Not Yet on Track: Climate Threat Demands More Ambitious Global Action
October 31, 2021--New IMF analysis shows gaps in ambition and policy needed to achieve emissions curbs that contain global warming.
In 1785, Robert Burns reflected on how humanity has come to dominate our planet:
"I’m truly sorry man's dominion, has broken nature's social union," he wrote.
The Scottish poet's words still ring true two centuries later.
Man-made climate change threatens our planet's ecosystem and the lives and livelihoods of millions of people. From the IMF perspective, climate change presents a grave threat to macroeconomic and financial stability.
Now, the window of opportunity for containing global warming to 1.5 to 2 degrees Celsius is closing rapidly.
As world leaders gather in Glasgow for COP26, a new IMF Staff Climate Note shows unchanged global policies will leave 2030 carbon emissions far higher than needed to "keep 1.5 alive." Cuts of 55 percent below baseline levels in 2030 would be urgently needed to meet that goal, and of 30 percent to meet the 2 degrees Celsius objective.
Source: IMF.org
ETFGI reports ESG ETFs and ETPs listed globally gathered a record US$119 billion US of net inflows in the first 9 months of 2021
October 29, 2021--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reports ESG ETFs and ETPs listed globally gathered a record US$119 billion of net inflows in the first 9 months of 2021. Environmental, Social, and Governance (ESG) ETFs and ETPs listed globally gathered net inflows of US$9.83 billion during September, bringing year-to-date net inflows to US$118.94 billion which is much higher than the US$47 billion gathered at this point last year.
Total assets invested in ESG ETFs and ETPs decreased by 1.3% from US$327 billion at the end of August 2021 to US$324 billion, according to ETFGI's September 2021 ETF and ETP ESG industry landscape insights report, a monthly report which is part of an annual paid-for research subscription service.  (All dollar values in USD unless otherwise noted.)
Highlights
Assets of $324 billion invested in ETFs and ETPs listed globally at the end of September are the second highest on record.
Record YTD 2021 net inflows of $118.94 Bn beating the prior record of $47 Bn gathered YTD 2020.
$118.94 Bn YTD net inflows are just $30.4 Bn over full year 2020 record net inflows $88.54 Bn.
$160.48 billion in net inflows gathered in the past 12 months.
Assets increased 67.7% YTD in 2021, going from US$193 billion at end of 2020, to US$324 trillion.
67th month of consecutive net inflows.
Source: ETFGI
Financial Services Study Reveals Emerging Tech-driven Systemic Risks
October 28, 2021--Rapid technology adoption is giving rise to new risks, as exemplified by increased cyber attacks, operational disruptions and algorithmic biases
Seemingly isolated risks must be addressed before they grow and spread across the ecosystem
The findings compel financial institutions, financial and non-financial technology firms, policy-makers and regulators to work collectively on mitigation approaches
Accelerated technology adoption in the financial services sector is creating new systemic risks to the global financial system, according to a new report. Beneath the Surface: Technology-driven systemic risks and the continued need for innovation is the first publication in the World Economic Forum's two-part Technology, Innovation and Systemic Risk research initiative.
Prepared in collaboration with Deloitte, the report explores the relationship between increased technology adoption and the potential shock of cascading risk factors - for example, the domino effect that can result when hackers, disasters or geopolitics expose interconnected financial systems to a growing array of known and unknown vulnerabilities. The research additionally examines actions that can address identified risks, including the role that technology itself can play in mitigation approaches.
Source: weforum.org
We can no longer grow our economies by degrading our natural capital
October 27, 2021--If we do not curb climate change, it will push at least 132 million people into poverty over the next decade. This illustrates just how much human prosperity is linked to the well-being of our planet. When we mismanage natural assets and turn a blind eye to the longer-term impacts of our actions, our prosperity-and that of future generations -is likely to face severe consequences.
So, are we accurately valuing natural assets? When thinking about wealth, do we just think about businesses, buildings, cars, maybe oil or minerals? What about forests, mangroves, water, fish, or clean air?
In 2005, the World Bank launched a seminal publication titled "Where is the Wealth of Nations?" The report argued that measuring Gross Domestic Product (GDP) alone does not determine whether a country's development is sustainable. In many cases, economic growth is happening at the expense of nature, and therefore at the expense of future prosperity. To understand the sustainability of growth, we must look at the value of all the assets that generate income and ultimately wel-being: this is called wealth accounting. Think about it as the balance sheet for a country. GDP and wealth accounting are complementary indicators for measuring economic performance and provide a fuller picture when evaluated together.
view the World Bank Report-Changing Wealth of Nations 2021
Source: World Bank
Global Wealth Has Grown, But at the Expense of Future Prosperity: World Bank
October 27, 2021--Global wealth has grown overall-but at the expense of future prosperity and by exacerbating inequalities, according to the World Bank's new Changing Wealth of Nations report released today.
