12/23 Climate News: COP15, HSBC, Vanguard
It’s been a big week for climate news, with three major institutions making announcements impacting the future of climate (Spoiler alert: 2 good, 1 bad) Read on for more!
By Helen So and Kathleen King
December 22, 2022
The GreenPortfolio team wishes you a restful holiday season!
Though we’re heading into the end of the year, it’s been a very eventful week for climate. What we’re covering today: 195 countries make history in the Kunming-Montreal deal, and HSBC differentiates itself from its big-league peers in the banking sector. Meanwhile, investment management-giant Vanguard retreats.
Countries commit to protecting 30% of land and water by 2030
In a breakthrough win for the planet, 195 nations came to an agreement during COP15 to protect 30% of the Earth’s land and water by 2030.
As a part of the deal, wealthy nations committed to “pay an estimated $30 billion a year by 2030” to developing nations. These resources will be mobilized through a new biodiversity fund to be created under the Global Environment Facility (GEF), the world’s largest environmental funder, which “provides financial resources for developing countries” to implement environmental policy frameworks and improve countries’ conservation, sustainable use, and restoration of natural ecosystems.
COP15 was a biodiversity summit in Montreal called to address mass extinction warnings from scientists: 25% of Earth’s species are currently at risk of extinction due to human-caused climate change and pollution, and it’s already beginning.
Gerardo Ceballos González, a professor of ecology at the National Autonomous University of Mexico, said “[h]e and his team found that in the past 100 years, more than 400 vertebrate species went extinct. In the normal course of evolution, such extinctions would have taken up to 10,000 years.” And extinctions have been accelerating “in recent decades.”
Up to a million species — 25% of all species on Earth — are at risk.
The COP15 deliberations, which lasted two weeks, were held to address this issue.
HSBC halts funding for new oil and gas fields
Breaking away from other banks in its league, HSBC announced last Wednesday it will stop funding new oil and gas fields. This is a major win for climate, and we’re optimistic for what’s to come — will the rest of the big banks follow suit?
Banks play a crucial role in climate change. They can fund the world’s transition to clean energy, but the only way we can get to the global net zero targets needed to fight climate change requires banks to stop funding the expansion of fossil fuel projects.
This major commitment from HSBC could have a positive domino effect on humanity’s fight against climate change. Jeanne Martin, head of ShareAction’s banking program, says that this commitment has effectively set a new minimum standard for the banking sector’s climate policies.
Dive into the details
HSBC’s new policy “covers both loans and debt underwriting” for new oil and gas fields, but this policy only applies to project financing — not corporate financing. HSBC will still provide financing and advisory services to companies that participate in oil and gas.
Vanguard leaves industry climate alliance
Vanguard has withdrawn from a major climate alliance: the Net Zero Asset Managers Initiative (NZAM). By leaving this alliance, Vanguard has absolved itself of previous commitments to support the planet’s transition to global net zero emissions.
By withdrawing from the alliance, Vanguard has also avoided speaking out about its ESG policies in a Senate hearing. The Texas Senate Committee had leaders from Vanguard, State Street and Blackrock scheduled to appear in court to answer questions about their ESG policies five days ago.
After Vanguard withdrew from the NZAM, Republican state senator Bryan Hughes stated the committee was “encouraged” by this development and excused Vanguard from the hearing. Republicans have continuously pressured asset managers to re-evaluate their strategies with regard to ESG. Vanguard has apparently left this climate alliance to “provide clarity to investors”.
In their official statement, Vanguard explains that their withdrawal from NZAM “...will not affect our commitment to helping our investors navigate the risks that climate change can pose to their long-term returns”. This statement ultimately frames climate “risk” as one that primarily endangers returns, rather than the wellbeing of the environment or human beings (Vanguard customers or not).
Kirsten Snow Spalding, VP of the Ceres Investor Network, remarked in a statement that “It is unfortunate that political pressure is impacting this crucial economic imperative and attempting to block companies from effectively managing risks -- a crucial part of their fiduciary duty.” This statement implies she believes that Vanguard’s departure was due to Republican pressure and not “clarity for stakeholders” as cited by Vanguard, and that by withdrawing from NZAM, Vanguard had been forfeiting its duty to responsibly manage risk, not fulfilling it.
According to Reuters, Blackrock and other Vanguard competitors have “taken the opposite stand and said their NZAM participation does not conflict with their independence.”
If you have funds with Vanguard and are considering divesting, check out this article for more info on how to find a climate-friendly fund.
Thanks for reading!
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