Hi and welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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Some very large banks have been trying to back out of their climate commitments (or “quiet quitting” as Bloomberg puts it). Why? Well, Citi, Bank of America, and JPMorgan Chase – all members of the Net Zero Banking Alliance (NZBA) under GFANZ – provided a total of $338bn USD in loans and underwriting to coal project developers during the period 2019–2021 according to a new report from Global Energy Monitor, putting net-zero targets further out of reach.
Never one to think long-term, Jamie Dimon, CEO of JPMorgan Chase, is rumored to have said the “President of the United States needs to stand up and say we may not meet our 2050 climate targets because of this fucking war.” He also allegedly told clients that some investors “don’t give a shit” about “ESG.” As Amanda Starbuck, director of the investor program at the Sunrise Project, said: “Showing true leadership here means leaving fossil fuel business on the table. But it needn't be scary – the benefits of transitioning faster are manifold." Differentiation between leaders and laggards within these alliances is to be expected, but it’s clear that all financial institutions need to raise the bar.
IMF-WB circus concludes
The World Bank and the International Monetary Fund concluded their annual meetings on Sunday – with the heat seemingly off David Malpass’ climate faux pas – as attention remains on inflation, war, debt, and the climate crisis. While overall a pessimistic week, there were a few positive indicators on climate finance – and some goodprotests.
The US, Germany, and G7 countries presented the World Bank with high-level reforms to scale climate finance, and called on the Bank to present a response before the end of the year. Discussions about debt relief continued, as Barbados Prime Minister Mia Mottley wrangled more support around a set of reforms to the global financial architecture. This comes as 20 countries extremely vulnerable to climate change have warned they are considering halting their repayment of $685bn in collective debt – seeking debt forgiveness to invest the money in climate projects and conservation, or “debt-for-nature” swaps.
And IMF managing director Kristalina Georgieva announced a new financing mechanism, the Resilience and Sustainability Trust, funded with an initial $20bn. The RST is the IMF’s first facility to provide long-term financing to support countries' resilience to climate and other structural challenges.
For a detailed rundown of the meetings and spokespeople to contact, check out E3G’s summary.
Reports and releases
Five years ago, AXA was the first insurance company to stop insuring coal projects, and many others have followed in its wake. How has this trend affected the coal industry? And are insurers extending their restrictions to oil and gas? The 2022 Scorecard on Insurance, Fossil Fuels and the Climate Emergency to be published by the Insure Our Future campaign on Wednesday, October 19th will release new data on the state of the world’s fossil fuel insurance and rank 30 large insurers on their climate policies. For an embargoed copy, reach out to: Conor Quinn, Greenhouse Communications, Conor.quinn@shareaction.org , +44 7444 696 214
Agencies beginning with C
The Commodities Futures Trading Commission received a letter last week from Democratic senators asking the federal regulator to crack down on the voluntary carbon offsets market, investigate cases of possible fraud, and draft rules for oversight. And on the future of carbon-intensive crypto, last week the SEC’s Gensler said Congress should give the CFTC greater powers to regulate cryptocurrency stablecoins to reduce financial risk.
Meanwhile the Consumer Financial Protection Bureau is facing a legal challenge from the US Chamber of Commerce and national banking associations over efforts to prevent discrimination. Some observers believe the case foreshadows future lawsuits to obstruct pending rules related to climate change. While the legal basis for challenging those currently being considered by the SEC on climate risk disclosure and ESG investing differs, the organizations challenging it are likely to be the same, encouraged by increasingly partisan courts.
The Securities and Exchange Commission discovered a public comment submission technical glitch after several comments were not included in the final comment files on the SEC website, including on the pending climate financial risk disclosure, ESG disclosure, and ESG naming convention rules. In response, the SEC is reopening the public comment period on all proposed rules that were affected for two weeks. Double-check the comment files here, here, and here.
