Financial Impacts of Climate Change was the topic of a panel at the 2019 CEBDS Seminar, held on the 5th, in São Paulo. Aimed at associates and partners, the event's main theme was the discussions for the 2020 review of the guidelines of Vision 2050, launched in 2012.
The panel featured the participation of Luciana Nicola, Superintendent of Government Relations at Itaú; Maria Eugênia Sosa Taborda, Regional Coordinator of UNEP-FI; Sonia Consiglio Favaretto, Director of Sustainability at Brasil Bolsa Balcão – [B]3; and Nabil Kadri, Head of the Environment and Amazon Fund Department at BNDES, and was moderated by André Clark, President and CEO of Siemens Brazil.
André Clark, president and CEO of Siemens Brazil, highlighted that the company serves three masters: investors, consumers and talent, and all of them are increasingly engaged in environmental issues.
The growing trend of consumers opting for less carbon-intensive products, in addition to the increase in competitiveness due to the adoption of technological alternatives in production processes, opens up opportunities for companies. More specifically, in the appropriate way of assessing their financial risks linked to climate issues, and disclosing them in reports.
This is considered the first step towards bringing greater transparency to the investment chain. With this initiative, financial institutions will be able to more easily identify how much their portfolios are exposed to risks associated with climate change.
“The Financial Stability Board began looking at the climate issue a few years ago. From there, the financial sector began to position itself to observe and report climate risks. This is how the TCFD came about. The TCFD does not impose rules, but advocates transparency on the impact of climate change. This risk needs to be incorporated into our operations. More than US$1,400 trillion in investments are seeking more transparent investments,” said Maria Eugenia Taborda, from UNEP-FI.
Climate change in focus of TCFD
The issue is as relevant as it is still little known, despite the growing support for Taskforce on climate-related Financial Disclosure, the TCFD. The TCFD initiative, chaired by former New York City Mayor Michael Bloomberg, aims to help companies, investors, financiers and insurers to properly quantify and assess climate risks and opportunities and their potential financial impacts on their organizations. It is important for bringing greater transparency on climate-related issues to direct capital in the transition to a low-carbon economy.
BlackRock, for example, the world’s largest investment fund, has lost $1.4 billion over the past decade by ignoring the serious financial risks of investing in fossil fuel companies. The fund has invested heavily in oil companies and missed out on investment opportunities in renewable energy.
“BNDES was the first Brazilian financial institution to issue green bonds, in 2016. We went to the market expecting to raise 500 million. We had a demand for 5 billion and subscribed 1 billion, which shows how many opportunities we have that still need to be explored,” said Nabil Kadri, from BNDES.
In August, during the Climate Week Latin America and the Caribbean, held in Salvador, the business sector sent a formal document to the federal government in defense of the creation of a carbon market as a necessary tool for reducing greenhouse gas emissions.
How can companies address climate issues?
“One of Itaú’s commitments is to invest R$100 billion in positive impact businesses by 2025. We have to influence behavior change towards more sustainable business investments,” said Luciana Nicola, from Itaú.
With the aim of continuing to help companies to be increasingly prepared to deal with climate issues, CEBDS launched this year the work “Financial impacts of climate risk: an essential strategy for business”.
The actions are not only aimed at the financial sector, and aim to provide greater transparency for the entire investment chain, thus enabling an improvement in the climate reporting of companies in general.
