Five global financial institutions have come together to guide best practice for the sector to address climate change risks and opportunities. Cr?dit Agricole, HSBC, Munich Re, Standard Chartered and Swiss Re have joined hands with The Climate Group, an international NGO, to launch The Climate Principles.
The initiative will seek to guide responses to climate change risks across financial products and services including research, asset management, retail banking, corporate banking, insurance and re-insurance, investment banking and project finance. It will also guide the commitments on greenhouse gas (GHG) emission reduction.
The aim is to encourage retail banks to enable customers take action to become climate friendly and insurance institutions to inform clients on climate risks and mitigation technologies. Financing solutions for investment in low-carbon technologies are expected to come from corporate and investment banks. Investment banks will also get leads to create an enabling environment for emission trading, weather derivatives, renewable energy credits and other climate related commodities. Project financiers will be asked to pursue disclosure of GHG emissions and offset solutions.
The initiative will complement the existing initiatives by stimulating environmental rigour, standardising responses, pitching for transparency and pushing the debate and practices forward. The aim is to formulate responses to emerging challenges and follow up with the financial sector on its existing commitments on climate change.
It’s understandable because the founding members of The Climate Principles are already on a environment friendly path. For example, HSBC went carbon neutral in 2005. The bank is also following the Principles of Responsible Investment, the Equator Principles and the UN Global Compact. Its other climate friendly initiatives include Climate Partnership, Global Environment Efficiency Programme, Climate Confidence Index 2007, Global Climate Change Benchmark and Climate Change Fund,
Cr?dit Agricole is already taking measures to reduce its greenhouse gas emissions, following its carbon footprint assessment. Customers are also offered commercial products for investing in cleantech. The top French banker is also involved with Responsible Investment Principles, the Carbon Disclosure Project and the Institutional Investors Group on Climate Change.
Some of them are also on top of the current climate change debate. Munich Re is a pioneer in climate change research. The leading global reinsurer submitted a proposal for an insurance mechanism to help poor people adapt to climate change related risks at the recent UN climate change summit in Poland. (Read below what the founding members said at the launch.)
Going forward, the founding members of The Climate Principles have their task cut out. One of the first tasks is to expand the membership base. It will be led by the steering committee, chaired by HSBC?s Francis Sullivan. The secretariat of The Climate Principles will be hosted by The Climate Group, which works with governments and companies to seek climate change solutions and accelerate the transition to a low-carbon economy.