1、Climate Finance Report 2019 - June 2020 #TheRightWay Lets continue working for a better world 2Climate finance report 2019 Our approach to responsible banking “ By delivering on our purpose, and helping people and businesses prosper, we grow as a business and we can help society address its challeng

2、es too. Economic progress and social progress go together. The value created by our business is shared to the benefit of all. Communities are best served by corporations that have aligned their goals to serve the long term goals of society. ” Ana Botn By being responsible, we build loyalty People Sh

3、areholders Customers Communities Im loyal to Santander because. . Santander treats me responsibly In our day-to-day businesses, we ensure that we do not simply meet our legal and regulatory requirements, but we exceed peoples expectations by being Simple, Personal and Fair in all we do. . Santander

4、acts responsibly in society We focus on areas where, as a Group, our activity can have a major impact on helping people and businesses prosper. 3 2019 Progress in our climate finance and environmental footprint performance and commitments 2002420025 Santander commitments relate

5、d to climate change Commitments related to our own operations (Environmental footprint) Electricity used from renewable energy sources1 43%50%60%100% Becoming carbon neutral in our own operations0% Reduction of unnecessary single use plastic in corporate buildings and branches 75%100% Commitments re

6、lated to our business activities Green finance raised and facilitated2 (euros) 19Bn120Bn From. to. Cumulative target Disclosure of progress according to the 4 TCFD pillars. Santander is participating in the UNEP FI second phase, along with 35 global and local banks. Disclosure of portfolio in climat

7、e relevant sectors so that we can make progress towards the Paris Agreement Goals3. SUSTAINABLE FINANCE: Global leader in renewable energy financing, in terms of both the number of transactions and their amounts, in 2019. In 2019, we launched Santander Sustainable 3. Increases in heavy precipitation

8、 (potential flash flooding) in several regions and conversely the probability of lower precipitation and drought in some regions; 4. Increases in climate-related risks to health, livelihoods, food security, water supply, human security, and economic growth. The risks would increase further with a gl

9、obal average warming of 2C, and further still with a warming of 4C. The impact of climate change on the global economy and geopolitical situation is increasingly evident. Studies have found that the overall aggregate effect of climate change on economic growth will most likely be negative in the lon

10、g run. Unchecked global warming could slow economic growth. Although there will be winners and losers from climate change at varying levels of warming, the balance between winners and losers turns increasingly negative as temperatures rise. Driving the world to a low carbon pathway will require $6.9

11、 trillions in investment every year, up to 2030, to meet the Paris Agreement according to the OCDE1, and has the potential to strand assets across many industries. In countries and regions where CO2 emissions are closely associated with GDP growth (e.g. emerging economies), the objective of economic

12、 growth can be in conflict with that of emissions reductions. Therefore, the two must be decoupled, in order to maintain growth and prevent the worst impacts of climate change. Because if unchecked, the impact of climate change on the natural environment threatens long-term economic growth. Climate

13、change is recognised as a global issue, with transnational causes and impacts. This has made it a focal point for multilateral policy initiatives, such as the UN Framework Convention on Climate Change (UNFCCC), ongoing since 1992. The UNFCCC has produced two landmark treaties, most recently the Pari

14、s Agreement, which has been ratified by the vast majority of countries. At COP 21, in December 2015, Parties to the UNFCCC agreed via the Paris Agreement to combat climate change and accelerate the actions and investments needed for a sustainable low carbon future. Specifically, Driving the world to

15、 a low carbon pathway will require $6.9 trillions in investment every year, up to 2030, to meet the Paris Agreement according to the OCDE 1. Financing Climate Futures: Rethinking Infrastructure Policy Highlights OECD/The World Bank/UN Environment, 2018 link to full report: https:/www.oecd.org/enviro

16、nment/cc/climate-futures/policy-highlights-financing-climate-futures.pdf 6Climate finance report 2019 the Paris Agreement seeks to limit warming to well below 2C above pre-industrial levels, and to pursue efforts to limit the increase to 1.5C. The Agreement entered into force on 4 November 2016, and

17、 has been ratified by 186 Parties of the UNFCCC as of October 2019, equating to approximately 99% of global GDP and approximately 97% of global GHG emissions. The Paris Agreement requires all parties to put forward their best efforts through nationally determined contributions (NDCs) and to strength

18、en these efforts in future years. The UNFCCC requests all signatories to the Paris Agreement to update and submit their NDCs every five years. The next round of nationally determined contribution submissions are scheduled for 2021 at COP 26. NDCs are supposed to become more stringent through time, a

19、nd are expected to ultimately align with the Agreements 1.5C to 2C target range. Following this path, In December 2019, the European Commission presented the European Green Deal, an overarching framework and programme of actions to transform the European economy. A key component of the Green Deal is

