G7 countries agree to end international fossil fuel funding
The G7 countries have committed to ending funding for coal projects abroad by the end of this year and to phase out the financing of all fossil fuel extraction and use. The agreement, reached at a virtual meeting hosted by the UK, commits the seven countries fully to decarbonise their energy sectors in the 2030s and to work with global partners to accelerate the adoption of zero-emission vehicles.
Only a small proportion of EU banking transactions are green, and many banks lack the data to determine their carbon footprint, according to the European Banking Authority. In March, the EBA submitted proposals to banks on how they should report environmental, social impact and corporate governance risks using the green asset ratio indicator, which aims to identify the proportion of green business in institutions' overall portfolio. The EBA says this is currently 7.9% for European banks, based on a study of 29 institutions from 10 countries that account for around half of total deposits in the EU. The regulator also calls for greater disclosure on transition strategies and greenhouse gas emissions to ensure that banks and supervisors can assess risks accurately. More than half the exposure to larger corporate customers of the banks surveyed was in sectors that could be sensitive to climate transition risk.
European Parliament approves €17.5bn climate transition fund
The European Parliament has approved a €17.5bn fund to help the EU countries most dependent on fossil fuels achieve a transition to a green economy. The Just Transition Fund will include €7.5bn from the 2021-2027 EU budget and €10bn from the Next Generation EU recovery programme. The biggest beneficiaries include Poland, Germany, Romania and Czech Republic, whose governments will receive help to finance investments in renewables, energy efficiency and sustainable transport.
Germany launches green finance strategy to steer investment toward net zero goals
The German government has launched a green finance strategy to steer capital toward environmentally responsible projects. The plan, which comprises 26 individual measures, aims to support the EU’s target of achieving carbon neutrality by 2050. The Berlin government intends to introduce a traffic light system to guide investors toward sustainable projects and away from others that put the environment at risk.
First quarter sees sharp rise in European ESG bond and loan issuance: AFME
European ESG bond and loan issuance grew by 228% year on year to €184bn in the first quarter of 2021, up from €56.1bn in the first three months of last year, according to the Association for Financial Markets in Europe. The organisation says ESG instruments represented 17.2% of total bond issuance in the first quarter, with just under two-thirds issued by governments, supranational organisations and international agencies.
Covid-19 pandemic strengthens private bank client focus on ESG
Three-quarters of private clients believe their investments should have a positive impact and 57% say the Covid-19 pandemic has strengthened that view, according to a survey by Deutsche Bank International Private Bank. More than half of respondents say that ESG investing helps manage risk, with climate change the most important element.
This free briefing is a small selection of key stories from VitalBriefing's Monthly Sustainability News & Insights Briefing, prepared by our top financial journalists and identifying the critical trends and major European and global developments in Legislation & Regulation, Sustainable Finance Trends and Investments & Products.