The global push towards sustainable investing is gaining momentum and investors and asset owners are increasingly facing immense pressure to incorporate sustainable considerations which include Environmental, Social and Governance within all their investment decisions.
ESG related risks pose and present new challenges to organisations, businesses and economies ranging from compliance issues, reporting, risk management and disclosures. Climate risk is now real and eminent, and investors and world leaders will have to play a pivotal role to drive the narrative towards sustainability through their actions and investment decisions. Climate transition poses material risk to the sustainability of economies, businesses and investments across the globe.
It’s now no longer just about profits, Sustainable/Green Finance advocates for the full incorporation of Environmental, Social and Governance considerations in all investments decisions and in essence including people and the planet in those decisions. Whether its gender equality, human rights, carbon emissions to board selections, biodiversity and diversity and inclusion-investors are now calling for more transparency and accountability from investee companies. Investments should therefore now have a positive impact on people and the planet besides profits-and this is increasingly becoming a key consideration by investors seeking to deploy capital Environmental, Social and Governance issues pose some of the most significant challenges to the long-term prosperity of the global economy, the well-being of people and communities, and the natural environmental ability to support life.
ESG Investing© explore the correlation that exists between the responsible management of ESG integration and the mitigation of the long-term impacts on climate and how business, governments, financiers, investors and organisations are committed to supporting stakeholders and economies in their transition to a low carbon economy, providing financial tools, products and/or services to business activities that are environmentally and socially responsible in line with its sustainability commitments and its support of the goals of the Paris Accord. This is a continuous endeavour, at different speeds for different countries and regions, and with multiple external dependencies across public policy, technological developments, ESG integration, sustainable financing, decarbonisation and needs amongst other factors are requiring ongoing engagement with stakeholders in their transition to a low carbon economy.
WORLD
The Importance of a Holistic Approach to Sustainability. Investor engagement and World Bank Climate Results
AfDB Improving Quality of Life in Africa. ESG, Social Bonds Financing Programs and Food Security in Africa
WHY INVESTING IN CARBON-NEUTRAL
Agrifood Systems Makes Sense. Both a victim and a cause of Climate Change
ADB Making Asia and the Pacific Accelerating Climate Financing. Climate investment should address Pacific climate- related challenges
Driving Greater Impact and Building Sustainable Organisations: A Case Study on CDL. Building capacity and partnership for Planet and People.
A Must in the Fight Against Climate Change. How How Sustainable Infrastructure braces cities against Climate Change
Aligning Public Policy and Investment to Address Climate Change. Jodi-Ann Wang, Climate Policy Analyst, Principles for Responsible Investment
INCREASING
For More and Better Impact Reporting. Addressing Climate Change calls for financial institutions
SUSTAINABLE DEBT MARKET IN LATIN AMERICA
Latin America and the Caribbean (LAC) region poses an enormous potential
Towards Sustainable Profitability. Grupo SURA integrated vision. ESG and Climate Change a priority.
CONSOLIDAR, Impact Investing Opportunities in Central America.
The path of co-creation, using validated tools and methodologies, allows the generation of comprehensive projects for complex problems and provide systematic solutions.
To meet its Ambitious Sustainable Development Goals by promoting a positive change while attracting foreign direct investment.
The Net-Zero Banking Alliance convened by the UN Environmental Programme Finance Initiative (UNEP FI), combining near-term action and commitments from banks to set net-zero targets.
With the Development of Colombia. Innovation and social commitment in green projects, responsible investment, diversity and inclusion.
To Build a More Responsible Banking. Sustainable Finance supporting green transition, financial inclusion and empowerment.
To a Greener and More Socially Equitable Economy. The vision to become one of the leading banks in the Middle East, Africa and South East Asia (MEASEA)
Synergy Between Climate Mitigation and Economic Growth
Sustainable Development Goals and Infrastructure to build resilience in countries while protecting against exposure to extreme climate change events.
Efficiency and Electrification. Investment in capital-intensive clean power and electricity networks, energy efficiency via greener buildings appliances and EVs.
Towards a More Sustainable Foreign Investment Chile is implementing new policies to transform investment into a tool to make its economy more sustainable. The country has made a commitment to clean energy.
The world needs more energy than ever. Blue Hydrogen a key element of the circular carbon economy.
INNOVATIONS That Will Help Achieve
A Technology-Led Transition. Businesses are rolling up their sleeves and leading the change in the energy revolution
GREEN HYDROGEN:
An Alternative that Reduces Emissions and Cares for Our Planet.
In the lead-up to COP26 in Glasgow, Scotland, the World Bank (International Bank for Reconstruction and Development, IBRD) launched an initiative to raise awareness with investors about its activities to mainstream climate action.
A press release on September 23 announced a target to raise US $10 billion in World Bank Sustainable Development Bonds as part of the initiative, which highlighted the World Bank’s Environmental, Social, and Governance (ESG) policies and its role
as the largest multilateral financer of climate action in developing countries.
Activities associated with the initiative explained how the World Bank integrates climate and sustainability throughout all its operations and across all sectors.
World Bank bonds have the label “Sustainable Development Bonds” to communicate that the proceeds support the financing of a mix of projects that address climate action alongside other social goals. During the launch phase of Sustainable Development Bonds, the World Bank emphasizes the intentional impact and sustainability focus of all its activities while highlighting the Sustainable Development Goals (SDGs). This holistic approach focuses on transparency for all activities and is underpinned by impact reporting for investors.
There was tremendous interest from investors to learn more about the World Bank’s approach to integrate climate action into all its operations. Based on reverse inquiry, nearly 75 virtual one-on-one investor meetings were conducted. Investors expressed strong interest to learn more about the World Bank’s updated Climate Change Action Plan and its “whole of economy” approach to support developing country clients in incorporating climate mitigation and adaptation into their national planning. In addition to one-onone investor engagement, several virtual investor workshops and a “net-roadshow” pooled together groups of investors and other capital market stakeholders in different time zones, enabling the World Bank Treasury and climate teams to reach over 250 investors and other market stakeholders. Technical specialists from the World Bank’s Climate Change Group participated in these virtual discussions to share World Bank’s experience. Investors were particularly interested to learn how the World Bank screens for climate and disaster risk in 100% of its investments, and the process it has used to incorporate climate action components in 95% of its projects in Fiscal Year 2021, which accounted for 33% of all financing committed.
The World Bank executed five benchmark and larger issuances and numerous smaller transactions
associated with the initiative raising over US $12 billion equivalent. In total, the transactions associated with the initiative attracted over 300 investor orders from around the world for bonds denominated in Australian dollars, New Zealand dollars, Euros, and US dollars fixed rate and US dollars linked to SOFR index, as well as smaller transactions in several emerging market currencies. The funding supports financing of World Bank projects in developing countries which integrate climate considerations and developments to build greener, more sustainable economies. This funding forms part of the World Bank’s overall issuance program for Fiscal Year 2022.
The World Bank shared online resources to explain its holistic approach towards sustainability and climate. A feature story What You Need to Know About Sustainable Development Bonds was posted as part of the World Bank’s Climate Explainer Series which highlights the World Bank’s plans, policies, and tools for fighting climate change.
A video supported the initiative and was shared with investors at different occasions to jump-start discussions. The video on World Bank Sustainable Development Bonds for Climate Action is published on the World Bank Treasury YouTube channel.
The initiative attracted several media stories including from Global Capital, World Bank to print $10bn
SDBs highlighting climate action, and IFR, World Bank's climate focus inspires interest for record 10-year.
During the two-month initiative to raise awareness with investors about the importance of mainstreaming climate action, the World Bank team made the following observations:
• nvestors were very appreciative of the direct engagement and discussions on climate change. Discussions ranged from approaches to mitigation, such as greenhouse gas accounting and carbon pricing, to best practice to incorporate adaptation and resilience into investments as well as the World Bank’s commitment to direct at least 50% of its future lending. Investors appreciated the clarification that all World Bank projects should be considered as addressing climate change because all projects are screened for climate risks and 95% incorporate climate financing
components.
• Investor behavior is changing. Bond investors are increasingly looking to understand the environmental, social, and governance impacts of their investments, with many taking a more holistic, issuer-focused approach. Overall, they are looking to integrate ESG considerations across all investments and seeking greater opportunities for positive impact beyond labeled bonds. Their motivations vary.
• Having started with green bonds, many investors are embracing a more holistic view of sustainability. Green bonds are often a key entry point for investors when setting up an investment process that
integrates transparency around ESG aspects; however, many investors are broadening their approach to incorporate green and social investment. Investors are growing their labelled bond portfolios by increasingly adding sustainability bonds that support both green and social projects. Other investors are going further to analyse the climate and sustainability impacts of the entire issuer, not just their labelled offerings.
•Discussions with investors were well timed with the developments
The Glasgow Climate Compact committed signatories to double adaptation finance, a priority in the World Bank’s Climate Change Action Plan. Other announcements in
Glasgow for countries to cooperate on methane, deforestation, and coal transition highlighted the importance of a holistic approach to green financing that incorporates social and climate considerations.
First published in Dec 2021 for more informarion visit www.worldbank.org or World Bank Climate Explainer Series
Awarming planet is by now well documented, not least by the Intergovernmental Panel on Climate Change’s sixth report, released earlier this year, where they warned, we are now set to reach the 1.5°C warming limit within the next two decades. Whilst the impact is being, and will continue to be, felt in all corners of the world, Africa is disproportionately affected.
Eight out of the ten countries in the world that are the most vulnerable to climate change are in Africa. These countries (Chad, Kenya, Madagascar, Malawi, Mozambique, Niger, Somalia, and Sudan) are severely exposed to extreme weather events, such as droughts and flooding, and
are ill-equipped to adapt to these climate risks. Against this backdrop, Africa, home to a sixth of the world’s population, has contributed just 3% of cumulative greenhouse gas emissions and 4% of annual emissions (Our World in Data, 2021).
The African Development Bank, along with other Multilateral Development Banks (MDBs), signed up for the UN’s Sustainable Development Goals as far back as 2015. In the same year, the Bank set out their “High 5” strategic operational priorities, namely: Light up and Power Africa, Feed Africa, Industrialize Africa, Integrate Africa and Improve the Quality of Life for the
People of Africa.
It’s often impossible to disentangle environmental from social considerations when looking at development, and the High 5 “Feed Africa” epitomises this. The UN released its report, The State of Food Security and Nutrition in the World, earlier this year stating that over 20% of Africans were undernourished. Clearly, the COVID-19 pandemic has exacerbated this, and that has been compounded by the Russia-Ukraine conflict, a region that provided 44% of the continent’s wheat between 2018 and 2020 (UN data).
Since 2020, the Bank has set up a number of initiatives to address this issue. In April 2020, the Bank
established a COVID-19 Rapid Response Facility (CRF), aimed at providing a flexible range of support to assist Regional Member Countries in fighting the pandemic and mitigating its social impact, in particular with regards to women, 92% of whom are in insecure and informal employment on the continent.
The Bank recognized the potential for additional adverse effects in the agricultural sector and set up the Feed Africa Response to COVID-19, as part of the CRF, to address the specific issues faced by the sector. This facility paved the way for a comprehensive intervention to build resilience, sustainability and regional selfsufficiency in Africa’s food systems.
More recently in May of this year, the Bank set up a USD 1.5 billion Africa Emergency Food Production Facility (AEFPF), which is tasked with addressing the estimated shortfall of at least 30 million metric tonnes of food, largely grains, imported from Ukraine and Russia. This initiative, to be implemented in 36 African countries, will help raise the production of wheat, maize, rice and soybean to compensate for the food supply deficit due to the war in Ukraine, benefitting 20 million smallholder farmers. The objective is to make up that shortfall by producing 38 million metric tonnes of food – leading to an increase of approximately 30%, equivalent to USD 12 billion, in local food production over the next two years. As of August this year, USD 1.13 billion had already been approved under this facility, contributing to addressing fears of starvation and food insecurity on the continent.
To fund these projects, the Bank has been partnering with ESG minded investors on Social Bonds since 2017, the same year that the Social Bond Principles were released, and the Bank established its Social Bond Framework. For climate-focused projects, the Bank has been issuing Green Bonds since 2013, before the Green Bond Principles were even published. Given the Bank’s mandate to spur sustainable economic development and social progress in
Africa, Social Bonds are inevitably the larger instrument, with a cumulative USD 7.3 billion equivalent issued to date, through 10 transactions, making the AfDB the largest issuer of Social Bonds amongst its peer MDBs.
For investors though, it is worth noting that, under the Bank’s second Climate Change Action Plan for the period 2016 – 2021, 92% of Bank funded projects were screened for climate risks and opportunities as of 31 December 2021, whilst 41% of Bank projects approved in 2021 were identified as Climate Finance. The Bank is targeting 2025 for all projects to be Paris Aligned.
In spring of 2020, the Bank issued its largest ever Global Benchmark, a USD 3.1 billion 3-year “Fight COVID-19” Social Bond. In September of this year, the Bank issued a EUR 1.25 billion 7-year Social Benchmark, its most successful Euro transaction ever. And it is not just about size, the Bank also has a role to play in the development of local capital markets, where it can pair market development and investor diversification with financing sustainability projects. This role is typified by the inaugural ZAR 200 million 1-year Green Bond launched in August.
