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Sustainable Finance Community Update

Working towards a sustainable future

An IFoA Sustainability Board initiative. Follow us on LinkedIn and Twitter for further updates and insights, and subscribe to the newsletter here.
6th August 2021
Japan has put a spotlight on sustainability at the 2020 Olympic Games, with athletes standing on podiums made of recycled plastics to receive medals crafted from recycled small electronics before sleeping on beds made of cardboard (see news section). Photo by Alex Smith on Unsplash.
In the news
Plastic podiums, recycled medals, cardboard beds: sustainability at Tokyo 2020
Japan has put a spotlight on sustainability at the 2020 Olympic Games. The Tokyo organising committee has hung its hat on providing a "beyond carbon neutrality" event. Gold, silver and bronze medals were forged from recycled metal from old appliances donated by the general public. The 3D-printed victory ceremony podiums were crafted from plastic waste. Some 500 hydrogen fuel cell vehicles are used to transport competitors, officials and media, as well as light the Olympic cauldron. The athlete's village, with it’s cardboard beds, will be turned into an apartment complex after the Games and continue to be partially powered by hydrogen fuel cells. Among the 43 venues for Olympics and Paralympics Games, 25 existed before the Games and 10 are temporary venues.

The games will, however, rely on a carbon offset programme to reach negative carbon output. The Tokyo Organising Committee estimated the event would generate 2.73 million tonnes of carbon. That was trimmed by around 12% by the exclusion of spectators. The carbon offset programme, in which more than 200 Japanese businesses are estimated to donate carbon credits of around 4.38 tonnes, will tip the event beyond carbon neutrality. "What we have seen is now everybody is much more aware that everybody has a role to play in climate action," said IOC sustainability development chief Marie Sallois.

Read the article here (Reuters).
Oil drillers and Bitcoin miners bond over natural gas
Cryptocurrencies, such as Bitcoin, require vast amounts of often-expensive electricity to maintain the network. Supercomputers must run constantly in a race against other “miners” to solve complex math problems in order to unlock digital vaults holding the currency. Meanwhile, stranded, low volumes of gas is a by-product in oil production, which producers are forced to burn off at the source in a process called flaring, creating CO2 emissions.
Miners, therefore, are increasingly sending these rigs out to oil fields to use otherwise flared gas because it’s one of the cheapest ways to obtain the energy they need. Mark Le Dain, VP of Strategy at Validere Tech, says "It helps cut emissions at (an oil) producer level, but also globally by reducing mining in parts of the world where coal is likely the power source".
Read the article here (Reuters).
London’s flooding is sure to worsen

On July 25th parts of London saw over 5cm of rain in just a few hours, an amount that would normally take an entire month to fall. The result was flash flooding. London is perceived as a rainy city but it receives less rainfall than some cities in sunnier climates:  Rome gets more total precipitation each year; New York City gets almost twice as much, and has far more rainy days. However, a combination of climate change, deindustrialisation and planning rules means that flooding in London is likely to become more common.
Even if global warming is limited to 1.5°C winter rainfall could increase by 59%, according to a government study of the Thames Estuary. The study predicted that “once-a-century sea level events are expected to become annual”. The problem is exacerbated by the way London has developed. For decades, its water table was artificially suppressed by factories tapping it. Deindustrialisation means it has been rising again since the 1980s. And thanks to planning rules that protect greenfield land, much new housing has been built in places vulnerable to flooding.
Read the article here (The Economist - paywall).
‘I Am Thirsty!’  Water Shortages Compound Iran’s Problems
Iran is grappling with a fifth wave of the coronavirus pandemic, an economy strained by US sanctions and stalled talks on rescuing a nuclear deal that was once seen as an economic salvation. Today, the country faces a different but easily predictable crisis: a severe water shortage. A prolonged drought and rising temperatures due to climate change, combined with decades of government mismanagement of natural resources and a lack of planning, have turned the water crisis into an unstable incubator of protests and unrest violent.

Iran’s meteorological organization warned in June that the southern and western regions had experienced a 50 to 85 percent reduction in rainfall and a two to three degree Celsius increase in temperature.

