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ANNUAL REVIEW 07/2019 - 12/2020
A year filled with opportunities
to mobilise climate leadership.
to shape sustainable finance.
to build back better.
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MEMBERS
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YEAR HISTORY
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Foreword

The COVID-19 pandemic changed lives overnight and plunged global economies into crises. It shone a spotlight on how dependent our societal and economic health is on the health of our planet and how far we still have to go to build resilient and sustainable societies and economies.

As the world recovers, sustainable finance has the potential to play a transformative role in shaping financing that builds back better - and we see momentum increasing demonstrated by new UNEP FI initiatives and the growth in UNEP FI’s membership. We continue to work with our members to equip them with the tools to play their part in a green recovery and put sustainability at the heart of their business. Find out more about the successes over the last year and a half in our 2019/2020 Overview.

Read the foreword.

Jacki Johnson
Co Chair, UNEP FI Global Steering Committee

Antoni Ballabriga
Co Chair, UNEP FI Global Steering Committee

Eric Usher
Head, UNEP FI

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Supporting leadership action and market transformation

UNEP FI convenes financial institutions to help align the global financial market with the transition to a sustainable economy.

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Implementing the UN Principles for Responsible Banking: More than 200 signatories collectively driving action

In September 2019, 130 banks signed the UN’s Principles for Responsible Banking, the first global sustainability framework for the banking industry. By December 2020, the coalition had reached 200 signatories across 58 countries and six continents, collectively representing 1.7 billion customers and USD 54 trillion in assets. That’s more than 40% of the global banking sector.

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Trailblazers set out pathway to a net-zero economy: First reporting from banks who signed up to ambitious climate action

Over 35 of the founding signatories of the Principles for Responsible Banking issued the Collective Commitment to Climate Action (CCCA) in September 2019, committing to aligning their loan-books with greenhouse gas emissions pathways compatible with the international Paris Agreement on climate change and with a temperature outcome of well below 2 degrees, striving for 1.5. The banks submitted their first progress reports in 2020 and UNEP FI summarized in a report.

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UN-convened Net-zero Asset Owner Alliance: leadership on decarbonisation

The UN-convened Net Zero Asset Owner Alliance, incubated by UNEP FI and executed in partnership with the Principles for Responsible Investment, was launched by Allianz CEO Oliver Baete during the opening of the UN Secretary General’s Climate Action Summit in September of 2019, as its most significant private sector initiative. Through the Alliance, participating investors commit to transitioning their entire portfolio to net-zero emissions by 2050 in line with 1.5 degrees of warming, and to publish and report on intermediate portfolio-level targets every 5 years, starting in 2025.

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Inspiring leadership in net-zero finance

UNEP FI is inspiring debate on the topic of net-zero finance, with the release of six essays in our series of ”thought leaders” in partnership with EIT Climate-KIC. Financial actors worldwide are encouraged to move from risk to alignment, challenge current assumptions around climate alignment and develop ideas and concepts on how to achieve alignment.

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Putting the Ocean back on the agenda: Sustainable Blue Economy Finance Initiative

During 2020, UNEP FI built up the work programme of the Sustainable Blue Economy Finance Initiative, and expanded its global community of banks, insurers, investors, international organisations, scientists and researchers, working together to shape the future of ocean-related finance.

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First global guide for non-life insurance underwriting on integrating Environmental, Social and Governance considerations

On 3 June, 2020, after a multi-year global consultation process, leading insurers from around the world and UNEP FI launched the first global insurance industry guide to tackle a wide range of sustainability risks—from climate change, ecosystem degradation, pollution and animal welfare and testing; to child labour, controversial weapons, and bribery and corruption.

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Norm setting and uptake

UNEP FI helps members prepare for expected policy and regulatory developments in sustainable finance, including the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) recommendations.

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Risks and opportunities in a changing climate: implementing the TCFD recommendations for banks, insurers and investors

The Task Force on Climate-related Financial Disclosures (TCFD) Phase II banking pilot built on the success of the initial programme by developing a climate risk toolkit to help banks implement the latest recommendations from the TCFD and regulatory guidance. UNEP FI engaged 39 global institutions across six continents in a year-long pilot focused on three main pillars in exploring physical and transition risks: climate scenarios, assessment methodologies, and governance and disclosure.

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Enhancing the insurance industry’s assessment of climate change

UNEP FI collaborated with 22 leading insurers and reinsurers from across the globe, representing more than 10% of the global industry premia, to develop methodologies to evaluate the financial impact that physical, transition and litigation risks may have on their underwriting portfolios. The resulting report represents the largest collaborative effort by market participants to pilot some of the most challenging recommendations of the Task Force on Climate-related Financial Disclosures.