Investors can find details of all Bank financed projects, whether financed by
social or green bonds or not, on the Bank’s website. Moreover, the Bank also provides a focus on eligible green and social projects in its annual green and social bond newsletter. From recent initiatives, for example in Coted’Ivoire, the AEFPF will contribute to the delivery of 2,279 tons of certified seeds of maize, 3,539 tons of rice and 134 million of linear meters of cassava cuttings with technical support from the Technologies for African Agriculture Transformation (TAAT) program. In Guinea, the TAAT team will support the country for the provision of hybrid rice and maize varieties and install an ex-vitro rapid cassava multiplication system (SemiAutotrophic Hydroponics) to produce 1.2 million cassava cuttings per year and strengthen the cassava seed system capacity in the country.
There is a lot more work to be done in Africa, and the Bank needs partners, both public and private sector, to do it. However, we believe that, with the African Development Bank providing the strategy and expertise, and ESG minded investors providing the financing, there is good hope that Africa can overcome these challenges in an environmental and sustainable way.
www.AfDB.org
The world needs to reduce emissions and curb global warming before it is too late.
Agrifood systems – both a victim and a cause of climate change – must do their part. We spoke to Mohamed Manssouri, Director of the FAO Investment Centre, about the importance of investing in carbon neutrality in agrifood systems.
The food, energy and financial crises are pushing more people into extreme poverty and hunger. Even before the pandemic and the war in Ukraine, the world was not on track to end hunger and malnutrition by 2030.
We urgently need to transform our agrifood systems to be more sustainable, resilient and inclusive. These systems need to be able to respond to growing food demand while also becoming greener and contributing to global mitigation efforts.
In terms of climate change, agrifood systems are both a culprit and a victim.
Depending on estimates, emissions from agrifood systems account for 21 to 37 percent of total anthropogenic greenhouse gas emissions. At the same time, the effects of climate change – increased drought, flooding, wildfires, unpredictable weather patterns – are extremely disruptive to global agricultural production. They also impact agrifood system actors differently, from small-scale farmers to large manufacturers and consumers.
Carbon neutrality is becoming a key policy theme globally, and many institutions and companies are genuinely concerned about sustainability. Countries are already highlighting the role of food and agriculture in their Nationally Determined Contributions (NDCs), and governments are pushing through legislation needed to achieve ambitious carbon reduction targets.
Is carbon neutrality in agrifood systems a utopian ideal?
We believe that decarbonizing agrifood systems is both necessary and
achievable.
When we talk about decarbonizing agrifood systems, we are effectively talking about removing emissions across entire supply chains – from farm to fork. We’re also talking about more efficient farming practices and sustainable agriculture, the use of agricultural lands for carbon sequestration, the avoidance of land clearing, efficient processing and logistics, and reduction of food loss and waste, including at consumer level.
The change is happening, but we’re not seeing a massive new green wave just yet. All this depends on many factors, including the commodity in question, the complexity of the supply chain, and the relationships among input suppliers, farmers, processors, distributors, retailers and consumers. Above all, it takes strong political and corporate commitment, sound policies, good governance and dedicated investment to see results.
Working towards carbon neutrality is merely a milestone, maybe a minimum of what we should be striving for
towards more ambitious emission reduction targets.
How do you define carbon neutrality, and what are some obstacles in achieving carbon-neutral agrifood systems?
Beyond the hype, many questions remain. For one, how do you measure carbon neutrality and achieve it in practice? And how do you ensure a shared governance mechanism?
There are at least a dozen definitions of carbon neutrality, with more cropping up as private and public players decide to tackle their emissions. According to the Intergovernmental Panel on Climate Change (IPPC), carbon neutrality is achieved when anthropogenic emissions are balanced by anthropogenic removals over a specified period (IPCC, 2018). There is limited reliable, up-to-date inventory data on food production processes for accurate carbon footprint assessments. And while farm-level innovations and methodologies to assess neutrality hold promise, they are far from perfect.
We, at the Food and Agriculture Organization of the United Nations (FAO), teamed up with our longstanding partner, the European Bank for Reconstruction and Development (EBRD), to carry out a comprehensive study on carbon neutrality in agrifood systems.
We wanted greater insight into these issues and to provide strategic guidance on the public and private investment and policy needed to move the carbon neutrality agenda forward.
The result was Investing in carbon neutrality: utopia or the new green wave? Challenges and opportunities for agrifood systems.
The private sector has much to gain by decarbonizing agrifood systems –like reducing costs, mitigating risks, protecting brand value, ensuring longterm supply chain viability and gaining competitive advantages.
Some companies have committed to ambitious emissions reduction targets. But efforts have been uneven.
For one, achieving carbon neutrality is still voluntary. And the costs of becoming carbon neutral can be significantly higher for smaller companies than larger ones – and vary from sector to sector.
Illustration by Sonia Malpeso at FAO
Most importantly, not all carbon reduction approaches pay off for agrifood system actors. Consumers are often not willing to pay a premium for carbon-neutral products, and regulations affecting carbon emissions (and implicit carbon prices) often do not create enough incentives to decarbonize.
So, what can be done? Our study identifies five areas where governments, investors and international organizations can take action to shorten the distance towards carbon-neutral agrifood systems.
One, strategically target carbon neutrality. Governments can set the tone through policies, strategies and road maps, including a strong commitment in their NDCs. And they can regulate carbon or provide incentives to adopt low carbon technology.
Two, improve and standardize tools and methods for collecting data and monitoring, reporting and verifying emissions, including carbon footprint calculators. Measuring carbon neutrality can be a major challenge for private companies. Governments can help by defining, simplifying and harmonizing internationally recognized standards for carbon accounting.
Three, promote sound governance mechanisms, which is crucial to guiding low-carbon investment and private
sector compliance. Four, directly support companies and farmers through concessional financing and incentives to decarbonize their operations.
Five, educate and communicate. That means developing capacities and sharing knowledge at all levels, from farmers and companies to service providers and consumers. Simple, more transparent and reliable communication on a product’s carbon footprint can raise consumer awareness and influence buying habits.
Drastically reducing the carbon footprint of the world’s agrifood systems can and must be part of the climate solution. It is not some boxticking exercise, but rather a broad, long-term endeavour involving a complex set of interventions and the engagement of many stakeholders, including organizations like FAO and the EBRD. We all have a responsibility to work towards a greener, more resilient future.
More Information: Mohamed Manssouri, Director FAO Investment Centre Food and Agriculture Organization of the United Nations Web: https://www.fao.org/ investment-centre
See related publication: Investing in carbon neutrality: Utopia or the new green wave? Rome, FAO.
The Pacific is at the forefront of climate change action, with the small island developing states of the region among the first in the world to sound the alarm about the need to take urgent action. This message was reinforced at the recent Pacific Island Forum, where Pacific leaders declared a climate emergency that threatens the livelihoods, security and wellbeing of their people and ecosystems.
This emergency takes many forms. Recently, prolonged drought has caused water shortages in Kiribati and Tuvalu, Category 5 cyclones
Yasa and Harold have taken lives and destroyed infrastructure and livelihoods, and storms and rising sea levels have routinely caused coastal flooding throughout the region. Climate change impacts and risks are compounding, becoming increasingly complex, and more difficult to manage. A report from the IPCC this year says the world is at a crossroads.
The imperative is clear. There is a critical need to pursue climate-resilient development and boost climate finance in the Pacific, as the window for taking transformative action is closing. The Asian Development Bank
proposes four main ways to do this. One, climate investment must be based on priority climate-related challenges, backed by the latest science and the daily realities of Pacific communities. We propose to conduct more upstream climate and disaster risk assessments that consider risks at a system level, for instance for a city or an island. This information will allow for adaptation investment planning across all sectors, such as water, health, transport, and education.
We must also base our support on country priorities. Countries in the Pacific each have their own
• Climate investment should address Pacific climaterelated challenges that were scoped through extensive research and risk assessment.
• Climate finance needs to be flexible, efficient, and support projects that promote low carbon and climate resilient development.
• ADB will use various regional programs, funds, and technical assistance projects to help develop investmentready climate change responsive projects.
In Sharm El-Sheikh for COP27, it is important the message of collective, innovative, urgent, and transformative action becomes ingrained. By prioritizing climate-resilient development, supporting regional priorities, and working together with our Pacific developing member countries and with key partners and donors, ADB is dedicated to achieving this in the Pacific.
Nationally Determined Contributions, National Adaptation Plans, and LongTerm Strategies and they must be considered when it comes to climate change investment.
Two, ADB will use various regional programs, funds, and technical assistance projects to help develop investment-ready climate change responsive projects. These include the Ireland Trust Fund for Building Climate Change and Disaster Resilience in Small Island Developing States, which has seen nearly $12 million approved for 21 projects in just three years, and the Urban Resilience Trust Fund, which will be relaunched later in the year and will, for the first time, provide financing for up to five Pacific countries. ADB is also spearheading the Blue Pacific Finance Hub to scale up ocean-climate action and sustainable blue economy investments
in the Pacific region.
Three, we must increase the amount of finance going towards projects that support low carbon and climate resilient development. Although ADB has accelerated climate finance to the Pacific (from an average of $60 million per year from 2016 to 2018 to almost $100 million per year from 2019 to 2021), climate finance as a share of regional commitments has increased only a small amount (from 11% to just 12%) during that period. This year, we are projecting both in increase in the overall amount of climate finance (about $150 million) and also the share of climate finance to overall commitments (19.5%).
However, the Pacific’s climate financing needs are immense, so strong partnerships are also needed. As developed countries seek to increase their levels of climate finance by 2025, particularly for adaptation, we must engage with partners to improve and streamline access to climate finance, while, at the same time, Pacific countries must have a say in how climate finance is distributed and managed.
And finally, fourth, Climate finance must be more flexible and
efficient. One example is the Pacific Renewable Energy Investment Facility, which uses a streamlined and programmatic approach to processing many small-value renewable energy projects throughout the region. As of December 2021, more than $105 million in ADB loans and grants had been committed under the facility. Another emerging instrument is the policy-based operation. This instrument has commonly been used to drive public financial management and private sector development reforms, but is now being directed to promote needed climate change responses. For instance, climate change is a key cross-cutting element of the $150 million Sustainable and Resilient Recovery Program for Fiji, which was approved in June 2022 and is supporting the implementation of the country’s Climate Change Act, which is among the world’s most comprehensive pieces of climate legislation.
The global business landscape is fast changing. The shocks caused by the COVID-19 pandemic and recent global natural disasters have not only disrupted millions of lives, but also awakened political and business leaders to the fact that the health of our planet, people and economies is
interdependent and interconnected. CDL’s Environmental, Social and Governance (ESG) strategy and our firm commitment to “Conserving as We Construct”, our corporate ethos established in 1995, has positioned us well in the transition to a lowcarbon economy. Our value creation business model, anchored on four
key pillars – Integration, Innovation, Investment, and Impact – provides us a solid foundation to mitigate and adapt to unprecedented threats and challenges. We are committed to achieving three deliverables: “Decarbonisation”, “Disclosure and Communication”, and “Digitalisation & Innovation”.
Integrating sustainability at the highest governance level since 2012 has enabled further strategic oversight of ESG issues for long-term value creation. Led by the Chief Sustainability Officer, the Sustainability function has been empowered to remain independent in setting goals and tracking performance, while at the same time fully integrated into the company’s strategy and operations. The leadership, spearheaded by CDL’s Board Sustainability Committee, has been critical in purposefully integrating sustainability into our corporate culture and business, delivering CDL’s consistent and strong ESG performance and adding business value to the company.
Companies cannot manage sustainability without measuring their operational impact. Being the first Singapore company to publish a dedicated sustainability report since 2008, CDL has benefitted from producing 15 sustainability reports to date. Using a unique blended reporting model, harmonising key international reporting frameworks, standards, and approaches with the GRI Standards at its core, we have been able to identify material issues, set targets, track performance and improve deliverables. This has led our management to take strategic and prompt action to futureproof our business, and enabled our stakeholders, including investors and financiers, to make informed decisions.
The road to net zero requires disruptive solutions to turn ambitions into reality. Our Green Building Technology Application function, established in 2020, focuses on leveraging cutting-edge technology to reduce our carbon footprint by enhancing the way we design, build, and manage our assets. To futureproof our business, CDL has been actively investing in PropTech venture capital funds, such as Fifth Wall and Taronga Ventures, as well as start-ups.
We also actively explore and develop PropTech solutions in-house, such as digiHUB, a digital platform focussing on predictive and integrated facilities management solutions.
Sustainability-driven innovation goes beyond technology application. It also entails improving business operations and processes to become more efficient, while insulating the business from potential climate-related risks. Complementing CDL’s target to achieve net zero for our buildings by 2030, we established a Smart, Sustainable and Super Low Energy (3S) Green Building Framework in 2020. It represents a holistic framework aligned with the BCA Super Low Energy building requirements, as well as international standards for advancing health and well-being in buildings. In 2021, we updated the 3S Green Building Framework to include embodied carbon management in alignment with the expanded World Green Building Council’s Net Zero Carbon Commitment.
