The World Bank/IMF Spring Meetings start today, and climate change is high on the agenda, alongside how to make the banks more responsive to the needs of developing countries, many of which face intertwined debt and climate crises
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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Spring has sprung, will reforms blossom at the Bank?
The World Bank/IMF Spring Meetings start today, and climate change is high on the agenda, alongside how to make the banks more responsive to the needs of developing countries, many of which face intertwined debt and climate crises. And as the World Bank readies to welcome Ajay Banga as the new president, options to expand concessional lending are on the table. Many civil society groups, and some countries, are pushing for debt cancellation, outgoing President David Malpass yesterday suggested suspending debt service payments.
Over at the IMF, conversations will also focus on easing the debt burdens of countries, including by rechanneling Special Drawing Rights allocated for COVID-19 recovery. The Resilience and Sustainability Trust (RST) set up last year still faces a nearly $15 billion shortfall.
Avinash Persaud, an author of the Bridgetown Agenda to overhaul the multilateral development bank system, cautioned the outcomes this week are likely to be modest, with other forums including an upcoming summit in Paris and COP28 likely to be more important. (Here’s a recording of the press briefing.)
“A $27 trillion black hole”
A new briefing released today from Oxfam describes a $27 trillion “black hole” in climate finance for developing countries. Focusing on the growing, intertwined issues of poverty, inequality, debt, austerity, and climate change, the report details solutions currently on the table (Capital Adequacy Framework reforms, disaster clauses, reallocation of SDRs), which they deem inadequate to fill the gap, and instead calls for rich countries to borrow $11.5 trillion to fund a historic “climate debt swap” with poorer countries, honor their historical aid commitments of cumulatively $6.5 trillion, commit to additional SDRs, and bring in new taxes on rich individuals and corporations.
Scope 3 emissions reporting is coming for U.S. companies
The Wall Street Journal reports that over 10,000 companies outside of the European Union (EU) will be required to comply with the EU’s new Corporate Sustainability Reporting Directive (CSRD), including 3,000 publicly traded U.S. companies - that’s over 70% of all U.S. public companies.
The CSRD's first standards are expected to be published this June (here’s the 2022 draft) and are stronger than those proposed by the Securities and Exchange Commission (SEC) and the International Sustainability Standards Board. They will require Scope 1, 2, and 3 emissions reporting where relevant, with a rollout period between 2024 and 2028. In California, Senate Bill 253––The California Climate Corporate Data Accountability Act––also passed through committee last month. The proposed legislation would require all large U.S. companies doing business in California––the fourth largest economy in the world––to disclose their emissions, including Scope 3, starting in 2026.
You can’t manage what you don’t measure. Scope 3 emissions account for as much as 75% of all corporate emissions and up to 88% of all oil and gas company emissions, so they are too material to ignore, as pointed out in a new comment from the Sierra Club submitted to the SEC. Another comment from Ceres and Persefoni shows that the benefits of this reporting outweigh the costs. (H/T Alex Martin)
New report: Still banking on climate chaos
Rainforest Action Network will release its 2023 Banking on Climate Chaos Report on April 13th. The research profiles the world’s 60 biggest banks and their ties with the fossil fuel industry. A new op-ed released ahead of the report argues banks are not doing enough to address climate risk and are instead making empty pledges to achieve net-zero emissions while continuing to pump money into new fossil fuel infrastructure. Reach out to Shawna Foster for questions.
Apr 10 - 17: WBG-IMF Spring Meetings. See the schedule here, including in-person press briefings and public, virtual events.
Apr 12: Beyond the Dollars: Ensuring World Bank Evolution Means Evidence and Impact Revolution, Too. Register here.
Apr 13: Transforming the Global Financial System to Address the Climate & Debt Crises - A Climate Vulnerable Perspective. Register here.
Apr 13: JETPs and the Role of MDBs in Driving the Just Energy Transition. Register here.
April 14: Big Shift Global World Bank Action Day, calling on the Bank to take action on climate, ending fossil fuel finance, a just green transition, debt cancellation, ending austerity, factory farming, and biodiversity.
Apr 14: What Do Middle-Income Countries Want from the MDBs? Register here.
Apr 19: Climate Group US Climate Action Summit 2023. Register here.
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