Countries that are depleting their resources in favor of shor-term gains are putting their economies on an unsustainable development path.
While indicators such as Gross Domestic Product (GDP) are traditionally used to measure economic growth, the report argues for the importance of considering natural, human, and produced capital to understand whether growth is sustainable.
The Changing Wealth of Nations 2021 tracks the wealth of 146 countries between 1995 and 2018, by measuring the economic value of renewable natural capital (such as forests, cropland, and ocean resources), nonrenewable natural capital (such as minerals and fossil fuels), human capital (earnings over a person's lifetime), produced capital (such as buildings and infrastructure), and net foreign assets. The report accounts for blue natural capital-in the form of mangroves and ocean fisheries-for the first time.
view the World Bank The Changing Wealth of Nations 2021: Managing Assets for the Future
Source: worldbank.org
How green are electric vehicles?
October 26, 2021--A policy paper dissecting existing life cycle assessments of electric vehicles and identifying potential future trends in the different stages of the vehicle life cycle, especially for batteries.
Globally, transport is responsible for 24 percent of CO2 emissions from fuel combustion. Hence, decarbonisation scenarios (e.g., IEA, IRENA, WEF) regularly stress the importance of electrifying the transport sector to achieve global climate targets.
Although the vast majority of life cycle assessments attribute electric vehicles (EVs) with less life cycle greenhouse gas (GHG) emissions than conventional combustion engine vehicles, some studies, for example, by the German General Automobile Club or the ifo Institute for Economic Research, disagree. A common second criticism of EVs focuses on the resource-intense and environmentally damaging mineral mining and battery manufacturing processes.
Source: bruegel.org
Longer Delivery Times Reflect Supply Chain Disruptions
October 25, 2021--Supply chain disruptions have become a major challenge for the global economy since the start of the pandemic. Shutdowns of factories in China in early 2020, lockdowns in several countries across the world, labor shortages, robust demand for tradable goods, disruptions to logistics networks, and capacity constraints have resulted in big increases in freight costs and delivery times.
Our chart of the week shows suppliers' delivery times in the United States and the European Union have hit record highs since late 2020 (the data goes back to 2007). IHS Markit’s suppliers' delivery times index is constructed from Purchasing Managers Index business surveys and reflects the extent of supply chain delays.
Source: IMF.org
IMF Departmental Paper-Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance
October 22, 2021--Summary:
This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies.
The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.
Source: IMF
The Commodity Markets Outlook in eight charts
October 21, 2021--October 21, 2021--Energy prices surge, non-energy prices stabilize at high levels
Energy prices have surged over the past three months, especially natural gas and coal prices, while most non-energy prices have plateaued following steep increases earlier in the year.
Adverse weather has buffeted many commodity markets: unusually high summer temperatures increased demand for electricity; droughts reduced hydroelectricity supply and affected some agricultural commodities, while floods impacted the supply of some metals and coal. Most prices are expected to ease in 2022 as supply constraints ease.
Crude oil prices continue to recover
Crude oil prices continued their recovery from their COVID-19 lows, with Brent crude oil averaging $82/bbl in the first half of October, well above its pre-pandemic level. Oil prices have been boosted by the continued recovery in oil demand, which is now just 3 percent below its pre-pandemic peak.
view the World Bank October 2021 Commodity Markets Outlook Urbanization and commodity demand
Source: worldbank.org
ETFGI reports record assets and net inflows in Active ETFs world-wide of US$418 billion and US$110 billion respectively at end of September 2021
October 19, 2021--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reported today record assets and net inflows in Active ETFs world-wide of US$418 billion and US$110 billion respectively at end of September. Actively managed ETFs and ETPs saw net inflows of US$14.68 billion during September, bringing year-to-date net inflows to US$109.93 billion.
Assets invested in actively managed ETFs/ETPs finished the month up to 1.1%, from US$413 billion at the end of August to US$418 billion, according to ETFGI's September 2021 Active ETF and ETP industry landscape insights report, the monthly report which is part of an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
Record $418 Bn invested in actively managed ETFs and ETPs industry at end of September 2021.
Assets increased 46.1% YTD in 2021 going from $285.83 Bn at end of 2020 to $417.73 Bn.
Record YTD 2021 net inflows of $109.93 Bn beating prior record of $51.29 Bn gathered in YTD 2020.
$109.93 Bn YTD net inflows are $18.83 Bn greater than the full year 2020 record net inflows $91.10 Bn.
$149.73 Bn in net inflows gathered in the past 12 months.
18th month of consecutive net inflows
Actively managed Equity ETFs and ETPs gathered a record $52.73 Bn in YTD net inflows 2021.
Source: ETFGI
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