to discussing the economic system transformation required to deliver the Paris Agreement, the series will provide answers on how our response to the COVID-19 pandemic informs the response to climate change, and what pathways are available for financial institutions and the financial system to ‘build back better’ and drive the necessary transition to a net zero-carbon economy.

“UNEP FI is supporting financial institutions to deliver low-carbon, fairer, and more resilient global economies,” said Eric Usher, Head of UNEP FI. “Currently, 38 banking members have committed to deliver the goals of the Paris Climate Agreement and we are co-convening 28 asset owners representing nearly US$ 5 trillion who aim to decarbonise their investment portfolios by 2050. This series of thought leadership papers convenes innovators and industry experts to provoke discussion, challenge the status quo and guide the transformation of business and finance towards a sustainable future.”

John Elkington and Richard Roberts from London-based change agency Volans, as well as Jakob Thomä, Managing Director at 2° Investing Initiative, will also participate in the series with papers published later this year on EIT Climate-KIC website.

 

ABOUT EIT Climate-KIC

EIT Climate-KIC is the EU’s climate innovation agency, working to accelerate the transition to a zero-carbon and resilient world by enabling systems transformation. Headquartered in Amsterdam, it operates from 13 hubs across Europe and is active in 39 countries. Climate-KIC was established in 2010 and is funded by the European Institute of Innovation and Technology (EIT), a body of the European Union.

As a Knowledge and Innovation Community (KIC), it brings together more than 400 partners form business, academia, the public and non-profit sectors to create networks of expertise, through which innovative products, services and systems are developed, brought to market and scaled-up for impact.

 

About UNEP FI:

The United Nations Environment Programme Finance Initiative (UNEP FI) is a partnership between UNEP and the global financial sector to mobilise private sector finance for sustainable development. UNEP FI has been leading two initiatives, which aim to move beyond a passive risk disclosure perspective to a more active engagement of private sector actors in committing to meet the objectives of the Paris Agreement and support the low-carbon transition. 38 banks have committed to align their portfolios with Article 2.1c of the Paris Agreement under the aegis of the Principles for Responsible Banking, while UNEP FI has partnered with PRI, WWF, and Mission 2020 to launch the Net-Zero Asset Owner Alliance, bringing together 28 institutional investors as of August 2020 to commit to net-zero emissions by 2050.

 
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Goal 10: Mainstream climate in financial markets
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