Companies with strong ESG performance have proven to earn
the trust of investors and financiers, allowing them to gain better access to financial resources for sustainable development. Since issuing the first green bond by a Singapore company in 2017, CDL has amassed more than S$3 billion of sustainable finance, including green loans, a green revolving credit facility and a sustainability-linked loan. The first-of-its-kind SDG Innovation Loan initiated by CDL in 2019 channelled funds to accelerate innovation, while securing a discount from lender DBS Bank Ltd. for our successful R&D and pilot of digiHUB. In April 2021, CDL’s
joint venture company, South Beach Consortium, secured a five-year green loan totalling S$1.22 billion – one of Singapore’s largest green loans to date.
With the rise of green investments and innovations, sustainability skillsets are being recognised as essential tools needed for a greener future. In January 2022, CDL’s Singapore Sustainability Academy (SSA) and the Global Green Connect Academy launched Sustainability Connect, bringing together a network of sustainability professionals to share best practices with aspiring
sustainability executives. It secured strong support from global and local knowledge partners, including the UN Institute for Training and Research.
The SSA, CDL Green Gallery and My Tree House are community-focused initiatives by CDL that were accorded the Building and Construction Authority’s Green Mark Platinum status as exemplary green projects that effectively demonstrate energy and water savings, environmentally
sustainable building practices and innovative green features.
A zero-energy facility, the SSA is Singapore’s first major People, Public and Private ground-up initiative in support of global SDGs and national goals to tackle climate change. A sustainability hub dedicated to action and advocacy, capacity building, knowledge and resource sharing, community engagement and partnership, the SSA has hosted over 700 events and trainings and welcomed over 23,700 attendees to its events since its opening in 2017. It involves an extensive partnership with six government agencies and 15 founding industry and NGO partners.
The first zero-energy gallery in Singapore, the CDL Green Gallery was launched in 2013 to educate the public on Singapore’s greening efforts through various exhibitions. The structure of the gallery was built within 24 hours using reusable, prefabricated, modular construction technology that reduces the environmental impact of construction.
“My Tree House, the world’s first green library for kids located in the Central Public Library, was created in 2013 by CDL and National Library Board to encourage and facilitate environmental literacy and love for nature amongst younger generations.
The business case for ESG integration is stronger than ever today. By integrating sustainability into core business strategies, companies retain their competitive advantage and build resilience for long-term growth. Committing to the “Race to Zero” and embracing the triple bottom line approach pushes companies to do well and adds purpose to their business while doing good.
Author: Esther An, Chief Sustainability Officer, City Developments Limited (CDL) www.CDLsustainability.com
The CDL Green Gallery is constructed from Hempcrete, a biomaterial that consists of hemp plant, lime, sand and water. It is not only resistant to pests, fire, mould and mildew, but also keeps indoor temperatures cool with its high thermal efficiency. Cladded with 105 solar panels on its roof, the gallery generates 31,000 kWh annually, surpassing its estimated annual energy consumption. It uses energy-efficient air conditioning and LED lights that consume 57% less energy than conventional lighting. The lush plant features around the gallery are irrigated by water from the nearby Swan Lake, rather than potable water.The world will have to invest $90 trillion in sustainable infrastructure by 2030, according to estimates by The New Climate Economy. These investments are crucial not only to renew old equipment in developed countries and bring them in sync with the fight against climate change, but also to bolster green economic growth in emerging markets and developing countries.
Around 9000 years ago, the city of Jerico in the West Bank became the most densely populated on the planet
with just 2000 inhabitants. The figure was impressive in those days, but seems insignificant compared to the immense megalopolis we have today such as Tokyo (Japan), Delhi (India) or Shanghai (China). According to the latest population survey conducted by the United Nations (UN), it all suggests that in 2030 we will have more cities and mega cities than ever, housing 60 % of humankind.
As cities grow, many of their inhabitants gain opportunities, prosperity and wellbeing, but that growth also significantly upsets the social, economic and environmental balance. As an example, the UN has highlighted that 70% of all greenhouse gas emissions (GHG)
come from urban areas, most of which are poorly designed, lacking in public transport and consume vast amounts of energy.
But there is room in this world for a different type of cities that are more compact, sustainable and resilient to the effects of climate change. These new burgs envisioned by the UN in its Sustainable Development Goals (SDG 9) base economic growth and citizen well-being on sectors such as innovation, research, sustainable infrastructure and a more inclusive and environmentally friendly industry.
The concept of sustainable infrastructure refers to equipment and
Climate and Natural Disasters Pollution Preservation of the Natural Environment Efficient Use of Resources
Source: IDB (Inter-American Development Bank).
systems that are designed to meet the population's essential service needs — including roads, bridges, telephone pylons, hydroelectric power stations, etc. — based on all-round sustainable principles. This means the infrastructure is environmentally friendly from end to end, and that includes economic, financial, social and institutional factors.
With urban areas growing exponentially, especially in emerging countries, sustainable infrastructure is showing its worth as a more efficient, productive and environmentally friendly option. Furthermore, according to the World Bank, these facilities prove more profitable as they make for more reliable services and greater resilience to extreme weather events, as well as lessening the impact
Poverty, Social Impact and Community Engagement Human & Labor Rights Cultural Preservation
Global & National Strategies Governance & Systemic Change Management Systems & Accountabiity Capacity Building
the planet of 3.7 gigatons of CO2per year over the next 15 years, according to The New Climate Economy.
Decarbonising the economy and developing a de-centralised and digitised electric grid could mean access to electricity for the billion people who currently go without.
In the renewables energy sector, we could see a rise from today's 2.3 million green jobs to 20 million by 2030.
Building sustainable infrastructure represents a key pillar in the new economy based on climate and sustainability action.
Present-day infrastructure is not prepared to cover even the most basic needs of emerging countries, such as access to running water, sanitation, transport networks, etc., whereas the sustainable alternative could.
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Replacing old urban infrastructure for new modern and sustainable elements will make cities more inhabitable and inclusive. This would require a multitrillion dollar investment worldwide over the next decade. But if we do things right, it would also see us on the road to economic growth. Here is a summary of the main advantages of sustainable infrastructure:
Better urban planning with more sustainable infrastructure would relieve
In the future, every city's growth should heed the recommendations of the New Urban Agenda (NUA). This strategic document drawn up by the UN promotes sustainable urban development and defines its parameters, advising cities to undertake their transformation through planning, development, governance and administration based on innovations in design, legislation and economic and urban policies.
Sustainable urban development also encourages the decarbonisation of the economy and a gradual energy transition towards a model based on renewable sources, which should be completed by 2050 if the Paris Agreement is to be met. By that time, sustainable cities will have saved the planet $17 trillion, as projected by the Global Commission on the Economy and Climate of The New Climate Economy (NCE).
SUSTAINABLE INFRASTRUCTURE of natural threats to people and the economy.
The climate crisis is at a crossroads. The three landmark reports issued by the IPCC in 2021 and 2022 highlighted the potentially catastrophic risks posed by climate change and the steps needed to preserve our planet for the future. The IPCC report also highlighted the unprecedented and coordinated global effort needed to tackle climate change – all sectors of our society have a role to play.
The impetus to reach net zero by 2050 is key to these efforts. Perhaps a (seemingly) distant target … but given the scale of the issue and its devastating impact, which is already being felt globally, we simply cannot afford to rest on our laurels. There are immediate issues linked to climate which pose a tangible threat to our security and stability right now. The unfolding global energy security crisis and the associated rise in the cost of living highlights the need to redouble our commitment to deliver on the transition to net zero.
The IPCC’s report found that climate finance has a central role in facilitating this change. The good news is that we have both the technology and capital needed to close investment gaps and fund the green transition. This means that by 2030, the global economy could be firmly on the road to reaching net zero. However, for this to be reality
investors need support. While there is undoubtedly still work to be done, there is also increasing appetite among the sector to align investment activity with the Paris Agreement goals – as clearly evidenced by the widespread adoption of the GFANZ initiatives for asset owners and asset managers and wider work being done across the sector. But for this change to be realised, investors need to operate within a supportive public policy sphere to ensure capital is allocated efficiently and that its impact is maximised. Finance can be an enabler or a constraint – investors and policymakers alike should strive for the former.
Investors are a key influence on policymakers and, therefore, their
engagement on public policy is an important extension of these investors’ responsibilities and fiduciary duties. This engagement can take many forms. For example, the current consultation by the Securities and Exchange Commission on mandatory climate disclosure in the US is a measure which numerous responsible investors have pushed for, and which now needs the ongoing support of institutional investors to ensure its adoption. Notably the response to this consultation is a truly global one, involving not only investors headquartered in the US but also those with US holdings, with a view that the rules implemented in the world’s largest market have the potential to
inform other standard setters around the world.
By working collaboratively, investors can amplify their voices and drive meaningful action most effectively. The annual Global Investor Statement to Governments on the Climate Crisis is an example of this. The statement, facilitated by The Investor Agenda initiative and supported by numerous investor groups, including the PRI, brings together investor voices to push for action on climate change. In 2021, the Statement was published in the lead up to COP26 and was signed by 733 investors with a combined total of US$52tn AUM. This was one of the efforts which influenced the SEC’s current consultation on climate disclosure, as well as feeding into wider policy discussion which took place at COP26.
Public policy and investment then are intrinsically interlinked on climate issues. To act most effectively, neither can operate in isolation. Investors should play an active role in policy engagement to and to help shape a policy landscape which is supportive of climate efforts. This is a core element of the process to drive effective and impactful capital allocation in aid of the net zero transition. And likewise, the policy sphere can and should lean on investors expertise and ability to allocate capital to deliver the change we so desperately need on climate issues.
What’s certain is that no group can solve the climate crisis alone. An unprecedented effort is needed to ensure that the risks are avoided. By working in union, both the investment and public policy spheres can form the core of a united and impactful global response to the dangers our planet faces.
Addressing climate change calls for financial institutions to step up their role in channeling capital towards green investments, including the green transition. It also calls for boosting impact measurement and reporting capacity to avoid green washing. IDB Invest promotes high reporting standards both as an advisor an investor for financial institutions in Latin America and the Caribbean and as a supranational issuer with its own sustainable debt framework and sustainable bond allocation and impact reports.
Latin America and the Caribbean (LAC) is home to some of the countries most affected by climate change: out of the 20 countries with the highest climate-related losses as a percentage of GDP, 9 are from LAC.
Globally, the volume of financing required to help mitigate and adapt to the effects of climate change is immense: in order to reach internationally agreed climate objectives by 2030, annual climate finance must increase by an estimated 590%. However, as it stands, only 49% of Latin American banks offer green products and services, well below the 95% average for international banks.
Addressing this challenge calls for financial institutions (FIs) to step up their role in channeling capital flows towards green investments, including the green transition. The business case for operating in this space is clear, from creating new business opportunities
and reducing exposure to climate change and climate transition risks, to strengthening reputation and branding.
Beyond financing green projects, FIs that go a step further to credibly measure the impact of their green portfolios—such as greenhouse gas emission avoidance, water and energy savings, and progress towards sciencebased targets—can gain a competitive advantage.
For example, rigorously measuring the impact of green lending activities can demonstrate how the FI is contributing to key global initiatives such as the Paris Agreement on Climate Change and serve as a first step towards more ambitious goals, such as achieving Net Zero Status. It can also help attract an ever-increasing base of global investors looking for reliable, comparable data on sustainable investment opportunities.
Green or sustainable bonds, which provide dedicated funding to environmentally friendly projects, are one of the most transparent sustainable investments. This is due to their strict use-of-proceeds structure and transparent reporting practices, which should follow the International Capital Market Association (ICMA) standards.
Likewise, the IDB’s Green Bond Transparency Platform aims to encourage transparency
in the green bond market in LAC through information sharing on the use of proceeds and environmental performance of specific bonds.
On the global stage, several recent initiatives by regulators and other organizations aim to standardize impact measurement for green investments.
For example, the Organization for Economic Co-operation and Development and United Nations Development Program recently published the Impact Standards for Financing Sustainable Development.
The Partnership for Carbon Accounting Financials developed a Global GHG Accounting and Reporting Standard for the Financial Industry, and the International Organization for Standardization, through their ISO 14020 standard, provides a globally recognized set of international benchmarks against which companies can prepare their environmental labelling. Likewise, IDB Invest is supporting various country-level initiatives to promote international best practices and policies on green lending in countries such as Paraguay, El Salvador, and Guatemala.
However, green finance impact reporting is not yet common in LAC, often because FIs lack the capacity to do so. This includes proper portfolio segmentation of green projects, appropriate tools to systematize information, and the technical capacity to calculate the benefits of such projects.
That is why providing support to increase the impact reporting capacity of FIs in the region is essential to build a culture of accountability and further
promote green investments.
IDB Invest is partnering with a range of FIs to create tailor-made plans to improve their capacity to better serve the green segment, measure the impact of these activities, and capitalize on opportunities in primary and secondary markets.
