Finance day at the 27th Conference of Parties (COP27) came and went this week, with several significant announcements in the world of green finance.

This article condenses some of the most important stories for Minerva’s readers.

High-Level panel puts proxy voting centre-stage

The United Nations (UN) High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities launched its first report at COP27, providing 10 recommendations for credible net-zero transition plans. Launched this year by UN Secretary-General Antonio Guterres, the Group was tasked with preventing net-zero goals from being undermined by greenwashing.

Following seven months of work, the Group has told investors that they must include commitments on voting, lobbying and ending deforestation if they are expected to be taken seriously. One key recommendation by the report states that investors’ climate transition plans should include “engagement targets that include voting (especially proxy) strategies in line with decarbonisation, and escalation policies.”

The report has also proposed for large asset stewards to have third-party verification of their annual progress reports.

Ultimately, the High-Level Expert Group aims to move the industry beyond the fundamental expectations of regulatory disclosure, toward behavioural regulation that encourages decisions to be made differently.

ISSB aligns with CDP

In keeping with the trend towards ‘levelling up’ the finance sector’s commitments to climate and sustainability, the International Sustainability Standards Board (ISSB) announced this at COP27 that it would form a partnership with the CDP.

The new partnership will work to incorporate International Financial Reporting Standard S2 into the disclosure questionnaire produced by CDP and completed by thousands of companies, cities, states, and regions every year.

The CDP is a huge player in the emissions disclosure space, and should this new partnership come to fruition it marks a big step towards the greater alignment of reporting methods by companies.

The ISSB also announced it will work with the European Financial Reporting Advisory Group (EFRAG) and the European Commission to increase the interoperability of their standards. This would include aligning the targets and metrics used for key climate disclosures.

Furthermore, this cooperation could mean the eventual adoption of ‘double materiality’ reporting standards by the ISSB, as EFRAG is currently working on a rival set of standards that will require such impact reporting.

Financing the transition – The African Carbon Markets Initiative

In a statement published on finance day at COP27 this week, UN Climate Change High-Level Champion Dr Mahmoud Mohieldin welcomed the growing ambition for action from non-state actors, citing the Race to Zero campaign, the Glasgow Financial Alliance for Net Zero, and the UN’s High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities.

However, he positioned these as a good starting point from which global financial markets must transition. Aligning with COP27’s key focus on loss and damage this year, he also urged financial institutions to “wake up to the investment opportunities in some emerging market and developing economies.”

Taking action on this matter, Dr Mohieldin reflected on the five regional finance forums that he and the other COP27 Climate Champions convened preceding the world’s largest climate conference in Sharm El-Sheikh.

“The result was a compendium of fifty projects demonstrating that investable opportunities exist in both developed and developing countries. This comes in addition to a second, extended list of projects based on regional priorities.”

Finally, Dr Mohield highlighted a key outcome of these regional forums – the African Carbon Markets Initiative (ACMI), “a coalition of African leaders, CEOs and carbon credit experts formed to develop a roadmap for how to scale African VCMs in the years ahead.”

Launched at COP27, this initiative has the potential to strengthen African markets and attract greater investment.

Last Updated: 11 November 2022