Luxembourg today signed an agreement to back a UN Environment-convened network that helps the world’s major financial centres to increase green and sustainable finance.
The International Network of Financial Centres for Sustainability (FC4S) has 22 members from Europe, Asia, Africa, and North America – each of them committed to shifting their investments to support the goals of the 2030 Agenda for Sustainable Development and the Paris Agreement.
Home to Europe’s largest investment fund center with a 62 per cent global market share in cross-border funds, along with136 international banks from 29 countries and over 35,000 listed tradable securities, Luxembourg is today one of the world’s leading financial centers.
“A recognized European leader in green and sustainable finance, Luxembourg is stepping up its commitment to support the efforts of the International Network of Financial Centers for Sustainability,” said Pierre Gramegna, Minister of Finance of Luxembourg, as he signed the agreement to provide USD 500,000 in funding to FC4S. “This commitment is aimed at helping the FC4S to better connect financial centers, to foster exchange of knowledge and thus help shaping the trends and developments that will define sustainable finance in the years to come.”
The levels of green and sustainable finance needed to deliver on the Paris Agreement and the sustainable development goals are still insufficient. For example, the World Resources Institute estimates that USD 5.7 trillion will need to be invested annually in green infrastructure by 2020. However, 2018 research by the United Nations Framework Convention on Climate Change found that climate finance, while growing, had hit only USD 681 billion annually by 2016.
“Much of the resources needed to finance the transition to a low-emission, sustainable world will have to come from private sources,” said Satya S. Tripathi, UN Assistant Secretary-General and head of UN Environment’s New York office. “This is why the work of FC4S, helping financial centres to green their flows, is crucial. UN Environment is very grateful to Luxembourg for increasing its commitment to green and sustainable finance.”
Luxembourg’s commitment to financial innovation and sustainable finance has led to the launch of a wide range of initiatives, including the first Stock Exchange dedicated to green, socially responsible and sustainable securities: The Luxembourg Green Exchange (LGX) in 2016.
The LGX has the largest market share of listed green bonds worldwide. Luxembourg leads the European market when it comes to responsible investment funds, with a market share of 39 per cent. 69 per cent of worldwide assets in microfinance investment vehicles are Luxembourg domiciled funds.
“Financial centres are key pressure points in the global financial system, and FC4S members like Luxembourg are pressing hard to make the system sustainable,” said Stephen Nolan, head of the FC4S network. “This contribution from Luxembourg is yet another sign that the smart money is getting behind sustainability.”
The signing took place at an event during the Spring Meetings of the World Bank Group and the International Monetary Fund, at which Mr. Gramegna, John Berrigan, Deputy Director-General, Financial Services and Capital Markets Union (FISMA), and Marcos Ayerra, Chair of the Inter-American Regional Committee and others looked at how to increase the role of financial centres in financing sustainability.
Milestones in National and Global Commitments to Tackling Deforestation
The World Economic Forum’s Tropical Forest Alliance annual meeting, which has concluded in the Colombian capital, Bogotá, has seen a number of commitments that will contribute to the Alliance’s goal of protecting the world’s tropical rainforests.
The meeting took place the same week world scientists warned that deforestation was one of the key drivers of ecological collapse, with up to 1 million species at risk of extinction (according to the Intergovernmental science-policy Platform on Biodiversity and Ecosystem Services – IPBES report).
The meeting convened over 200 leaders from government, business and civil society and was co-hosted by the Colombian government. With over 50% of its land area forested, Colombia has the second-highest biodiversity density in the world after Brazil.
Important outcomes from the meeting included:
The launch by the Colombian government of a $20 million BioCarbon Fund aimed at reducing deforestation and degradation, promoting smart agriculture and sustainable land use – the funding corresponds to commitments by the governments of Germany, Norway and the United Kingdom
The Colombian government’s successful conclusion of an agreement with the meat and dairy industries to eliminate deforestation – the two strategic sectors complement existing agreements on cocoa and palm oil in the country
The German government, through the Federal Ministry for the Environment (BMU) and the Federal Ministry for Economic Cooperation and Development (BMZ), joined the Tropical Forest Alliance
Among other outcomes from the meeting were agreements to promote South-South cooperation at the national and sub-national level. These groups, along with business and civil society leaders, have agreed to hold a special meeting during the UN Climate Action Summit 2019 in September.
In his address to the Alliance, the President of Colombia, Iván Duque, expressed strong commitment to stop tropical deforestation. The actions and commitment of the Colombian government mark an important milestone in the global fight against deforestation. Deforestation has actually increased in the country since the peace agreement was signed and, in response, the government has developed an integrated strategy that involves fighting illegality, advancing deforestation-free supply chains, promoting restoration and implementing an innovative carbon tax.
Colombia will join a growing list of countries determined to champion the role of nature-based solutions to address climate change in New York in September.
“It’s quite simple. Life on earth isn’t possible without forests because they are integral to ecosystems and livelihoods around the world. While the original commitment was to eliminate deforestation from commodity supply chains by 2020, companies and governments have made important progress to enhance transparency and clean up supply chains over the last decade. It is only by coming together and harnessing the power of the full Alliance to force through real systemic change that protecting our forests for future generations can be achieved,” said Justin Adams, Director, Tropical Forest Alliance.