For example, IDB Invest provided advisory services to banks in Costa Rica and El Salvador to prepare for the first issuance of sustainable bonds in both countries. Sometimes IDB Invest support evolves over time along with the client. For instance, with a credit cooperative in Brazil, IDB Invest first helped the client develop a sustainability strategy and capabilities to monitor the impacts of its green portfolio. In a subsequent transaction, IDB Invest helped the client develop a Green Bond Framework, which was validated through a second party opinion, and purchased the entire issuance. Since then, the client has issued sustainable financial notes in the market, which include green and social categories.
Other FIs aim to reach Net Zero Status and need help getting there. IDB Invest is working with a bank in Ecuador to develop a strategic plan, including identifying the workforce capabilities, technologies, new products and services, and financing necessary to achieve this ambitious goal, as well as how to measure progress towards decarbonization.
IDB Invest not only works with clients to promote the issuance of green bonds and other form of sustainable issuances compliant with highest standards: in 2021, IDB Invest published its own sustainable debt framework to issue green, social and sustainability bonds. The framework is aligned with the Green Bond Principles and Social Bond Principles published by ICMA, and it received a second party opinion by Vigeo Eiris, today part of Moody’s ESG. Since its inception, IDB Invest has issued over $3.1 billion worth of green, social and sustainability bonds both in the global capital markets as well as in local markets in the region. Following through with its commitment to transparency and accountability, in October 2022 IDB Invest published the first allocation and impact report for the bonds issued under its sustainable debt
framework. The report, available on IDB Invest’s website, provides detailed information of the bonds issued, the portfolio of projects financed with those bonds and metrics measuring the actual impact achieved by those projects up to the report’s cutoff date, becoming the first supranational issuer that reports actual impact as opposed to expected impact metrics.
Climate change represents one of the greatest challenges of our generation. FIs have the potential to direct capital flows towards green investments in a meaningful way, and they have a strong business case to do so. Making this happen is as much about enhancing the green lending and impact measurement capacities of FIs as supporting them financially.
www.idbinvest.org www.iadb.org
Globally, the cumulative total labelled (including green, social, sustainability, and sustainability-linked) issuance reached USD3.3tn in H1 2022, according to the Climate Bonds Initiative database. Even though Latin America and the Caribbean (LAC) region poses an enormous potential, it still represents less than 2% of the total global value. The first issuer from LAC entered the market in 2014, the Peruvian Energia Eolica’s USD204m deal to finance the construction of two wind farms in north-western Peru and since then, LAC’s market has more than doubled Prospects for GSS+ growth in the region remain positive.
The development of LAC capital markets in recent years settled the ground for more debt issuances by both companies and governments and increased opportunities to investments in green projects coming from these Emerging Markets. Economic, environmental and social crisis became pressing issues in the region, calling for urgent and necessary capital deployment, particularly in the
The latest figures from the Climate Bonds Initiative point to a cumulative USD138.4bn in GSS+ issuance from LAC countries. The sustainability label is the most prominent in the region (USD 51.5bn), followed by green (USD37.5bn), sustainability-linked (USD25.8bn) and social (USD23.6bn).
Global annual green bond issuance reached the half trillion mark for the first time, ending 2021 at USD522.7bn. After the COVID-19 socio-economic crisis worldwide, private sector issuers returned to the green bond market in force with a notable growth from emerging market (EM) financial and nonfinancial corporate issuers. In the Latin America and Caribbean (LAC) region, volumes accounted for USD8.2bn worth of deals from 36 issuers and LAC sovereign green bond volume in 2021 was entirely supplied by Chile, a USD1.2bn operation. In 2022, the number of issuances decreased to USDD1.7bn by H1 2022 with nonfinancial corporates from Argentina
Since 2014, issuers from Brazil, Chile and Mexico dominate the labelled thematic bonds market in LAC. Mexico, Colombia and Chile rank first in social, sustainability and ESG issuances.
to USD11.5bn, mainly coming by sovereign issuers: USD9bn from Chile which represented 80% of the region’s market and Peru contributed 10% of the total, a USD1bn deal.
Chile led the way for sovereign social spending in 2021, as the EUR and USD denominated issuance in July 2021 was the largest social Government-backed entities issuance bond operation in the country’s history, and included the longest tenors issued by the Republic. The proceeds of Chile’s social bonds were destined to support low-income families, the elderly and other vulnerable groups, as well as provide funding for education, employment, affordable housing, healthcare and food security. On the Peruvian deal launched in November 2021, the country debuted a 15- year social bond issued in EUR, raising funds for 2021/2022 budget funding to support education, essential health services, housing and SMEs.
In 2022, the number had a decrease compared to the previous year, with Mexico as the largest social bond issuer with a total USD1.1bn. The social label should continue to get traction in the region due to the many social challenges that need to be tackled.
Source: Climate Bonds Initiative, H12022
context of sustainable infrastructure development. Transitioning to a green and climate-resilient economies in the region is crucial to ensure that Latin American countries can reduce their GHG emissions, better hedge against climate risks and thrive in the long run. Thematic bonds could be an important instrument to support this transition. Amongst the green label, the most mature in the region proceeds allocations are mainly directed to the Energy, Industry and Land Use sectors.
(USD766m) and Brazil (USD397m) representing more than half of issuance volume. While there has been a decrease in the green label, there has been greater diversification to other themes such as sustainability and sustainability-linked.
The social theme (excluding China) contributed 20.5% to total GSS+ all regions' volumes in 2021. The LAC region showed the most impressive development, growing by 338% YOY
In 2022, Sustainability issuance reached USD15bn, with Mexico (USD5bn) and Chile (USD4bn) as the largest markets in LAC. Sovereign issuers represented 33% of the total issuance up to H1 and non-financial corporates 31%. In the beginning of the year Chile issued a USD4bn sustainability sovereign, leading this type of issuance under the sustainability theme. Comisión Federal de Electricidad, from Mexico, did the two largest non-financial corporate issuances of USD1.2bn each. Proceeds were allocated towards Energy, Building, Transport, and ICT.
GSS+ debt markets are growing rapidly worldwide in an attempt to fund the low-carbon transition, with an increase in sustainability and
sustainability-linked bonds. Most recently, there has been an increase under these two themes in the LAC region.
However, the transition is not yet being delivered at sufficient scale and pace to achieve the goals of the Paris Agreement. The transition and SLB markets went from strength to strength in 2021, with the SLB market expanding by 941% to a total of USD135.0bn. At the end of 2021, SLBs comprised 4.8% of the GSS+ market, up from 0.9% share in 2020.
Chile’s USD2.0bn sovereign SLBs tied to the country’s GHG emissions and Renewables Installed capacity was issued in early 2022. Their
GHG emissions targets are derived from Chile’s Nationally Determined Contributions (NDCs) to the Paris Agreement, and its renewables targets aims targets a majority (50%) by 2028, and 60% by 2032. This issuance served as an ambitious example of a sovereign SLB for other countries in the region. In H1 2022, Mexico debuted its sovereign sustainability (SDG) issuance worth USD981m and Uruguay prepares its first sovereign SLB issuance based on the framework published to tie interest rates to lower greenhouse gas emissions and preserve native forests by 2025 targets.
In H1 2022, the volume of SLBs
issued in LAC reached USD6bn. Brazil and Chile appear as the two largest issuers, with USD2bn each from nonfinancial corporates. SLBs have been increasingly used by companies as it allows for greater flexibility in the use of resources, moving away from a use of proceeds model.
There have been recent movements to further support market growth and the expansion of a GSS+ pipeline with the creation of local taxonomies.
Taxonomies are classification systems to identify assets and projects eligible to receive financing in order to achieve a low carbon economy, as well as providing the definition of sectoral criteria to detect GHG emissions consistent with the global warming objectives established in the Paris Agreement of COP 21, the ground for determining the Nationally Determined Contribution (NDC) targets.
Colombia became the first LAC country to publish a green taxonomy in April 2022, which excludes all fossil fuels, including natural gas in the energy sector. In terms of defining sectorial criteria and activities eligibility, it was designed to be well aligned with the EU Taxonomy and promote the seven environmental objectives. An additional highlight was the contribution of the Land Use sectors (Agriculture, Forestry and Livestock) for adaptation and mitigation criteria and the incorporation of multiple environmental objectives simultaneously to ensure a holistic approach. Chilean and Mexican taxonomies are currently under development with the support of Climate Bonds Initiative.
LAC has an increasing role to play in the GSS+ market. While issuances in 2022 have been timid compared to 2021, there is a need to scale investments in sectors such as low carbon energy, water, transportation and other critical infrastructure. Thus, the issuance of labelled bonds to fund such sectors are likely to increase in the coming years.
www.climatebonds.net
Grupo SURA is a Latin American investment manager that develops a portfolio of leading companies in insurance, savings and investment, banking, infrastructure and food industries. With more than 77 years of history, it has been characterized as an organization with a philosophy that has integrated a commitment to human, social and environmental issues to the creation of economic value, by recognizing the role of companies in building sustainable societies.
Its subsidiaries, present in 10 Latin American countries, not only
manage financial services and related businesses, but also seek to be increasingly relevant in the lives of more than 44 million people and companies that trust in the products, solutions and services provided by more than 30,000 employees of the subsidiaries Suramericana (insurance) and SURA Asset Management (savings and investment).
This creation of value is also demonstrated in relationships based on trust with different stakeholders, and the linking or promotion of various social, educational and cultural initiatives that promote human development and transform territories. And why?
Sustainable profitability is possible through the creation of economic value for shareholders and the contribution to a harmonious development, that is, a growth that maximizes the well- being of society. To achieve this, a balanced management of financial, human, social and natural capital (finite resources) is pursued.
Now, all organizations manage capitals, however, the real differentiator is when it occurs through a decision-making culture that considers the interrelations that exist between them, to achieve a balance.
by the consideration of social issues in the development of products, solutions and services that close inequality gaps, in addition to the historical work of the Fundación SURA; and by enabling the development of skills not only of employees, but also of suppliers, insurance advisors, citizens and others. This is how we seek that our growth responds to these four capitals”, explained Gonzalo Pérez, president of Grupo SURA.
In this context, some entities have studied the concepts associated with different types of capitals and apply them in the analysis of risks and impacts of companies, to improve the way in which they are managed beyond financial resources.
“WE START FROM COMPLEX THINKING AND A LONGTERM VISION TO BE SUSTAINABLE. AND THAT IS POSSIBLE BY MANAGING FINANCIAL RESOURCES TO HAVE A RETURN HIGHER THAN THE COST OF CAPITAL” Gonzalo Pérez, president of Grupo SURA
For example, the International Integrated Reporting Council (IIRC) proposed some time ago reporting principles based on the use of different capitals. For its part, the World Business Council for Sustainable Development (WBCSD) developed protocols that sought to improve companies' understanding of the relationship and use they make of capitals, as well as the analysis of their interdependencies.
“We start from complex thinking and a long-term vision to be sustainable. And that is possible by managing financial resources to have a return higher than the cost of capital; by advancing in the inclusion of environmental criteria in investment decisions of portfolio companies;
In line with the foregoing, Grupo SURA has incorporated various criteria associated with human, social, environmental, and governance factors into management decisionmaking, through framework policies on issues such as sustainable investment, human rights, social investment, good governance, among others.
As a result, and considering the materiality analyses, one of the
• Financial capital: the company's assets have grown more than 36 times in the last 20 years.
• Social capital: nearly 800 thousand people improved their quality of life with SURA's social investment in 10 countries in 2021.
• Human capital: 14,879 suppliers of the SURA Business Group were trained in financial management and sustainability.
• Natural capital: USD 986 million of assets under management invested by SURA Asset Management integrating ESG and carbon risk criteria, by SURA Asset Management integrating ESG and carbon risk criteria, as well as an 82% growth in sustainable insurance premiums for Suramericana in the last year.
prioritized issues has been climate change. In this topic there is an action framework of guidelines to incorporate risks in the general management system, as well as selected scenarios for risk analysis. "We are working to quantify and minimize the impact of greenhouse gas emissions derived from the activities of the companies in our investment portfolio (financed emissions), as part of our natural capital approach," added Lina Uribe, director of Sustainability of Grupo SURA.
Finally, the search for balanced capital management is not a finished task, it is a path of learning. Thus, a constant development of interdisciplinary knowledge is required, a permanent evaluation of risks and opportunities, as well as an integrated vision around interrelationships between these capitals, to mention a few aspects. In such manner, it is possible to guide decisions and strategic actions in terms of profitability that is combined with long-term sustainability.
The path of co-creation, using validated tools and methodologies, allows the generation of comprehensive projects that attack complex problems and provide systemic solutions appropriate to each reality.
Little did Benjamin know that finishing his thesis would fulfill the dream he had promised his grandfather. He is Mayan from the Guatemalan southwest, rooted in the land and committed to his people. After several years of study and many analyses, tests, and verification in the field, he came up with a much-awaited formula.