At the end of July, demonstrators took to the streets of the southwestern province of Khuzestan, the epicenter of the protests. Large crowds shouting, “I’m thirsty! – captured in amateur videos and shared via social networks – called for immediate help and the resignation of local officials.
Read the article here (NY Times – paywall).
We're reading
The Little Book of Investing in Nature

The Little Biodiversity Finance Book was launched at COP 10. In the latest volume, The Little Book of Investing in Nature provides a treasure trove of information on how to make progress along different dimensions of biodiversity finance. Capturing the conceptual progress made in the last decade, it provides an almost encyclopaedic overview of the options available across the spectrum of financial solutions from different sources.
The book aims to energise that dialogue by clearly laying out options for financing biodiversity conservation. While some measures to protect biodiversity may come at an economic cost, others are likely to generate strong returns, economic and otherwise. This book presents evidence that, if a well-considered series of measures to protect nature is implemented, nature may be able to pay for itself.
It begins with the basics, “Understanding Biodiversity”; and uses the UN’s Development Programme framework to set out the current state of each category before developing ideas to offer the reader a look into the future. That framework consists of:

  • Generate revenue
  • Deliver better
  • Realign expenditures
  • Avoid future expenditures
  • Catalyse

Read the little book here (Global Canopy).

Tune in
3 rules for a zero carbon world

Every human and natural system – from oil extraction to the flight of a flock of starlings – can be seen as a set of repeating patterns. These patterns can be disrupted for good or for bad, says Nigel Topping, the High-Level Climate Action Champion for COP26. In his latest TED talk he shares three rules of radical collaboration that he says could positively disrupt the patterns of the global economy and help humanity tackle the world's greatest threat: climate change
  1. Harness Ambition Loops: these are the feedback loops driving ever higher levels of ambition between the private sector and policy makers.
  2. Set exponential goals: because we believe in the power of human innovation and have seen exponential progress in many areas over time, for example the progress made in electric vehicles.
  3. Follow shared action pathways: these are the actions that if everyone in the system works together to follow then we will be on track to a zero-carbon future.
Finally, he outlines what he believes is the most important feedback loop of all, the feedback loop between the stories we share of our future and our progress made towards it with the actions we take today. He argues that sharing positivity about the future and positive stories about the progress made to achieve net zero, as opposed to dread or negativity, will help fuel the innovation and spirit that makes us more likely to reach the net-zero future that we are aiming for.
On demand here (Race to Zero).
We need to talk about Net Zero bullsh*t

Pablo Berrutti, founder of sustainable finance resource Altiorem, questions the credibility of climate-related disclosures, scenario analysis and the efficacy of carbon capture technologies. He believes the Task Force for Climate-related Financial Disclosures (TCFD) hasn't built upon the shortcomings of its predecessor the Carbon Disclosure Project (now CDP). But the TCFD did come with a new tool for delay and obfuscation — scenario analysis - which investors, companies and NGOs have argued about ever since.  As a disclosure requirement the temptation to bend scenarios to existing corporate strategy has been too great, with a string of fossil fuel companies claiming alignment with climate goals while growing their production. None has imagined a scenario that puts them out of business.
Morningstar proxy voting data shows that  almost all climate-related resolutions at company annual general meetings have been proposed by smaller investors. While large investors have the resources, technical expertise, moral obligation and financial interest to drive these resolutions, they continue to free-ride on the efforts of smaller players.
He also says that climate commitments can also provide escape hatches for guilt-free failure. For example, commitments made today are based on pathways conceived in elaborate top-down models, most of which hold great faith in ‘negative emission’ technologies. Carbon capture and sequestration is a technology that has over-promised and under-delivered.
Read the piece here (Responsible Investor).
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Communication is at the heart of shifting mindsets on climate and sustainability issues, and is vital in highlighting and understanding steps we can take as finance professionals to implement positive change.

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The weekly newsletter summarises information from different sources for the benefit of subscribers. While we take care to select articles, papers and opinions from reputable sources, we do not perform independent verification and hence these summaries should not be relied upon for any purpose. Further, the statements, opinions and conclusions that are summarised within the newsletter do not necessarily represent the views of the IFoA nor the newsletter authors and their employers.

This initiative is brought to you by the Institute and Faculty of Actuaries (IFoA) Sustainability Board (formerly Resource & Environment Board). The Sustainability Board is a group of voluntary actuaries working with the IFoA to encourage change within finance. We work alongside - but separately to - the IFoA and as such this is not an IFoA communication. Find out more about the IFoA Sustainability Board here.

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