Entries for 'Sustainable Finance'

The IIF hosted its 2024 IIF Spring Meetings between April 15-22, alongside the IMF / World Bank Spring Meetings in Washington, DC.

On Thursday, April 18, the IIF submitted a comment letter in response to a European Banking Authority (EBA) Consultation Paper on Draft Guidelines on the management of ESG risks.

The Institute of International Finance (IIF) has published it's Sustainable Finance Monitor - April 2024

Transitioning towards a sustainable agricultural system is crucial to address biodiversity loss and nature-related risks on the path to a net-zero economy. This shift will be quite challenging—perhaps even more so than the clean energy transition—given that over 330 million people across 78 countries are currently facing an acute level of food insecurity.

Nature and biodiversity are emerging as critical areas of market focus, attracting increasing attention from corporates, financial institutions, and policymakers.

Global climate flows surpassed $2 trillion in 2023—up from $1.4 trillion in 2022. While still well short of the estimated $8.1 trillion annual pace needed to achieve net-zero emissions by 2050, the pickup reflects the strong growth in climate finance commitments in recent years.​

Early 2024 saw a sharp surge in ESG fund flows, driven by a rally in tech shares (which are heavily weighted in ESG indices given their high ESG scores). In February, inflows to ESG fixed income funds reached their highest in over a year. Looking ahead, a synchronized series of rate cuts by major central banks could have a positive impact on ESG fund flows, particularly in the second half of 2024.

The ESG-labelled debt universe grew by 25% in 2023, nearing $6 trillion. However, this is still less than 2% of the global debt universe—policy support, including from the G20 Brazil Presidency, could support substantial market expansion.

Beyond carbon emissions, addressing methane emissions is vital for achieving a net-zero economy by 2050. Despite increasing pledges to reduce methane emissions, these efforts have been limited in scope due to the wide range of emission sources (making standardized solutions difficult) and the high cost of financing emissions reductions.

Demand for voluntary carbon credits (VCC) reached an all-time high in December 2023, reflecting the exponential increase in corporate climate commitments. Under favorable market conditions, and as the policy drivers for a net-zero economy take shape, annual demand for retiring VCCs is projected to surpass $3 trillion by 2030–a sharp increase from less than $0.8 billion in 2023.

Global climate flows are on track to surpass $2 trillion in 2023—up from $1.4 trillion in 2022. While still well short of the estimated $8.6 trillion annual pace needed to achieve net-zero emissions by 2050, the pickup reflects the strong growth in climate finance commitments in recent years.

Voluntary carbon credit issuance and retirement have cooled significantly amidst integrity concerns, highlighting the need for private sector-led initiatives like the ICVCM Core Carbon Principles to be operationalized as soon as possible.

The ESG debt universe has expanded by $1.1 trillion over the past four quarters, surpassing $5.6 trillion in Q3 2023.

Rising global tensions and political divides could hinder multilateral efforts to achieve sustainable development goals. Global economic performance remains subdued, with significant regional disparities; a contributing factor has been the prolonged stagnation in global capital flows over the past 15 years amid post-financial crisis regulatory initiatives.

Our New York Climate Week events last week—which included an IIF Transition Finance Workshop, an IIF/TCW Blended Finance Roundtable, and the launch of the IIF Global Debt Monitor—focused on the changing landscape for net-zero transition planning and addressing the challenges of mobilizing capital for climate action.

Voluntary carbon credit issuance picked up significantly in Q2 2023, as the ICVCM Core Carbon Principles and Assessment Framework were launched. Greater collaboration between the supply-side ICVCM and demand-side Voluntary Carbon Markets Integrity Initiative (VCMI) will support market development and rapidly growth in demand as companies ramp up climate commitments.

Global climate flows surpassed $1.1 trillion in 2022 - up over 25% from $870 billion in 2021. However, this is still well short of what will be needed to achieve net-zero emissions. ESG stock and bond market performance improved in Q2 2023. Despite rapid growth, ESG integration in global debt markets is still at an early stage: just 6.1% of total debt issuance in Q2 2023 was ESG-linked.