The banking sector plays an important role in sustainable finance to fight against climate change – Informial

Information (The Jakarta Post)

Jakarta ●
Thu, December 16, 2021


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After two weeks of deliberations around the world on how best to tackle the climate, COP 26 concluded in November 2021 with results ranging from pledges for billions of climate change investments to elimination gradual negation of coal power over the next decade, alongside an increased urgency to control greenhouse gas emissions to control global warming below 2 degrees Celsius and ideally 1.5 degrees Celsius.

As nations pledge to increase their funding, financial institutions worth billions of dollars have been called upon to pledge to tackle climate change. Achieving the pace and scale of reducing greenhouse gas (GHG) emissions will require significant investments. The international energy agency estimated that average annual investments will need to increase from the current $ 2 trillion to $ 5,000 billion by 2050.

There is clearly a lack of funding. Here, financial sector players like Standard Chartered can play a critical role in getting funds to where they are most needed, helping to reduce emissions, and changing the way future economies should play where sustainability doesn’t. is not a simple trend, but the norm.

Commitment to climate action

Standard Chartered was one of the first banks in 1997 to incorporate environmental and social considerations into its risk management framework – now a common compliance requirement in more and more markets around the world.

The bank is strongly committed to the fight against climate change. As part of its aspiration to be the world’s most sustainable and responsible bank, Standard Chartered established a sustainable finance team at the end of 2018 and has actively grown the team and business across all of its major markets. The Bank has mobilized over US $ 5 billion in blended finance for public sector clients and development organizations, as well as raising over US $ 10 billion in green bonds and advising regulators on relevant issues . In 2020, the Bank has committed to $ 75 billion in sustainable financing by the end of 2024, to support its clients in their transition to net zero.

Despite this, the bank remains committed to encouraging the transition to new and renewable sources of energy. By 2024, Standard Chartered will only provide financial services to customers who are less than 80% dependent on thermal coal, with that figure falling below 5% by 2030.

Standard Chartered Group also announced ambitious new targets to achieve net zero carbon emissions from its funded business by 2050, including interim targets to 2030 for the most carbon-intensive sectors, such as thermal coal mining. , oil and gas and electricity. It also plans to mobilize US $ 300 billion in green and transition finance by 2030. The group’s approach is based on the best data currently available and aligns with the net zero emissions scenario by 2050 ( NZE) of the International Energy Agency.

Following the announcement, the bank also highlighted the growth of its energy transition office. Standard Chartered’s Energy Transition activity will initially encompass carbon trading on the European Union Emissions Trading System (EU ETS) and financial trading in natural gas, bringing them together within a one-stop shop.

As part of these massive efforts in sustainability and green finance, Global finance Named Standard Chartered as the world’s best bank for sustainable finance in 2019, thus consolidating the Bank’s leadership in this area.

Driving change for a greener supply chain

Standard Chartered understands the complexity of climate change mitigation efforts, so banks champion a concerted effort between the financial sector, governments around the world, and development organizations, including regional and global bodies.

In addition, companies, as one of the key players in changing the behavior of industries in response to climate change, must take ownership of their supply chains, scrutinize environmental performance and their customers in addition to managing their own. footprint. Based on a survey of the supply chain priorities of over 900 companies, the assessment is based on five indicators: environmental soundness and transparency of direct suppliers, as well as indirect or higher-level suppliers ; financial solidity; flexibility and adaptability; and collaboration and connectivity across the ecosystem. Customers can use the results to identify their weak points and seek advice and solutions from the bank to help them achieve their goals.

The development of Standard Chartered Supply chain performance indicator enables companies to benchmark the resilience and sustainability of their supply chains, based on benchmarks with peers across regions and sectors.

The indicator follows the global introduction of Standard Chartered’s Sustainable Trade Finance Proposal, which is designed to help companies implement more sustainable practices in their ecosystems and build more resilient supply chains.

Accelerate adoption via a marketplace with high quality carbon credits

As economies go down to zero and carbon prices rise, investors can shape the future of nature-based solutions by improving the quantity and quality of transactions and delivering social and environmental benefits beyond reducing emissions.

In May 2021, Standard Chartered has partnered with DBS, Singapore Exchange and Temasek to develop an exchange and carbon market, Climate Impact X (CIX); provide businesses with a market for high-quality carbon credits to tackle hard-to-reduce emissions.

Focusing initially on nature-based solutions, CIX recently completed a one-of-a-kind portfolio auction with 170,000 tonnes of carbon credits traded under eight natural climate solutions projects. Co-benefits include around 55,000 jobs, educational improvements for more than 35,000 students, help fund 60 medical facilities and infrastructure projects; plus, efforts to protect more than 250 endangered species.

Sustainability commitment for Indonesia

Standard Chartered, understanding how emerging markets like Indonesia have become a major force in development and the fight against climate change, has made efforts to help both the Indonesian government and investors

To support Indonesia’s transition to more renewable energy production, Standard Chartered has counted the Cirata Floating Photovoltaic Plant in West Java among its funded project portfolios. With a capacity of 145 megawatts (MW), Cirata will be one of the largest floating solar projects in Southeast Asia when completed, generating enough electricity to power 50,000 homes and offset 214,000 tonnes of carbon emissions. CO2, while creating up to 800 jobs. Standard Chartered’s support is aligned with the Indonesian government’s goal of having 23% of its energy mix from renewable sources by 2025 as part of its Electric Infrastructure Acceleration Program.

Prior to that, Standard Chartered was the only bank participating in the High Level Meeting on the Green Investment Plan for Papua and West Papua, including the Development of Carbon Finance Structures, held in February 2020. In June 2021, Standard Chartered participated as the lead association and associate bookrunner in the $ 750 million green sukuk issue from Indonesia.

Not only through high level support, Standard Chartered has also renewed its focus on sustainable financial products, to enable individual clients to participate in investing towards a greener planet by launching the world’s first sustainable deposit to European investors. in May 2019. The term deposit has since been deployed in Indonesia in April 2021, after having been launched in several markets, including Singapore, the United States, Hong-Kong.

Through the term deposit, Indonesian investors can participate in the bank’s investments and activities that are in line with the United Nations Sustainable Development Goals (SDGs), including projects on COVID-19 mitigation, food security , renewable energies, access to water, as well as adaptation to climate change.

In addition, a panoply on ESG principles (environment, social and good governance) was also presented to Indonesian clients of Standard Chartered, in particular the Batavia Global ESG Sharia Equity USD, Standard Chartered’s first offshore mutual fund product that is actively managed according to principles (ESG), and FCP BNP Paribas ISR-Kehati Index, of which 0.2% of the net asset value of the product is donated to the KEHATI Foundation to support its food security program in Flores, East Nusa Tenggara, through the cultivation of sorghum plants.

Ultimately, the role of financial institutions like banks in tackling climate change is clearer than ever. Standard Chartered’s far-reaching commitments and solutions are on track to help markets in its footprint, reducing carbon emissions as quickly as possible without sacrificing the obvious need for development, contributing to the effort to put the world on a sustainable path to net zero by 2050.

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