Sustainable Finance Flashcards
What is a reallocation of capital ?
Investors and lenders will increasingly exit high climate-risk equity, bonds and new loans
What will issuers do on the asset side of the of the balance sheet?
Hold assets that hedge the risks
What will issuers do on the liabilities side of the balance sheet?
Avoid covering risks where it becomes no longer possible to evaluate the risk they would be talking on
What is the starting point of the TCFD recommendations report?
That financial market pricing must reflect all the actual risks
What is an essential function of financial markets?
To price risk to support informed, efficient capital-allocation details
What does the expression net zero assume?
That some years before 2050 the world finds a technology that can economically and on a large scale remove carbon from smokestack emissions caused by burning fossil fuels and a second emission to CO2 from the atmosphere
Why do some commentators doubt the finance industry’s commitment ?
Taxonomy regulations
Materiality approach to reporting climate related information
What are the three largest emitters?
Energy
Materials
Buildings
Three causes of global warming are?
Agriculture
Fossil fuel combustion
Déforestation
Why are agricultural emissions poised to increase by 15-20 percent by 2050?
Increasing population
Rising per capita food consumption in emerging markets
Sustained share of meat in diets everywhere
Understanding and analysing E S&G issues is likely to be what?
A means of achieving alpha performance and for banks a higher return in their capital from their lending activités
How is is corporate governance defined?
The way which companies are governed and to what purpose. It also identifies who has power and accountability and who makes decisions
What is one key purpose of of governance?
Achieving the appropriate risk-adjusted return for shareholders
What does sustainable mean?
Integrating E& S criteria as well as normal economic financial criteria. Meeting the needs of the present without compromising the ability of future generations to meet theirs.
What are the three main pillars of sustainability?
Social
Environmental
Economic
What are the three benefits to society that commercial banks are increasingly integrating ESG factors into?
Aid to loan underwriters in banks in achieving lower loan losses
Enable central banks to reduce the risk of financial instability
Facilitate the drive to decarbonise the world through market forces and thus complement those regulations and taxes
How does PRI define responsible investment?
An approach to investing that aims to incorporate environmental, social and governance
What is responsible investment about?
Systematically identifying, assessing, pricing, managing and monitoring material ESG risks . It means preserving and enhancing the value of an asset through investment process
What are the 6 principles?
Alignment Impact Clients and customers Stakeholders Governance and Target setting Transparency and accounting
What are the 5 capitals
Natural capital Financial capital Social capital Physical capital Human capital
Put Half For Nicole Shamiso
How do business play a vital role in the economy?
Creating jobs
Fostering innovation
Providing essential goods and services
What is one of the three long terms goals for Paris Agreement ?
Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development
Why was the 2 degree investing initiative set up?
To reform investment frameworks and mobilise the financial sector to reallocate capital in line with below 2 degrees climate goals.
What is the Paris Agreement’s central aim?
To strengthen the global response to the threat of climate change by keeping the global temperature rise this century well below 2 degrees and to pursue efforts to limit the temperature increase even further to 1.5 degrees.
