November 20, 2023

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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Starting next week, the finance newsletter will publish on Tuesdays instead of Mondays. See you then.

A new report and preliminary data reveal that industrialized countries “look likely” to have fulfilled their 2009 commitment to provide $100 billion annually in climate finance to developing nations. The data did however also reveal that specific funding for adaptation declined to $24.6 billion, despite the promise to double it by 2025. Private finance also appears stagnant. 

The report comes weeks before the COP28 climate talks, set to take place from November 30 to December 12. Observers and participants will be closely watching how the summit tackles key issues such as the first Global Stocktake to assess progress since the Paris Agreement, implementation of the Loss and Damage Fund, progress on the energy transition, and a host of expected new pledges.

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Higher prices thanks to climate change impacts and policies could be here to stay, a growing body of evidence suggests. Last week, the National Climate Assessment noted Americans could see higher costs for items including medical care, insurance premiums, and food — see the latest spike in sugar prices.

Also last week, the Bank of England said climate change was likely to boost inflation thanks to “climate shocks, policies, and spillovers.” This is in line with a recent report from the U.S. Treasury Department, which put the total cost resulting from major U.S. weather and climate disasters between 2018 and 2022 at over $617 billion.  

​​A discouraging signal about the climate transition is emerging from corporate bond markets, where banks and big investors are charging fossil fuel firms the same interest rates charged to companies with far less climate risk, the FT reported.

Borrowing costs since 2010 for oil and gas companies in the US and Europe are typically in line with those for other debt issuers, the FT said, citing an analysis by S&P Global Ratings.

Climate-related initiatives like GFANZ have “yet to impact capital market access for oil and gas issuers,” S&P found. “Environmental concerns seem to be far from the most important factor for funding oil and gas companies.”

Insurance giant Chubb took tentative steps toward a more responsible climate stance last week, announcing a set of policies limiting underwriting for oil and gas extraction based on specific criteria related to habitat conservation and methane emissions.

The reaction from climate advocates was mixed: Rainforest Action Network called the first-of-its-kind policy “a major step forward,” but noted that Chubb must stop underwriting fossil fuel expansion everywhere “to fully align with a safe climate pathway.”

For evidence, climate campaigners might point to Chubb’s own recent report showing commercial property owners vastly underestimate their exposure to flood-related losses — losses exacerbated by the climate crisis, fueled by fossil fuel projects Chubb continues to insure. “There’s a massive false sense of security,” a Chubb flood insurance executive told Semafor. 

Might be time to tighten that oil and gas underwriting. 

• Americans for Financial Reform: Federal Home Loan Bank System to Undergo Major Public Benefit Reforms in Modern Era  
• Bill McKibben: Insurers are making the world uninsurable and unlivable
• Bloomberg: $266 Trillion in Climate Spending Is a No-Brainer
• Boston Consulting Group: Despite Climate Concerns, Just 14% of Companies Reduced Carbon Emissions in Line with Ambitions Over the Past Five Years
• Financial Times: Octopus Energy launches £3bn offshore wind fund
• Mariana Mazzucato: We won’t tackle the climate crisis unless we transform the financing
• Private Equity Stakeholder Project: Private Equity Labor Scorecard 
• The Wall Street Journal: Clean-Energy Startups Expected a Gusher of Government Money. They Are Still Waiting

• November 21-22: Organisation for Economic Co-operation and Development (OECD) Green Growth and Sustainable Development Forum. In-person and virtual. Register here. 
• November 22: Road to Dubai briefing, outlining advocacy and campaign plans as well as key messaging to make progress on climate finance at COP28. Register here. 
• November 29: As You Sow Webinar: Capturing the Diversity Benefit – Workforce Diversity Linked to Financial Performance. Register here. 
• November 30: Deadline to submit inputs to the UN Human Rights Special Rapporteur on climate change, who is requesting information on corporate accountability in the context of human rights and climate change. 
• December 4: Last day to sign onto a BankTrack and Reclaim Finance letter to banks financing the expansion of the world’s metallurgical coal capacity. Read the letter and sign on here. 
• December 18: Ceres Charting Progress: Regulator Actions on Climate Financial Risks Webinar. Register here. 

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– Steve Hargreaves, Katharine Poole, Jayson O'Neill and Olivia Amitay