His dream was to return to his land, which his grandfather had never left, so he could contribute what he had learned as an agronomist. He had told his grandfather: "You will see. We are going to produce more quality and greater quantity right here, perserving our land and our culture." He had not yet founded Flor de Tierra, but he was already filling a few bags with enriched soil based on the formulas he had presented in his thesis. The main ingredient in the sachets was hope.
Benjamin is one of many who have companies with a social purpose, created from business opportunities, research, and people's needs. Benjamin wants to continue growing; for this, he may need to access funding.
Meanwhile, in different country in Central America, another idea, a purpose, emerged out of a need. After a co-creation process, the Regional Center for the Promotion of MSMEs (CENPROMYPE in Spanish) and VIVA Idea shaped a program that will help link investors and other capital providers with those from the field who need investment to scale their business.
The situation in Belize, Guatemala, Honduras, El Salvador, Nicaragua,
Costa Rica, Panama, and the Dominican Republic (the countries that are part of the Central American Integration System — SICA) is currently complex. High unemployment rates, growing social inequality, and informality exceeding 50% in several of the region's countries are part of the growing difficulties. Micro, small, and medium enterprises (MSMEs) make up about 97% of businesses.
CENPROMYPE, SICA's regional entity in charge of strengthening the MSMEs' ecosystems, has a Regional Policy for Modernization and Transformation of MSMEs in the SICA countries (2022-2050), and implementing it is its primary objective.
CENPROMYPE’s aim was to respond to the needs of MSMEs that had the
urgency of consolidating and going to scale; to generate a solution using a participatory approach on the ground, yielding a contextualized program, appropriate to the region, to achieve the link between MSMEs and capital providers.
David Cabrera, Executive Director of CENPROMYPE, recalled, "we needed a project that could put Central American beneficiaries on the map for international investors. We were looking to design and implement a comprehensive and different project for MSMEs in the SICA region, and VIVA Idea supported and advised us so that we could create a complete program that includes links with capital providers, an investment fund for MSMEs, a work platform, and a certification brand, all under the same institutional umbrella".
The Regional Center found in VIVA Idea a strategic partner that provided knowledge, co-creation methodologies, and systematization of a process to build a robust proposal adapted to the Central American context.
VIVA Idea's "action research" methodology would be underlying the project. Research generates impact, and impact allows for more [better] knowledge creation, that is translated into tools that in turn support impact, generating a virtuous cycle.
impact as well as financial return.
Paola Fonseca, VIVA Idea's Director of Impact, stated that "the construction of a comprehensive project is not a one-day task; it is a process. It seeks to create trust, mutual understanding, and alignment of objectives, and requires deep knowledge of the context".
"Co-creation is the mechanism that ensures that different visions of the same problem be on the table and that the solutions we create are the product of a strategic alignment, of joint work by those who understand the context and want to act on the problem" explained Urs Jäger, Executive Director of VIVA Idea, who led that first moment of creation of the project even before it had a name.
"As a regional entity linked to the Central American Integration System (SICA) that works with the governments of the region's countries, we have already been working in these matters. Now, within the framework of the Program that we have been formulating, we will continue with that effort, with clear objectives, and aligned with our MSME Regional Policy", explained the director of CENPROMYPE.
Existing tools from both organizations will be used to create the Consolidar Program. Social progress measurement tools, acceleration methodologies, beneficiary analysis to generate investment portfolios, and stakeholder alignment tools in complex environments were all tested in previous projects and created from action research processes endorsed by the international scientific community.
progress of the region and the improvement of its inhabitants' quality of life through the market's potential to generate and distribute wealth.
Impact investing is increasingly seen as the heart of the investing world and the marketplace. “If the market has an invisible hand, impact investing is its heart,” as Sir Ronald Cohen, Chairman of the Global Steering Group for Impact Investment (GSG), puts it.
In this sense, the Consolidar Program has multiple objectives towards sustainability in the region and seeks to be a bridge between investors and companies that generate impact. These companies, which will have received training, acceleration, and preparation, may have a certification seal through the Consolidar brand that will give confidence and security to the investor who seeks to invest with triple impact, generating financial, social, and environmental returns.
Benjamin is possibly thinking, why isn't there a platform in Central America where he can access capital providers that have that positive impact as a priority?
The project was framed around the concept of impact investing. Impact investments are investments made in companies, organizations, and funds to generate social and environmental
The Consolidar Program brings together a mapping and integration of stakeholders, a capital fund, a training and acceleration platform, and a certification to identify the participating MSMEs. This structure will enable the execution of CENPROMYPE's regional MSME strategy, promoting exchanges between those who need financing and training and those who want to diversify their impact investments, and creating possibilities for social progress for the region.
The main objective is the social
Investing in a company installed in a society that also needs to improve is an investment that will have a more significant impact. As the founder of VIVA Idea, Stephan Schmidheiny, says, "there are no successful companies in failed societies," and Consolidar knows that the investment must be made in a way that benefits the beneficiary company and its surroundings.
You are invited to be part of this initiative and encourage impact investing through the consolidation of MSMEs in Central America and the Dominican Republic.
www.vivaidea.org
"CO-CREATION IS THE MECHANISM THAT ENSURES THAT DIFFERENT VISIONS OF THE SAME PROBLEM BE ON THE TABLE AND THAT THE SOLUTIONS WE CREATE ARE THE PRODUCT OF A STRATEGIC ALIGNMENT, OF JOINT WORK BY THOSE WHO UNDERSTAND THE CONTEXT AND WANT TO ACT ON IT IN THE SAME SENSE"
Urs Jäger, Executive Director of VIVA Idea
”
ProColombia’s Investment Strategy for Sustainable Development sets out our actions to position Colombia as a sustainable development investment hub in the LATAC region. We aim to support Colombia´s National Sustainable Development Goals by promoting a positive change while attracting foreign direct investment to the country and enhancing Colombia´s ‘road to zero’ and sustainable inclusive growth strategies” stated Flavia Santoro, president of ProColombia.
Colombia was one of the 71 countries that submitted updated
Nationally Determined Contributions (NDCs) to the Paris Agreement by the 2020 deadline, reinforcing their commitment to urgent climate action.
Although Colombia represents only around 0.6% of global emissions, its NDC is one of the most ambitious in the Latin America and Caribbean region thus far and is much more closely aligned with the country’s objective of achieving carbon neutrality by 2050.
This enhanced NDC not only paves the way for significant climate benefits, also is contributing to a more rapid and inclusive economic recovery after
the impacts caused by COVID-19.
In order to reach these goals, the Colombian Government pledges to move forward with plans to undertake massive landscape reforestation and restoration projects as part of its NDC. This coincides with initiatives to plant 180 million trees by 2022, as well as to conserve the Amazon rainforest and Páramo grassland ecosystems. That is on top of the country’s commitment to protect and restore 1 million hectares of land through Initiative 20x20, a Latin American partnership already supporting several projects in the country.
The Government’s purpose is to tackle the climate crisis involving key sectors of the local economy with the greatest emissions and need to adapt: Agriculture and Rural Development; Commerce, Industry, Tourism; Transportation; Housing; Energy and Mining; and Health and Social Protection, among others.
The energy transition is an ongoing example of this country’s commitment, where 2,800 MW will be reached at the end of President Iván Duque’s mandate; and clean mobility, in which Colombia has legislation that has allowed it to have one of the largest electric public transport and cargo fleets in Latin America and the Caribbean.
As an active part of this mission, from our work at ProColombia, we are promoting international projects that could help corporates offset carbon and compensate for emissions to achieve zero deforestation rate and reduce CO2 emanations by 2030. Likewise, fostering investment opportunities in energy transition, circular economy, sustainable tourism, and bio-economy.
Through our friend-shoring strategy, we aim at attracting those industries and value chains that would cut emissions by using Colombia as a strategic location for serving regional markets in the Americas.
Certainly, our commitment goes beyond environmental issues; so, we seek an integral, friendly development that takes into account our communities.
We work to reduce poverty, assist economic recovery and enable inclusive sustainable growth with and amongst Colombian regions and communities, by developing guidelines for regional companies, projects and entities so they attain better structuring, financing, and investor presentation decks that would result in unlocking better international financing inflows for Colombian regions.
We aim to level the playfield amongst regional investment promotion agencies by promoting the arrival of impact investment to Colombia, as well as favor Blended Finance mechanisms that enable public & private investments to find a
way to meet social inclusive growth, also sharing knowledge and best practices for increasing sustainable investment attraction.
Colombia is proud to be among the ten largest developing economies receiving foreign direct investment and is determined to continue to be a part of this select group. We offer legal security, clear rules of the game, political stability, responsible management of public finances, and enormous human potential.
Our commitment from ProColombia is to be an active contributor to existent platforms in Colombia for mobilizing climate finance, responsible and impact investment (we are now members of the Task Force for Responsible Investment and NAB Colombia) to ensure coherence and cooperation.
We strive to promote a better understanding of the sustainable investment mechanisms (both
internally and externally) as a mean to enable a superior identification, attraction, and execution of investments aimed at enhancing sustainable development in Colombia and boosting economic growth.
ProColombia is the Colombian entity in charge of promoting Tourism, Foreign Investment in Colombia, Nonmining energy exports, and the image of the country.
Through the national and international network of offices, it offers support and comprehensive advice to clients, through services or instruments aimed at facilitating the design and execution of its internationalization strategy, which seeks the generation and development of business opportunities.
The industry-led, UN-convened Net-Zero Banking Alliance brings together banks worldwide, which are committed to aligning their lending and investment portfolios with net-zero emissions by 2050. The Alliance was launched by 43 Founding Members on 21 April 2021 and in its first 18 months has grown to more than 120 banks, representing almost 40% of global banking assets. Combining near-term action with accountability, the ambitious commitments require signatory banks to set intermediate net-zero targets, for achievement by 2030 (or sooner) and 2050, no later than 18 months after joining.
The Alliance is convened by the UN Environment Programme Finance Initiative (UNEP FI). In addition,
the Alliance coordinates with other sub-sector financial alliances as the banking element of the Glasgow Financial Alliance for Net Zero. It also serves as the climate-focused accelerator of the Principles for Responsible Banking.
The Alliance aims to reinforce, accelerate, and support the implementation of decarbonisation strategies, providing an internationally coherent framework and guidelines in which to operate, supported by peer-learning from pioneering banks. It recognises the vital role of banks in supporting the global transition of the real economy to net-zero emissions.
The commitment of Alliance members
The central commitment of the Alliance itself is robust, ambitious
and science based. In addition to targeting net zero by 2050, the commitment specifies a temperature outcome consistent with limiting global warming to 1.5°C from preindustrial levels, in line with the most ambitious objective of the Paris Agreement. Using the best available scientific knowledge, including the findings of the Intergovernmental Panel on Climate Change (IPCC), the commitment specifies that targets should be set in line with 1.5°C low/ no overshoot scenarios that is, climate trajectories that comply with the IPCC’s definition of a 1.5°C pathway. The commitment addresses both absolute emissions and emissions intensity in its annual reporting requirement, providing a high level of transparency, and takes an all-
economy approach by covering nine carbon-intensive and high-emitting sectors.
In joining the Alliance, signatory banks have committed to:
• Transition the operational and attributable GHG emissions from their lending and investment portfolios to align with pathways to net zero by 2050 or sooner.
• Set first 2030 targets (or sooner) and a 2050 target within 18 months of joining, as well as intermediate targets every five years from 2030 onwards. All targets will be regularly reviewed to ensure consistency with the latest science (as detailed in IPCC assessment reports).
• Prioritise sectors based on GHG emissions, GHG intensities and/or financial exposure in their portfolio in their first round of target setting (within 18 months of signing).
• Set a further round of sector-level targets within 36 months of joining for all or a significant majority of specified carbon-intensive sectors,
including: agriculture; aluminium; cement; coal; commercial and residential real estate; iron and steel; oil and gas; power generation; transport.
• Engage with their clients’ own transition and decarbonisation to promote real economy transition rather than only portfolio decarbonisation.
• Annually publish absolute emissions and emissions intensity in line with best practice and, within a year of setting targets, disclose progress against a boardlevel reviewed transition strategy setting out proposed actions and climate-related sectoral policies.
• Take a robust approach to the role of offsets in transition plans.
The task that has been set to decarbonise the global banking sector is both critical and ambitious.
The impact of climate change on the planet following decades of unchecked emissions is manifesting itself in many ways and the need for action is urgent.
Decarbonisation requires change
in the real economy, but that banks are crucial to enable that change, by providing finance to support clients and countries to transition to a new low carbon economy. And, in many ways, the banking sector is in uncharted territory, refashioning the tools of our trade to address the monumental task at hand: new methodologies must be developed, new risk models built, new opportunities must be scaled and captured, new capacities built and expanded.
The challenges in doing this are many. There are significant gaps in the availability and consistency of climate data particularly in the emerging markets or developing countries that are most in need of finance to support transition. The regulatory and policy framework is fast evolving but is not yet comprehensive or consistent and shocks to the global economy through inflation, war, disrupted supply chains and pandemic recovery are threatening the global consensus on the need for urgent action.
www.unepfi.org
Grupo Aval Acciones y Valores S.A. is the Holding Company of the Aval Financial Conglomerate, one of the main financial groups in Latin America, has positioned as the largest financial group in Colombia.
