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A Proposal to Scale Up Global Carbon Pricing
June 18, 2021--Between one quarter and one half. That's how much carbon dioxide (CO2) and other greenhouse gases must fall over the next decade to keep alive the goal of restricting global warming to below 2°C. The fastest and most practical way to achieve this is by creating an international carbon price floor arrangement.
This matters to the IMF because climate change presents huge risks to the functioning of the world's economies. The right climate policies can address these risks and also bring tremendous opportunities for transformative investments, economic growth, and green jobs-so much so that our Board recently approved proposals to include climate change in our regular country economic surveillance and our financial stability assessment program.
A Proposal to Scale Up Global Carbon Pricing
June 18, 2021--Between one quarter and one half. That's how much carbon dioxide (CO2) and other greenhouse gases must fall over the next decade to keep alive the goal of restricting global warming to below 2°C. The fastest and most practical way to achieve this is by creating an international carbon price floor arrangement.
This matters to the IMF because climate change presents huge risks to the functioning of the world's economies. The right climate policies can address these risks and also bring tremendous opportunities for transformative investments, economic growth, and green jobs-so much so that our Board recently approved proposals to include climate change in our regular country economic surveillance and our financial stability assessment program.
FTSE Russell threatens to expel 208 ESG offenders from FTSE4Good
June 16, 2021--More than 200 companies are in danger of being thrown out of a family of FTSE Russell stock indices for failing to meet more stringent environmental standards.
The 208 companies represent 13.5 per cent of the 1,546 stocks in the FTSE 4Good index series-designed to measure the performance of businesses with strong environmental, social and governance (ESG) practices-which is tracked by a range of exchange traded funds and investors such as the Japanese Government Pension Investment Fund, the world’s largest pension fund.
FTSE Russell has given the companies 12 months to meet its tighter climate-performance standards or face deletion from the indices.
Central Bankers Talk Down Concerns Over Digital Currency Risks
June 16. 2021--Central bankers sought to play down concerns that their efforts to develop digital currencies will take business away from the financial industry.
Benoit Coeure, the head of the Bank for International Settlement’s Innovation Hub, which was expanded to Stockholm on Wednesday, said commercial lenders should look at central bank digital money "as an opportunity that will enable them to offer new services to their customers, as part of a broader set of new technologies."
Exchange Traded Funds are directly financing fossil fuel companies at large scale-Oxford research
June 15, 2021--Financial institutions with over $70 trillion in assets have pledged to achieve net zero portfolios and loanbooks by 2050, including meeting ambitious interim 2030 targets.
However, new research by the Oxford Sustainable Finance Programme reveals that passive funds not only hold fossil fuel assets, but directly finance them by buying large quantities of new bonds issued by fossil fuel companies.
To track and manage transactions that are channeling capital flows directly into fossil fuels, the Oxford researchers propose a new metric, Primary Market Carbon Exposure (PMCE). PMCE measures the proportion of securities bought in primary market transactions, for example shares at IPO or new bond issuance, from fossil fuel companies.
They find that between 2015-2020, 14% of the value of new bond issues bought by U.S. corporate bond Exchange Traded Funds (ETFs) were in fossil fuels.
For example, the largest bond ETF, the iShares Core U.S. Aggregate Bond ETF with $88 billion in assets, had a PMCE of 14% in corporate bonds, while the iShares iBoxx USD Investment Grade and High Yield ETFs, with $39 billion and $22 billion in assets, had PMCEs of 9% and 20% respectively. The researchers also apply this metric to ETFs bought by the US Federal Reserve in 2020, resulting in a PMCE of 13%.
Hedge funds expect to hold 7% of assets in crypto within five years
June 15, 2021--Hedge funds expect to hold $310 billion in cryptocurrencies within 5 years-more than 7% of their assets.
Hedge funds plan to ramp up their crypto holdings to more than 7% of assets by 2026, a survey showed. That would equate to around $313 billion of cryptocurrency holdings, Intertrust Group said.
BlackRock's ETF assets race past $3tn
June 14, 2021--Assets in BlackRock's exchange traded fund business raced beyond the $3tn milestone for the first time in May as the ETF industry's global assets surged to a fresh all-time high above $9tn.
BlackRock predicted last week that the ETF industry's assets would reach $15tn as early as the end of 2025, helped by increasing demand for environmentally friendly strategies and more usage by debt investors.
ETFs currently account for just 3 per cent of assets held in equity and bond markets globally, according to BlackRock.
Climate change is making ocean waves more powerful, threatening to erode many coastlines
June 14, 2021--A new report looks at the impacts of rising ocean temperatures on the size of waves.
Rising ocean levels and stronger waves could have devastating consequences for coastal communities.
But reducing greenhouse emissions and helping communities to adapt can help to reverse these effects.
Sea level rise isn't the only way climate change will devastate the coast. Our research, published today, found it is also making waves more powerful, particularly in the Southern Hemisphere.
We plotted the trajectory of these stronger waves and found the coasts of South Australia and Western Australia, Pacific and Caribbean Islands, East Indonesia and Japan, and South Africa are already experiencing more powerful waves because of global warming.
This will compound the effects of sea level rise, putting low-lying island nations in the Pacific- such as Tuvalu, Kiribati and the Marshall Islands- in further danger, and changing how we manage coasts worldwide.
view the Natural Variability and Warming Signals in Global Ocean Wave Climates report
World Bank Report: Investing in Protected Areas Reaps Big Rewards
June 14, 2021--A new World Bank report released today shows that for every dollar governments invest in protected areas and support for nature-based tourism, the economic rate of return is at least six-times the original investment.
The report, "Banking on Protected Areas: Promoting sustainable nature-based tourism to benefit local communities" found that the original investment triggered a chain of benefits for local businesses and households-even for those not directly connected to the tourism sector.
Given these economic benefits, the report argues that the promotion of sustainable tourism in protected areas should be included in COVID-19 economic recovery plans, an investment that creates local jobs, improves incomes and protects biodiversity.
view the World Bank Report: Investing in Protected Areas Reaps Big Rewards
ETF securities lending almost doubles in four years
June 9, 2021--The funds' securities lending jumps 77% outstripping the 21% growth of the broader market
Securities lending by exchange traded funds has almost doubled since 2017, data from EquiLend show, reflecting the huge growth in assets under management in the ETF industry as a whole.
The value of ETFs' on-loan balances-the value of securities on loan at any point in time- rose 77 per cent, from an average of $37.5bn in 2017 to $66bn between January 1 and mid-May, according to EquiLend, a securities lending platform. This dwarfed an overall increase of 21 per cent in the wider securities lending market.