London Climate Action Week

Last week saw the world’s leading climate experts convene in London for London Climate Action Week (LCAW) to discuss how our economies, companies, and portfolios can transition to net zero and build a greener, more sustainable future. Climate Bonds joined events throughout the city to share how investors, issuers, and financial institutions can mobilise the green bond market to finance a rapid and credible transition. 

The first quarter of 2024 saw the largest growth in green bonds in history, with over 272.7bn of GSS+ bonds added in the first three months of the year. With the market on course for its first $1 trillion year, the sustained growth in this market reflects the enthusiasm of issuers to decarbonise their operations as swiftly as possible and seize the opportunities for growth.

However, the week’s discussions made it clear that much more work must be done. As the risks of climate change become ever more present, investors are looking for ways to derisk their portfolios and ensure that their investments are resilient and ready to enter the net zero future. Policymakers play a central role in this process and must ensure that industries and entities have a regulatory landscape that allows them to transition their operations to net zero.

Net Zero Transition for Corporates

On Tuesday 25 June, Climate Bonds joined with The Institutional Investors Group on Climate Change (IIGCC), Sustainable Markets Initiative (SMI), the Glasgow Financial Alliance for Net Zero (GFANZ), and Climate Arc to discuss how financial institutions are navigating the net zero transition.

The world needs to transition our economies and industries to net zero in order to prevent catastrophic climate change. Financial institutions have tremendous influence in supporting, facilitating, and encouraging this transition. 

That’s why Climate Bonds’ has launched the Navigating Corporate Transitions tool, a methodology designed to aid financial institutions in assessing corporates by their transition credibility. Created in collaboration with IIGCC, SMI, and Climate Arc, the methodology can be used to categorise a financial institution’s corporate exposures and track their transition progress over time.

Chris McGarry, Partner at White & Case LLP, joined Doris Honold, Chair of the Climate Bonds Board, to open the day. With transition plans increasingly becoming a “license to operate” for companies, banks, and asset managers need credible information and reliable frameworks to evaluate those plans and encourage rapid, credible transitions.

The event featured a fireside chat between Mary Schapiro, Vice Chair of Glasgow Financial Alliance for Net Zero (GFANZ) and Ronald O'Hanley, Chairman and CEO of State Street Corporation and Chair of the Asset Manager Asset Owner Task Force for the Sustainable Markets Initiative. 

Ron O’Hanley then led a panel discussion to discuss the launch of the Corporate Navigation tool and to examine the effect that transition plans and frameworks can have in aiding the net zero transition. Nazmeera Moola, Chief Sustainability Officer at Ninety One, joined Dan Gardiner, Head of Transition Research at IIGCC, Climate ARC CEO Meryam Omi , and Climate Bonds Director of Thought Leadership Anna Creed.

With more severe weather events happening around the globe, it is increasingly clear that companies’ financial risks and transition risks are closely tied together. This new tool will enable financial institutions to plan for, assess, and mitigate those risks as they support companies and industries on their journeys to net zero.

Global Green Building Alliance — Transitioning the Built Environment

Buildings account for over 30% of global energy use and more than a quarter of global emissions. As the majority of existing buildings will still be standing in 2050, the world needs large-scale capital investments to decarbonise existing buildings and support sustainable retrofits in order to meet global climate targets.

During LCAW, Climate Bonds joined members of the Global Green Building Alliance for the launch of Financing Transformation: A Guide to Green Building for Green Bonds and Green Loans. This guide details how various buildings and certification standards can be used to comply with global classifications and bond frameworks, setting a trajectory for the global built environment to meet a sustainable 1.5°C future. 

Speaking at the event, Sean Kidney, CEO of the Climate Bonds Initiative stressed, "Transforming our built environment for climate action is necessary. Through sustainable finance and rigorous certification, we can drive decarbonisation and resilience. This alliance is a crucial step in aligning investments with sustainability and catalysing the green transition."

In addition to the Global Green Building Alliance partnership, Climate Bonds’ CEO Sean Kidney was re-elected to the World Green Building Council Board at the AGM on Tuesday, 25th June.

Partnerships and Progress

The race to save our planet from catastrophic climate change requires everyone to pull in the same direction. Partnerships and collaborations between industries, sectors, and regions are the key to making sure that we meet our climate targets and preserve a world that our children will want to live in.

During LCAW, Climate Bonds announced new partnerships that will help mobilise finance for climate action and drive capital toward impactful and essential projects.

On Thursday, the United Nations Environment Programme Finance Initiative (UNEP FI), Climate Bonds Initiative and the Principles for Responsible Investment (PRI) announced a collaboration to support global interoperability and implementation of sustainable finance taxonomies and other frameworks.

The collaboration aims to build consensus on taxonomy definitions and concepts among standard setters, policymakers, and taxonomy users, support the development of taxonomies and provide tools for implementation.

Climate Bonds CEO Sean Kidney said, “Taxonomies of sustainable finance are the building block of sustainable finance markets – they are, essentially, ‘shopping lists’ for investments for a sustainable future. They provide simple guidance for investors, banks and corporates, making easier for capital to flow to climate solutions.”