Its mission is to provide the customers with socially responsible, safe and
easy-to-access, understand and manage financial solutions in any place and at any time.
To generate added value to all stakeholders, Grupo Aval is constantly evolving and striving towards the growth and development of the country. The decisions taken by Grupo Aval are guided by the impact
they have on the economy, social development and environment to ensure the well-being of the context in which it operates. For that reason, Grupo Aval´s sustainable model contemplates the 17 Sustainable Development Goals of United Nations 2030 agenda, prioritized 8 SDGs in which the group add more value.
Consequently, the group is part of different international sustainable initiatives as Global Compact, Principles of Responsible Investment (PRI), DJSI (Dow Jones Sustainable index) and UNEPFI (in progress).
One of the main contributions of Grupo Aval in Colombia in social and economic aspects is the generation of around 85.000 jobs in the country; 70.000 of which are direct collaborators, and leverage of other 26.000 positions in the companies in which they provide services through outsourcing.
Additionally, entities from the conglomerate such as Banco de Bogotá, Banco Popular, Banco de Occidente, Corficolombiana, and Porvenir, have been recognized by Great Place to Work as some of the best employers in the country. In other hand, Porvenir received the first place in Great place to work for women in Colombia, in the “more than 1.500 employees” category. Furthermore, according to Linkedin’s Top Companies 2022, Grupo Aval is the number one employer in Colombia due to its implementation of varied strategies to foster
“GRUPO AVAL HAS INCORPORATED ESG AS ONE OF ITS STRATEGIC PILLARS FOR OVER HALF OF A DECADE. OUR CONGLOMERATE HAS BEEN COMMITTED TO THE DEVELOPMENTS OF THE REGIONS WHERE WE OPERATE, PROTECTING THE ENVIRONMENT AND STRENGTHENING OUR CORPORATE GOVERNANCE”
Luis Carlos Sarmiento Gutiérrez, President of Grupo Aval.
personal and professional growth opportunities.
The economic contributions of Grupo Aval not only push towards the development of society but are also evident by the accompaniment of the conglomerate toward other Colombian companies. Banco de Occidente, for example, has a training program on different topics of interest based on seminars, short workshops, and podcasts, intended for over 8.000 small and medium-sized enterprises
(SME´s); this program contributes to increase their sales and strengthens their decision-making process by providing sectorial information and comparative data. Banco de Bogotá, alongside Deloitte and Pontificia Universidad Javeriana, provides advisory and coaching to SME´s, to help them assess and regulate their management practices, to structure a sustainable model, and generate value in the long term. Moreover, Corficolombiana through the Corficolombiana Sustainable Awards, recognize their SME´s providers sustainable initiatives with social, environment and economic impact in the communities, process, products or services.
On the other hand, the company dale! is constantly aiming towards the financial inclusion of people around the country no matter if they have credit solvency. Through its electronic wallet, facilitates easy and secure transactions with no cost. In 2021 dale! benefited more than 20.000 people in different regions of the country, in alliance with NGO´s,
companies and universities.In 2022, Grupo Aval inaugurate CTIC - Cancer Treatment and Research Center (Centro de Tratamiento e Investigación sobre Cáncer Luis Carlos Sarmiento Angulo for its acronym in Spanish) a non-profit organization that provides comprehensive and advanced treatment for Cancer in Colombia, contributing to the development and wellbeing of the country. CTIC has the highest scientific and humanitarian standards with a multidisciplinary approach.
For its purpose of providing hope in the fight against cancer, the Center has the capacity of caring more than 7,000 people annually, due to the 12 clinical functional units which the Center operates and that respond to the most frequent oncological pathologies.
In addition to its diagnostic and clinical component, the CTIC has the biggest research facilities in the country about the disease, where the most advanced equipment in genomics, proteinomics and immunogenetics. The Center has established itself as the largest health donation in the country's history. In fact, since its construction, it has
been declared a Project of Strategic National Interest, being the first institution in the health sector to receive this designation.
Grupo Aval has also taken environmentally and socially sustainable steps through green projects and responsible investments, such as the issuance of social bonds by Corficolombiana, as well as Banco de Bogotá being titled as the first carbon-neutral bank in Colombia by Icontec (Colombian Institute of Technical Standards and Certification); the actions and products of subsidiary companies of Grupo Aval that promote the consumption of low emission products, and that contribute to communities from vulnerable regions from Colombia; the “Planeta Azul Award” by Banco de Occidente, has awarded for 25 years companies and people who work towards water conservation.
Grupo Aval, the banks that belong to this conglomerate: Bogotá, Occidente, Popular, AV Villas, and the pension and severance fund Porvenir
are committed to equity, diversity, and inclusion, as acknowledged by the recertification Friendly Biz, given by the LGBT+ Chamber in 2022. In addition, Corficolombiana will receive this certification for the first time in a few days. Grupo Aval´s Diversity and inclusion corporate policies, established alongside the inclusion program of the global NGO ACDI/VOCA and the ACDI/VOCA LA Foundation, are examples of the efforts made towards inclusion, which decrease the barriers faced by women, ethnic communities, people with disabilities, youth, migrants, elderly, and LGBTIQ+, in educational, corporate, productive, mediatic, cultural and social environments.
“Grupo Aval has incorporated ESG as one of its strategic pillars for over half of a decade. Since then, our conglomerate has been committed to the developments of the regions where we operate, with special emphasis on protecting the environment and strengthening our corporate governance. We strongly believe that by doing so the sustainability of our business is guaranteed”, stated Luis Carlos Sarmiento Gutiérrez, President of Grupo Aval.
To build a more responsible banking financial institutions should embed environmental, social and governance approach to their strategy and culture and take total responsibility to aim to be net zero by 2050 and support all stakeholders' transition to a low-carbon economy and drive inclusive and sustainable growth.
Santander concerned with the climate emergency is one of the leading banks that has an ambitious to achieve net-zero CO2 emissions group-wide by 2050 in support of the climate change objectives of the Paris Agreement. This applies to the group’s own operations, which have been net zero since 2020, and to all emissions from their customers of their lending, advisory and investment services.
The bank is committed to aligning their power generation portfolio with the Paris Agreement goals by 2030 and aiding the transition to a low-carbon economy. In their finance operations, the two initial decarbonization targets concerning industries that release CO2 are:
• to end financial services by 2030 to power generation customers who rely on thermal coal for over 10% of their revenues; and
• to cut the bank exposure to thermal coal mining to zero by 2030.
Santander has a responsibility in integrating climate within their governance, strategy and risk management, defining courses of action and assessing procedures to transition portfolios and industries with the biggest impact on climate towards our net zero target by 2050. The bank is also working alongside international
financial institutions and industry associations, implementing the PACTA 2 Degrees Investing Initiative, and reporting on our progress on the UNEP FI Collective Commitment to Climate Action.
Santander is supporting the transition of corporate and investment banking, commercial banking and wealth management, private banking and insurance customers to a low-carbon economy. The bank also intends to continue fighting deforestation and its damage to the climate and biodiversity, especially in the Amazon.
Banco Santander finances more renewable energy projects than any other bank, according to the Dealogic League Tables. We are also a leader in advisory services and are actively financing projects that help the environment. We’re intent on becoming an international mainstay in sustainable finance through stronger ESG products and solutions that suit corporate banking and investment clients’ strategies for sustainable models.
The bank internal green book, which classifies retail products under environmental criteria, contains mortgages, energy efficiency loans, leasing to install renewable energy, loans for clean modes of transport and low-carbon agriculture, and other green products we offer for retail customers, SMEs and companies. We also have lines of credit for energy efficiency and renewable energy projects with such multilateral bodies as the European Investment Bank (EIB), the CAF – Development Bank of Latin America and the European Bank
for Reconstruction and Development (EBRD).
Additionally to this the bank aim to promote socially responsible investment, and as an asset manager is the pioneer in Spain to have an ESG team, assigning ESG rating to most funds offered and a wide range of ESG products to all wealth management clients. Private banking advisory service is adopting ESG criteria to complement its assortment of sustainable funds, green bonds and alternative products and manage the environmental and social risks for customers' activities.
Santander Finance for All helps people access the financial system, set up and grow micro-businesses, and learn how to manage their finances. Our strategy addresses the needs of individuals and SMEs in Europe, Latin America and the US who have problems obtaining credit, limited financial knowledge or financial difficulties.
Our three lines of action promote financial inclusion:
At Santander, we believe education is key to financial inclusion and protecting users of financial services. Teaching financial concepts helps people to take better decisions about their money and protect their finances.
Financial education is at the core of our responsible banking agenda, through which we aim to make economic concepts easier to understand, reduce asymmetric information between customers and financial service providers, protect the most vulnerable through special tactics and promote market stability.
Sustainability has become one of the most pressing topics impacting our society today. This includes environmental aspects, such as climate change and resource scarcity, social aspects, such as human rights, financial inclusion and data privacy, and corporate governance aspects, such as board
composition, anti-corruption, and ethical business practices. Collectively, these are commonly referred to as ESG (Environment, Social, and Governance).
QNB Group’s sustainability strategy was developed in consultation with key stakeholder groups - our customers, investors, employees,
regulators and government, society and suppliers - taking into account their needs and expectations. Through regular and targeted engagement with stakeholders, we deepen our understanding of their priorities, and where appropriate, align our initiatives with their interests and needs.
The Group stakeholder selection
process is guided by a benchmarking exercise against peer banks in the region and beyond. In addition, our primary stakeholders are groups that are directly affected by our business and operations (customers, employees, suppliers), invest in our business (investors), have oversight and influence on our activities (regulators and government), as well as those who are indirectly impacted in the communities we serve (society).
In response to these external demands, and to support QNB’s vision to become one of the leading banks in the Middle East, Africa and South East Asia (MEASEA), QNB has defined a Group-wide sustainability programme. This has been developed in alignment with national and international standards and guidelines, with particular focus on the objectives
All three pillars contribute to QNB’s goal of ensuring sustainable financial performance, through reducing risks, opening up new business opportunities and strengthening our brand.
Sustainable finance is the integration of ESG criteria into financing activities to deliver profit with purpose. QNB aims to be a leader and role model in delivering sustainable financial performance through our national and international commitments as well as our financial, social, and environmental initiatives. This includes reducing ESG risks throughout our value chain and enabling the transition to a greener and more socially equitable economy and improve access to finance for SMEs and underserved groups.
Sustainable financing can enable significant change and meaningful outcomes to benefit the environment and society. Increasingly, such financing will underpin the transition of industries and businesses towards a lower carbon economy.
QNB is committed to financing and supporting eligible sustainable projects. QNB’s green and social loan portfolio eligibility criteria aligns with 13 of the global goals of the UNSDGs and reflects our investment in green buildings, renewable energy, clean transportation, and pollution prevention.
categorisation. It includes our position on extractive industries (e.g., fossil fuels and mining), and our support for RSPO, recognising our influence and ability to support the transition to responsible business practices.
GSSBs provide an opportunity to bolster the sustainable finance ecosystem and allow institutions to tap into capital markets in order to generate funds that supports the transition towards a socially conscious and low-carbon economy. QNB Group developed the GSSB Framework in full alignment with the ICMA Green Bond Principles, Social Bond Principles, and Sustainability Bond Guidelines. As per industry best practice, QNB obtained a Second Party Opinion (SPO), and conducted a pre- issuance review on our eligible portfolio. This enabled QNB to leverage green bonds as a financial instrument and issue our first green bond of USD 600m in 2020.
QNB Finansbank issued its first green bond with the backing of the EBRD. This first green bond issuance, of USD50 million, marks the EBRD’s first investment in a green bond issued by a Turkish bank. QNB Finansbank’s green bond is issued under the Group’s GSSB Framework, which was updated and received a SPO earlier in 2021.
of the United Nations Sustainable Development Goals (UNSDGs), Global Reporting Initiative (GRI) Standards and the Qatar Stock Exchange (QSE) ‘Guidance on ESG reporting’.
At QNB, we define sustainability as the delivery of long-term value in financial, environmental, social and ethical terms, for the benefit of our customers, shareholders, employees and communities. Our sustainability framework consists of three pillars; sustainable finance, sustainable operations and beyond banking.
The Group is commited to sustainable business practices and we continue to work with our suppliers and clients to identify, assess, manage, and monitor exposure to ESG risks. We have therefore incorporated ESG relevant criteria and metrics into our risk appetite, which is cascaded down to our risk adjusted capital allocation process through the development and application of the ESRM Framework.
Our ESRM clearly articulates exclusions, sectors deemed high risk, prohibited activities, and risk
The USD50 million proceeds will be used to finance internationally certified green building projects in the Bank's portfolio. The Bank's eligible green portfolio is significantly greater than the issue size, providing scope for future issuances.