“Colombia is proud to host this meeting to showcase how we are advancing to differentiate our production of palm oil and cocoa as deforestation-free on the world stage, and to take the beef and dairy supply chains along that same route. Currently we face a spike of deforestation in the Colombian Amazon and the TFA meeting provided an opportunity to involve companies in reversing these trends by understanding their supply chains and working to eliminate any trace of deforestation from them. Thus, the private sector can be part of the solution and help us tackle this complex problem,” said Roberto Esmeral,
Vice-Minister of Territorial Environmental Planning of the Ministry of Environment and Sustainable Development of Colombia.
In 2010, members of the Consumer Goods Forum, including many major food and consumer goods companies, committed to end deforestation in key supply chains. Governments, businesses, civil society and indigenous people’s organizations further strengthened commitments in 2014 by endorsing the New York Declaration on Forests, which called for halving global deforestation rates by 2020 and ending it by 2030.
The Tropical Forest Alliance was brought into the World Economic Forum in 2015 to accelerate action on deforestation in the run-up to 2020 and beyond.
Climate change: ‘A moral, ethical and economic imperative’ to slow global warming
It is nothing less than a “moral, ethical and economic imperative” to take more action to mitigate the existential threat posed by climate change, said top executives from across the United Nations system on Thursday.
Calling on Member States to take “urgent action to limit global temperature rise to 1.5°C above pre-industrial levels”, the leaders of more than 30 UN agencies and entities, issued a formal, joint appeal for governments everywhere to “step up ambition and take concrete action” ahead of the landmark Climate Action Summit, which has been convened by UN chief António Guterres this September.
The appeal noted that to keep rising temperatures down, countries had to strive to “fulfil their obligations on human rights, including the right to health, the right to food security, the right to development, the rights of indigenous peoples, local communities, migrants, children, persons with disabilities and people in vulnerable situations, as well as gender equality, empowerment of women, intergenerational equity, and decent work and a just transition for all, as stated in the Paris Agreement.”
As set out by the Intergovernmental Panel on Climate Change (IPCC) Special Report on Global Warming, limiting global warming to 1.5°C “is necessary to prevent irreversible changes. Achieving this goal will require changes on an unprecedented scale at all levels, but it is still possible if we act now”, said the UN system-wide appeal.
“With great urgency we call upon Member States to come to New York in September with concrete, realistic plans to enhance their nationally determined contributions by 2020 and in support to the implementation of the Sustainable Development Goals.”
The communique issued after consultations during a meeting of the UN Chief Executives Board for Coordination, called on countries to ensure that appropriate “adaptation measures” are taken to protect people, jobs and ecosystems, “particularly people in those regions most vulnerable to the impacts of climate change including those at risk through forced displacement and migration.”
$100 billion per year by 2020, for climate action
On the crucial issue of paying for the ambitious measures which need to be taken, the appeal described climate finance as “critical to deliver action on the necessary scale to address climate change…developed countries must deliver on the goal of mobilizing governments and the private sector to achieve the goal of $100 billion per year by 2020, to support climate action in developing countries and further enhance their efforts on scaling-up financial resources.”
And in the race to innovate, the appeal calls for greater ambition, noting that “the Fourth Industrial Revolution offers tremendous potential for a paradigm shift to low-emission, climate-resilient development pathways.”
The UN system is supporting “the enhancement of capacity of Member States to develop and utilize relevant data and technological innovations, to find solutions for climate and sustainable development challenges and disaster risk reduction and management, including the use of new and emerging technologies, including information and communication technologies, data and tools.
And the UN is going to practice what it is preaching from the Secretariat and beyond. “We will present our system-wide efforts towards reaching climate neutrality in our internal operations by 2020 and enhancing environmental and social sustainability in all UN activities”, says the joint appeal.
UN and African Union in ‘common battle’ for development and climate change financing
UN Secretary-General António Guterres has called for a “quantum leap” in funding for development and climate change for Africa, speaking to journalists on Monday, following the plenary meeting of the latest United Nations-African Union (AU) Conference, which took place in New York.
Mr. Guterres declared that the Organization’s work to promote peace and security, human rights, development and climate action, can only progress in Africa if the UN works hand in hand with the AU.
The UN chief emphasised the “alignment” between the UN’s and African Union’s respective plans to ramp up inclusive and environmentally responsible economic development: the UN’s 2030 Agenda for Sustainable Development, and the African Union’s Agenda 2063.
The common battle they face, he continued, is to secure the necessary financing for development, particularly for Africa. Mr. Guterres said that development there is a “fundamental precondition” for a more peaceful world, and for well-managed migration, and, therefore, that improved funding is “in the interests of the whole international community.”
With regard to climate change, the Secretary-General warned that more ambition is needed, because “we are not winning the battle,” and Africa is disproportionately affected: “the African continent practically does not contribute to climate change, but the African continent is one of the areas of the world where the impact of climate change is more dramatic and devastating.”
A joint communiqué released on Monday by the UN and African Union welcomed the “strong cooperation and collaboration between the two organizations”, and committed to continue to work closely together in addressing peace and security issues, and achieving sustainable development issues in Africa.
The communiqué described the UN Climate Action Summit, which will take place in September, as “critical to mobilize the needed partnerships, resources” necessary to achieve international climate action goals, and noted the agreement of the leaders of both organizations to further strengthen their cooperation on adaptation for climate change ahead of the Summit and beyond.
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