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Cross-industry guidance: mapping climate risk assessment providers

A summary of the key developments across third party climate risk assessment providers since May 2019, including new and updated scenarios, methodological tools, key guidelines, as well as an overview of the changing regulatory landscape and potential developments into 2021 is provided in the Climate Risk Landscape: Mapping Climate-related Financial Risk Assessment Methodologies.

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Scaling up training programmes

UNEP FI partners with institutions that provide training to finance professionals to expand capacity building on sustainable finance, and to broaden knowledge development on emerging best practice, methodologies, tools, guidance etc. Between July 2019 and December 2020, UNEP FI held 39 training sessions in which 4,000 professionals took part.

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Methodologies and tools

UNEP FI works with its members to provide practical methodologies and tools to assist financial institutions in applying sustainable finance to their business decision-making, products and services.

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Positive Impact Initiative paves the way for mainstreaming impact finance, develops tools

UNEP FI’s Positive Impact Initiative (PII) works with finance sector representatives and other stakeholder groups to mainstream impact analysis and help financial institutions ensure their business helps finance the Sustainable Development Goals (SDGs). In April 2020, it launched two new tools for corporates and banks to step up their contribution towards the achievement of the 17 goals.

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Open Review Process and Impact Mappings

As part of its work on facilitating impact analysis across all aspects of a financial institution’s business, the PII started a set of ‘impact mappings’, considering the positive and negative associations between sectors (e.g. car manufacturing) and impact areas (e.g. resource efficiency), as well as the level of country needs in relation to impact areas (e.g. Morocco and employment).

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Enhancing the ENCORE tool: Technical support for setting biodiversity targets

UNEP FI is working with the UNEP World Conservation Monitoring Centre and Global Canopy to further develop the tool Exploring Natural Capital Opportunities and Risk Exposure (ENCORE) to help financial institutions set biodiversity targets.

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Financing sustainable land use

UNEP FI has continued to contribute to The Good Growth Partnership’s work to advance technical capabilities to finance sustainable commodity supply chains. The project focuses on three commodities (beef, palm oil and soy) and four countries – Paraguay, Brazil, and Indonesia, and Liberia.

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Strengthening communication and engagement

UNEP FI brings its members together encouraging peer-to-peer learning and enabling them to meet with other actors in the sustainable finance community. We amplify the collective voice of the financial sector to policymakers around the globe.

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Fiduciary Duty in the 21st Century: from a legal case to regulatory clarification

A joint four-year programme together with the Principles for Responsible Investment (PRI) and The Generation Foundation, Fiduciary Duty in the 21st Century concluded in October 2019 with a final report summarizing progress towards a modern interpretation of fiduciary duty – one that includes consideration of environmental, social and governance (ESG) issues at global and country level.

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Leadership on physical climate change and adaptation, signalling to policymakers

UNEP FI’s role in mobilising climate leadership by financial institutions is not limited to climate change mitigation – we are also highlighting the strategic role of the finance industry in adaptation to climate change. In 2019, UNEP FI delivered a key technical paper on financing for adaptation to support the Global Commission on Adaptation’s (GCA) flagship report on climate change adaptation.

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Driving the Investor Agenda on Climate Change

The Investor Agenda was developed for the global investor community to accelerate and scale up the actions that are critical to tackling climate change and achieving the goals of the Paris Agreement. UNEP FI is a founding member of the Investor Agenda with 6 other investor network partners.

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Leveraging the UN network

UNEP FI works closely with the UN network allowing financial institutions to benefit from experts inputs and to take part in high level UN-led projects.

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Plastic pollution: implications for insurers, regulators and supervisors

In November 2019, UN Environment Programme, supported by UNEP FI and signatories to the Principles for Sustainable Insurance, launched the first global insurance industry study on managing the risks associated with plastic pollution, marine plastic litter and microplastics.

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How insurers can protect World Heritage Sites

The UN, WWF and world’s insurers united in Sao Paulo, Brazil, at UNEP FI’s Regional Roundtable to launch the first insurance industry guide to protect UNESCO World Heritage Sites in October 2019.

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Raising awareness of financing for a circular economy

UNEP FI published the study Financing Circularity: Demystifying Finance for the Circular Economy, published in October 2020 with support and expert inputs from UNEPs Economy Division to provide practical steps that financial institutions can take to finance the transition to a circular economy aligned with global sustainable consumption and production goals.

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ANNUAL REVIEW
07/2019 - 12/2020
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