There is now increasing demand from investors, customers, regulators, and our own employees for greater transparency of our approach to ESG issues. And we recognise the significant contribution QNB can make to society by adopting business practices to address these, especially through our financing activities.
www.qnb.com
“THE ABILITY TO UNDERSTAND ESG IMPACTS AND MANAGE THE RELATED RISKS AND OPPORTUNITIES HAS BECOME A NECESSITY. WE CONTINUE TO BUILD UPON THE PROGRESS WE HAVE ALREADY MADE TOWARDS EMBEDDING SUSTAINABILITY AS A CORE PART OF OUR CULTURE, VALUE PROPOSITION, BUSINESS AND OPERATING MODEL TO CREATE POSITIVE IMPACT FOR GENERATIONS TO COME.” Mr. Abdulla Mubarak Al-Khalifa Group Chief Executive Officer
Infrastructure and sustainable development are positively interlinked. Approximately 70% of greenhouse gases are linked to the construction and operation of infrastructure, and buildings alone are estimated to account for more than 30% of global resource consumption and energy end use. According to a WHO report, the number of deaths from emissions from key infrastructure industries will rise from the current 150,000 per year to 250,000 by 2030.
Does that mean that the solution to fulfilling the Sustainable Development
Goals (SDGs) and to saving our planet is to stop all construction of infrastructure? Let’s take a closer look at the nexus between the SDGs and infrastructure.
In 2015, all United Nations Member States adopted a development policy on sustainability which centers around the 17 Sustainable Development Goals (SDG). The 17 goals provide a global blueprint for peace and prosperity of people and the planet,
and are set to be achieved by 2030. It goes without saying that SDG 9, Industry, Innovation and Infrastructure, and SDG 11, Sustainable Cities and Communities, are connected with infrastructure.
But we also rely upon diverse forms of infrastructure to deliver essential services and support our economies. Human well-being depends upon water and sanitation infrastructure (SDG 6), just as quality education (SDG 4) and productivity depend on access to energy (SDG 7). Infrastructure can result in better health (SDG 3),
can result in economic growth (SDG 8), and with all these combined, it can help eradicate poverty (SDG 1).
Overall, purposefully planned urban infrastructure including smart public transportation, green and energyefficient buildings as well as green spaces are vital to ensure that the world’s fast-growing cities are in line with the 2030 Agenda.
These examples show the answer is not to stop construction of infrastructure, but to ameliorate the construction plans and to shape it in such a way that helps achieving the SDGs. Part of the solution lies in sustainable infrastructure or lowcarbon infrastructure.
What is the definition of sustainable
infrastructure? Sustainable infrastructure is planned, designed, constructed, operated, and decommissioned in a manner to ensure economic and financial, social, environmental (including climate resilience), and institutional sustainability over its entire life cycle. While the economic benefits and financial aspects are important, there are economic risks associated with it that need to be considered to avoid any negative impacts, e.g. debt and fiscal sustainability.
Sustainable infrastructure can help build resilience in countries while protecting against exposure to extreme climate change events. An example of low carbon infrastructure is railway infrastructure that reduces the number of carbon-emitting trucks. The demand for this type of
infrastructure and the worldwide drive for economic growth are high in both developed countries and in developing countries as well.
THE PEOPLE, THE ECONOMY,
Infrastructure can yield crosssectorial benefits and provides a basis for improvements within three dimensions: an economic dimension, a social dimension, and an environmental dimension.
Sustainable infrastructure underpins the delivery of all the social SDGs. Improved access to basic services is one of the fundamental objectives of infrastructure development, and sustainable infrastructure that integrates electricity, transport, clean water, and sanitation services is closely associated with poverty alleviation.
Photo by Ed 259 on Unsplash
For the economy, investments in infrastructure will result in growth through employment creating, a new source of income, trade opportunities and assets and services. The optimal use of local labour and materials can also stimulate the local economy and contribute to poverty reduction.
At last, it is widely acknowledged that the ambitions set out by the Paris Agreement on Climate Change will only be met by a transition towards sustainable energy requiring large investments in new infrastructure, and that limiting climate change to any level.
Below are two examples of sustainable infrastructure in practice in a developed country and in a
developing country.
Construction of e.g. roads, bridges and industrial facilities should contemplate future climatic conditions. The City of Copenhagen, Denmark, did this with their 2012 Cloudburst Plan: the plan outlines measures recommended for climate adaption including extreme rainfall. Tunnels and roads were designed to increase drainage capacity and water discharge into the sea. Furthermore, buildings got installed anti-flooding mechanisms.
Infrastructure supports developing countries seeking to integrate into the global economy by facilitating international trade. Well-functioning transportation and intermodal infrastructure enables domestic
In Kenya, the power plant, Olkaria, is a geothermal investment project which was built in order to reduce the country’s reliance on hydropower. Olkaria has increased the proportion of geothermal energy to 51% of the Kenyan national energy mix according to the World Bank. Development of geothermal power is also key to Kenya’s strategy for alleviating poverty through increased access to reliable and clean energy. The World Bank’s country director for Kenya, Diarietou Gaye, commented on how the energy sector is “a key infrastructure investment in the fight against poverty.”
www.unric.org
producers to export goods abroad.
Investment in capital-intensive clean power and electricity networks, as well as spending on energy efficiency and electrification via greener buildings, appliances and EVs, would need to more than triple in EMDEs in the 2020s to be consistent with a well-below-2 °C temperature outcome (from about USD 45 per person in EMDEs today to around USD 130) and increase more than six times in order to keep the door open
for a 1.5 °C stabilisation (to around USD 240 per person).
The power sector accounts for a rising share of total investment, as clean electricity and electrification need to play central roles in EMDE strategies for sustainable development. At least 1 600 GW of renewable capacity is added over the next decade in rapid transitions, increasing the share of renewables in total power installed
capacity to well above half by 2030, from 30% today. This shift demands an increase of private capital with greater reliance on debt and project finance. Policies supportive of privatesector participation and competition, and targeted public finance have helped lower the cost of capital and attract private investment in renewable power, but stronger efforts are needed. In more mature EMDE markets, efforts focus on addressing
persistent risks, such as access to long-term, locally denominated debt, while markets at earlier stages of development still require clear targets supported by regulation and a greater role of blended finance to help crowd in private capital.
Investment in electricity networks and battery storage has to grow rapidly to accommodate rising electricity demand and the surge in renewables deployment; in the SDS it nearly triples to USD 200 billion by the late 2020s, and rises even faster to USD 325 billion in the NZE. Financing – provided mainly by state-owned utility balance sheets – depends on good system planning and regulation. Development finance institutions can help to bolster funding options along with supporting investment in smarter, digitalised systems. In some markets, with enabling reforms, new business models to attract private financing for grids could help bridge the investment gap.
Generation and networks businesses are unbundled in most EMDEs, but states often own the utility companies that shape decision-making across
"THERE IS NO SHORTAGE OF MONEY WORLDWIDE, BUT IT IS NOT FINDING ITS WAY TO WHERE IT IS MOST NEEDED. GOVERNMENTS NEED TO GIVE INTERNATIONAL PUBLIC FINANCE INSTITUTIONS A STRONG STRATEGIC MANDATE TO FINANCE CLEAN ENERGY TRANSITIONS IN THE DEVELOPING WORLD." Fatih Birol IEA's Executive Director
electricity investments. While many utilities in EMDEs have improved cost recovery over time, the pandemic has exacerbated vulnerabilities and financial stresses, including their ability to invest in grids and act as creditworthy power purchasers. Better financial performance comes through reforms that boost competition, enhance planning and operations, promote cost-reflective tariffs, sound financial management and good governance.
Rapid urbanisation and strong construction activity in EMDEs puts
a premium on investment in energyefficient, digitally-connected buildings in climate driven-scenarios, alongside a step-change in spending on clean solutions to manage the huge rise in demand for cooling. Constrained access to affordable consumer finance, lack of building codes, split incentives, and energy subsidies all inhibit investment in green construction at the scale needed to meet climate-aligned scenarios. Stronger performance standards, building certification schemes and increased deployment of a range of financing solutions – including credit lines from development finance institutions and ESCOs – can help to overcome spending barriers.
Fast-growing mobility demands in EMDEs call for a roll-out of cleaner transport solutions, including public transit and new vehicle options. Passenger EV sales reach over 5 million in 2030 in the SDS from a very low base today, with capital increasingly reliant on better access to debt finance. High borrowing costs, underdeveloped manufacturing capacity and limited charging stations pose challenges to deployment. These can be bridged with tax incentives, purchase subsidies, expansion of green auto loans and leasing models. Efforts to roll out mass transit benefit from tapping into sustainable debt markets and partnerships with global technology providers.
Enabling universal access to electricity by 2030 requires investment of USD 35 billion per year, with half of that for decentralised solutions including USD 13.5 billion in subSaharan Africa. While debt fundraising has improved as some markets have become more attractive to lenders, public concessional funds continue to underpin investment, especially in countries with high risks or weak underlying economics. A similar story holds for clean cooking, where business models are still being explored.
IEA 2021-2022, Financing clean energy transitions in emerging and developing economies. www.iea.org
Current versus future average annual investment in clean power, grids and energy end use by Emerging Markets and Developing Economies in climate-driven scenarios, 2016-2030The South American country is implementing new policies to transform investment into a tool to make its economy more sustainable.
In defiance of the global economic crisis, Chile is accelerating its steps towards a more sustainable economy, using foreign investment as a tool for reaching its targets.
The country has made a commitment to clean energy and caring for the planet, promoting renewable energy production and venturing into new clean energy sources such as green hydrogen. They are also encouraging
recycling and implementing public policies to reduce the use of singleuse plastics. Alongside the State, the private sector - in particular foreign companies - has taken a leading role in facing these new challenges.
Chile is currently developing an ambitious decarbonization plan, whose goal is for 70% of its electricity generation matrix to be made up of renewable energy by 2030. The target has not been set at random: this type of electricity has undergone significant development in the country in recent years. In 2011, Chile had an installed capacity of non-
conventional renewables of 540 MW, and a problematic dependency on imported fossil fuels; the figure is now 11 times higher, and non-conventional renewables already make up 58% of the National Electric System.
According to Bloomberg’s Climatescope ranking, Chile sits in second place among the emerging economies with the greatest investment potential in clean energy, and foreign companies have identified an opportunity. The energy sector currently leads the portfolio of InvestChile, Chile’s Foreign Investment Promotion Agency, with projects worth
more than US$9 billion in different stages of development.
Green hydrogen, which has been described by many as “the energy of the future”, offers a new opportunity for Chile. The country aims to produce the cheapest green hydrogen on the planet by 2030, to be among the top three exporters by 2040, and have 5 Gigawatts (GW) of electrolysis capacity under development by 2025. This panorama has attracted companies like France’s Engie, Germany’s Siemens, Italy’s Enel, and Spain’s Acciona and Enagás, who are already developing green hydrogen projects in Chile. The government has promised that the development of the hydrogen industry will be coherent with its social and environmental surroundings, incorporating best practices and
dialogue. The industry will thus be developed in harmony with its environment, ensuring in particular the responsible use of water alongside nearby communities and activities. Sustainability is being incorporated into all of Chile’s different sectors. Even industries such as large-scale miningan important international stakeholder to help enable the transition of the global economy towards carbon neutrality, and which is highly relevant for foreign investment - is massively incorporating seawater to replace the use of continental water in its processes (from 2% in 2010 to 30% in 2020; the sector’s target is for 90% of the water used in Chilean mining to be seawater or reused water by 2025). The industry is also incorporating renewable energy; 50% of the electrical energy used by large-scale mining comes from renewable sources, and some companies have achieved 100%. The sectoral target is 90% by 2030.
In terms of recycling, one of the goals is to reduce the generation of waste and promote its reuse, recycling and other types of recovery. This will
be achieved through the Extended Producer Responsibility Law (REP Law), whose implementation has been a joint effort between the public and private sectors.
InvestChile is promoting the REP Law as an investment opportunity for foreign companies. The agency is working with companies that are committed to the circular economy, supporting recycling projects for used mining vehicle tires and aquaculture nets, and recovering waste from the fishing industry, among other initiatives. But the country’s commitment does not stop there. In March this year, the government enacted the Climate Change Law following almost a year of discussion. With this milestone, Chile became the first developing country to have a regulation of this type. Furthermore, the government has just announced the creation of a special tax incentive for investment projects with a multiplier and green effect, consisting of a US$500 million tax credit fund for sustainable projects that have a high multiplier effect.
In the eyes of Chile, foreign investment can contribute to the construction of a greener future. And they are already working on it.
The world needs more energy than ever before. Which means we need a sustainable system that can meet these growing demands, whilst also addressing CO2 emissions and the overall impact on the environment.
One possible solution is hydrogen, which has the potential to deliver sustainable, efficient and affordable
energy at scale. However, it is expensive to transport. So how could we make it commercially viable to deliver this clean energy around the world?
Hydrogen is not only the most abundant element in the universe. It could also play an essential role
in tomorrow’s energy mix - from fuelling cars, trains, trucks and ships to generating electricity and heating buildings. That’s because it’s a colorless, clean fuel that emits only water when burnt or oxidized.
Currently, around half of the world’s industrial hydrogen comes from natural gas (methane) and is used for fertilisers, as well as in the iron,
steel and space industries. However, the traditional method of extracting hydrogen from natural gas also creates around 10 tonnes of CO2 for every tonne of hydrogen produced. Therefore, we needed to find a more sustainable way to produce it.
For over a decade Aramco have explored potential technologies to produce high purity hydrogen from hydrocarbons, including ThermoNeutral Reforming (TNR) and a catalyst for converting diesel into hydrogen. Their ultimate ambition was to create so-called ‘blue’ hydrogen – extracting the valuable gas whilst also capturing all the CO2 emissions.
When methane burns it creates hydrogen and CO2, but what makes blue hydrogen different is that we capture these CO2 emissions and either recycle, remove or reuse them. This all-forms part of the company vision for a circular carbon economy.
Currently, Aramco can successfully convert around 80-85% of the energy of the hydrocarbon into hydrogen fuel, and then use two innovative technologies to utilize the captured CO2. The first involves injecting it into one of the organisation’s oil reservoirs for Enhanced Oil Recovery, whilst the other takes the waste CO2 and converts it into chemicals like methanol for industrial use. Any additional CO2 can also be safely
sequestered deep underground.
Creating blue hydrogen was only half of the solution. The next problem we had to overcome was how to affordably store and deliver this revolutionary fuel to where it was needed.
Hydrogen is a very light molecule. It can be liquified, but that requires keeping it at a temperature of -254°C, which makes it very difficult and expensive to transport – particularly over long distances. The solution lay in converting the hydrogen into a chemical compound which is already widely traded around the world: ammonia.
Compared to hydrogen, liquified ammonia is far more convenient, practical and cost-effective to
transport, in terms of both the required temperature and pressure conditions.
Once the blue ammonia reaches its destination, it can be converted back into blue hydrogen, or used directly as a fuel for gas turbines for cleaner power generation
In 2020, Aramco successfully completed one of our most ambitious pilot projects to date – a supply network demonstration covering the complete hydrocarbon value chain in partnership with SABIC and the Institute of Energy Economics Japan (IEEJ).
The fruits of this unique collaboration came in August 2020, when successfully shipped from Saudi Arabia 40 tons of high-grade blue ammonia to Japan.
There are still several challenges ahead, such as developing ways to convert a higher percentage of the hydrocarbon energy into hydrogen, and working together creating partnerships around the world to establish wider infrastructures and supply chains for power generation and hydrogenpowered vehicles.
However, it’s clear that converting natural gas into blue hydrogen could be key to generating affordable, reliable and sustainable cleaner energy for everyone.
www.aramco.com
Illustration: AramcoThere is good news around if you look for it: businesses are rolling up their sleeves and leading the change in the energy revolution; major global corporations are embedding sustainability into their operational strategies; partnerships between the public and private sectors are helping find solutions critical to tackling climate change. The journey to a carbon neutral world will not be possible without technology.
Organizations are already working across a vast portfolio of sustainabilityfocused technologies, from innovative systems to make urban infrastructure smarter and less energy intensive, to decarbonization offerings and
solutions for harnessing alternative fuel sources such as hydrogen and renewables.
But the public sector must also innovate. Advances in regulatory and policy frameworks and financial structures are key to creating the market conditions for sustainable technology to flourish and to ensure continued private sector investment in the most promising emerging areas. Here are some existing technologies that have been the result of similar efforts:
1. RENEWABLE
Aviation is one of the rapidly growing sources of greenhouse gas emissions. This is one area where industry has made significant progress and where
technological solutions already exist, these alternative technologies are able to produce sustainable aviation fuel (SAF) that meets and exceeds jet fuel standards for performance. Alternative fuels It can be made with a variety of feedstocks, including vegetable oils, animal fats and nonfood-based, and second-generation feedstocks such as camelina, jatropha and algae.
However, public-private partnerships are needed to scale up the deployment and use of this technology in transportation systems. Collaboration needs to continue between global governments and industry to ensure that regulations being developed are consistent,
Low global warming refrigerants can be used in everyday products, including for personal and household care, air conditioning for cars, refrigerants for supermarkets, blowing agents for insulation, and solvents for cleaning Image: Honeywell
clear and realistic with where SAF markets and related feedstocks are today. Doing so can help speed the adoption of sustainable fuel across global markets.
Governments need to coordinate with international partners to encourage the use of a range of widely available, economically viable, sustainable feedstocks. This will help address feedstock constraint issues as these markets develop.
Small molecules can make a big impact when it comes to reducing emissions. The need for low global warming potential alternatives has led scientists to develop hydrofluoroolefin (HFO) technology that is used in the form of propellants, aerosols, blowing agents and refrigerants.
Hydrofluoroolefin are unsaturated organic compounds composed of hydrogen, fluorine and carbon similar to HFCs. HFOs are olefins also known as alkenes. Hydrofluorocarbons are extensively used as refrigerants and in other applications such as blowing agents however, HFCs are potent greenhouse gases with a high global warming potential which can deplete the ozone layer.
Hydrofluoroolefin are an alternative to hydrofluorocarbons, with zero
ozone layer depletion and low GWP. Hydrofluoroolefin are the fourth generation of refrigerants which presents a strong case as an alternative to the refrigerants depleting ozone layer
These innovative technologies can help users to reduce their greenhouse gas emissions and can improve energy efficiency without sacrificing performance. It is used in everyday products, including for personal and household care, air conditioning for cars, refrigerants for supermarkets, blowing agents for insulation, and solvents for cleaning. These products have helped avoid the release of high global warming potential molecules equivalent to more than 295 million metric tons of carbon dioxide into the atmosphere, equal to carbon sequestered by 110 billion trees.*
Buildings account for approximately 37% of the world’s direct and indirect CO2 emissions. Occupants have higher expectations than ever of these buildings – expectations that a building’s indoor air quality will support their well-being and use less energy. These are big expectations, but ones we’re ready to meet. Buildings Sustainability Manager solutions can help building owners and operators meet these
“WE CANNOT ADVANCE SUSTAINABILITY PLEDGES WITHOUT INNOVATION FROM THE PRIVATE SECTOR.” Anne T. Madden Senior VicePresident and General Counsel, Honeywell International Inc.
two pressing, yet often conflicting, objectives: reducing the environmental impact of buildings while optimizing indoor air quality.
All these technologies are available today, but the public sector need to innovate too. It took the world more than a century to carbonize, but there is not that time available to decarbonize. We need to create the right environment to support a technologyled transition that is both timely and sustainable in the long-term.
* Calculations are estimates based on past and present sales of Honeywell Solstice HFO products from 2015 to 2022 (including forecasted estimates of current year sales), comparing the difference in GWP of those products to the HFCs and/or HCFCs they replaced. All GWP values are from "Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press.
Decarbonising the planet is one of the goals that countries around the world have set for 2050.
To achieve this, decarbonising the production of an element like hydrogen, giving rise to green hydrogen, is one of the keys as this is currently responsible for more than 2 % of total global CO2 emissions. Find out how this is achieved and what its impact will be in the coming decades.
The estimates by the International Energy Agency (IEA), predict that
global energy demand will increase by between 25 % and 30 % by 2040, which in an economy dependent on coal and oil would mean more CO2, exacerbating climate change. However, decarbonising the planet suggests a different world in 2050: one that is more accessible, efficient and sustainable, and driven by clean energies such as green hydrogen.
This technology is based on the
generation of hydrogen — a universal, light and highly reactive fuel — through a chemical process known as electrolysis. This method uses an electrical current to separate the hydrogen from the oxygen in water. If this electricity is obtained from renewable sources we will, therefore, produce energy without emitting carbon dioxide into the atmosphere.
As the IEA points out, this method of obtaining green hydrogen would save the 830 million tonnes of CO2that are emitted annually
This energy source has pros and cons that we must be aware of. Let's go over some of its most important good points:
• 100 % sustainable: green hydrogen does not emit polluting gases either during combustion or during production.
• Storable: hydrogen is easy to store, which allows it to be used subsequently for other purposes and at times other than immediately after its production.
• Versatile: green hydrogen can be transformed into electricity or synthetic gas and used for commercial, industrial or mobility purposes.
However, green hydrogen also has negative aspects that should be borne in mind:
• High cost: energy from renewable sources, which are key to generating green hydrogen through electrolysis, is more expensive to generate, which in turn makes hydrogen more expensive to obtain.
• High energy consumption: the production of hydrogen in general and green hydrogen in particular requires more energy than other fuels.
• Safety issues: hydrogen is a highly volatile and flammable element and extensive safety measures are therefore required to prevent leakage and explosions.
when this gas is produced using fossil fuels. Likewise, replacing all grey hydrogen in the world would require 3,000 TWh/year from new renewables — equivalent to current
demand of Europe. However, there are some questions about the viability of green hydrogen because of its high production cost; reasonable doubts that will disappear as the decarbonisation of the earth progresses and, consequently, the generation of renewable energy becomes cheaper.
Hydrogen is the most abundant chemical element in nature. As noted by the IEA, the global demand for hydrogen for use as a fuel has tripled since 1975 and reached 70 million tonnes a year in 2018. In addition, green hydrogen is a clean energy source that only emits water vapour and leaves no residue in the air, unlike coal and oil.
“THIS IS ONE OF THE MOST EFFICIENT SOLUTIONS TO HELP THE MOST POLLUTING INDUSTRIAL SECTORS TRANSFORM THEIR PROCESSES AND BECOME MORE SUSTAINABLE. THANKS TO THE COLLABORATION WITH PIONEERING AND FORWARDLOOKING COMPANIES, WE HAVE BEFORE US TANGIBLE EXAMPLES OF GREEN HYDROGEN PRODUCTION THAT ARE ALREADY A REALITY.”
Millán García-Tola, Iberdrola's Global H2 Director
Hydrogen has a long-standing relationship with industry. This gas has been used to fuel cars, airships and spaceships since the beginning of the 19th century. The decarbonisation of the world economy, a process that cannot be postponed, will give hydrogen more prominence. In addition, if its production costs fall by 50 % by 2030, as predicted by the World Hydrogen Council, we will undoubtedly be looking at one of the fuels of the future.
China, France and Germany. Others like Japan are going even further and aspire to become a hydrogen economy. Below we explain what the impact will be in the future:
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These two elements are obtained by reacting hydrogen and oxygen together in a fuel cell. This process has proved very useful on space missions, for example, by providing crews with water and electricity in a sustainable manner.
Compressed hydrogen tanks are capable of storing energy for long periods of time and are also easier to handle than lithium-ion batteries because they are lighter.
Hydrogen's great versatility allows it to be used in those consumption niches that are very difficult to decarbonise, such as heavy transport, aviation and maritime transport. There are already several projects under way in this area, such as Hycarus and Cryoplane, which are promoted by the European Union (EU) and aim to introduce it in passenger aircraft.
In its commitment to driving the energy transition, Iberdrola is leading the development of green hydrogen with more than 60 projects in eight countries (Spain, United Kingdom, Brazil, United States, among others) to respond to the needs of decarbonisation. As it did with renewables 20 years ago, the company has become a 'first mover' in this new technological challenge that involves the production and supply of green hydrogen.
OF GREEN HYDROGEN Hydrogen as a fuel is a reality in countries like the United States, Russia,
Iberdrola is already developing several projects that will enable the decarbonisation of industry and heavy transport in Spain and the United Kingdom, as well as developing its value chain. The company has a mature project portfolio of 2,400 MW by 2025 and expects to produce
350,000 tonnes of green hydrogen per year by 2030. In addition, Iberdrola has submitted 54 projects to the Next Generation EU programme, which would trigger investments of €2.5 billion.
In its mission to lead the energy transition, Iberdrola is spearheading the development of green hydrogen with over 60 projects in eight countries (Spain, the United Kingdom, Brazil, the United States, among others) to meet the demand for electrification and decarbonisation in sectors such as industry and heavy transport.
The company has created a new green hydrogen business unit with the aim of becoming the world leader in this technology. The group is addressing the technological challenge of producing and supplying green hydrogen from clean energy
sources, using a technology that will be competitive much sooner than expected, according to a report by UK consultancy Rethink Energy.
Iberdrola has commissioned the largest plant producing green hydrogen for industrial use in Europe. The Puertollano (Ciudad Real) plant consist of a 100 MW photovoltaic solar plant, a lithium-ion battery system with a storage capacity of 20 MWh and one of the largest electrolytic hydrogen production systems in the world (20 MW). All from 100% renewable sources.
A total of 150 million euros has been invested in the project, an initiative that
will create up to 1,000 jobs and avoid emissions of 48,000 tCO2/year.
According to a report by UK-based consultancy Rethink Energy, new energy vector will be competitive by 2024, with costs three times lower than today's by 2035. The report suggests that its cost will fall from the current $3.70/kg to just over $1/kg by 2035, and to $0.75/kg by 2050. By that date, the cost reduction will be more than 95 per cent from 2020 levels, which will increase global demand tenfold. As part of its objective to lead this new energy vector, the Iberdrola group has been a pioneer in making green hydrogen a reality with projects in two main areas: indu