20、 the proposed Climate Law embedding a legal commitment for the EU to achieve climate neutrality by 2050. The EU will bring forward a comprehensive plan to increase the EU 2030 climate target to at least 50%, and will also bring forward a revised and more ambitious strategy on adaptation to climate c

21、hange, building from the 2013 strategy and the adaptation goals of the Paris Agreement and the SDGs. The role of the banking sector: risks and opportunities Climate risk is not a new risk type, but an emerging driver of risk; it will impact the banking sector through a variety of channels, including

22、 credit, market and operational risk among others. Risks can often be hidden, or difficult to understand, and are therefore subject to mispricing. Compared to non-financial organisations, the banking sector has a different exposure profile to climate-related issues. Risks and opportunities can emerg

23、e within financial markets through activities such as investing, lending and the trading of financial derivatives. In Santander, aligned to organisms that are advanced in climate change such as the PRA in the UK, we have framed how climate-related risks and opportunities could materialize: Credit ri

24、sks Physical climate change can lead to increased credit exposure for banks if damages to assets are not insured and the financial burden falls on the banks. Companies with business models not aligned with the transition to a low-carbon economy face a higher risk of reduced corporate earnings and bu

25、siness disruption due to new regulations or market shifts. This may leave them unable to repay loans or meet their obligations on other financial transactions. Market risks Market changes in the most carbon- intensive sectors affecting energy and commodity prices, corporate bonds, equities and certa

26、in derivatives contracts. The increasing frequency of severe weather events could also affect macroeconomic conditions through sustained damage to national infrastructure and weaken fundamental factors such as economic growth, employment, and inflation. Operational risks Severe weather events could

27、directly impact business continuity of a customers and the banks operations. 7 1. Climate change today and the banking sector Reputational risk could also arise from shifting sentiment among customers and increasing attention and scrutiny from other stakeholders (investors, regulators, etc.) on the

28、banking sectors response to climate change. An orderly transition to a low-carbon economy can also take advantage of opportunities for investment in innovation, infrastructure, skills and cities. Achieving the goal to limit global temperature increases requires an urgent scaling-up of investments in

29、 the low-carbon energy transition. These investments have potential for attractive returns and therefore, financing the transition to a low carbon economy is a major opportunity for investors and creditors. The OECD found in 2017 that annual investment of $6.9 trillion in new infrastructure was requ

30、ired to limit global warming below 2C between 2016 and 2030. Also, as part of the Sustainable Europe Investment Plan and the European Commissions next multi-annual financial framework (MFF 2021-27), the InvestEU Programme, the single budgetary guarantee of the EU, will aim to leverage EUR 279 billio

31、n of public and private climate financing. The EUs Action Plan on Financing Sustainable Growth (March 2018) called for the creation of a classification system for sustainable activities or Taxonomy, focusing on economic activities that can make a substantial contribution to climate change mitigation

32、 or adaptation, while avoiding significant harm to the other environmental objectives. As energy policies are re-designed to achieve climate neutrality by 2050, it is important to review how fossil fuels are being subsidised, in order to support progress on phasing out fossil fuels. While acknowledg

33、ing that different countries have different circumstances, the overall policy framework that is being designed in Europe and in other jurisdictions to guide the transition to a low carbon economy, should ensure that fuel prices are set at efficient levels that properly internalise the associated env

34、ironmental costs in the form of climate change, air pollution, etc. Another element to consider is the role that an effective carbon pricing mechanism could play in setting the right framework to reduce emissions and drive investment in low carbon technologies and infrastructures. It would be advisa

35、ble that the carbon policy instruments are part of a broader framework of policies, including on energy efficiency or research and development, in order to achieve the necessary emissions reduction. International alignment should be prioritised, so that any potential solution works across countries

36、and avoid carbon leakage. This is in line with what leading sustainability organizations like WBCSD are supporting. Santander contributes to the transition to a low carbon economy by supporting clients (companies, SMEs and individuals) in all sectors involved in this transformation. Our aim is not o

37、nly to finance whats already green, but to support the greening of the economy, supporting our clients in their transition to sustainable production The challenge we are facing comprises mobilizing trillions of dollars and euros of capital required, driving billions of people make green decisions an

38、d facilitate the green transition allowing everyone to be on board. In this sense, we advocate for a just transition, ensuring that no region or community is left behind and that sufficient investment is devoted to reskilling people. Policies and regulations are key to set price signals and guide th

39、e transition with clear incentives. Governments have to define clear paths on how each sector will reconvert to meet the targets of a low carbon economy, backed by policies and incentives, enabling banks to support companies in their transition, under a certain environment. Being climate a global ch

40、allenge, a global response is needed, notwithstanding international standard setting bodies should play a key role in directing the agenda. The recommendations from the Task force on Climate-related Financial Disclosure provides a starting point for aligning corporate disclosure on climate change wi

41、th requirements falling directly to the banking sector. Given the global scope of the transition, international alignment on taxonomies (where the EU Taxonomy is a very significant milestone), methodologies, agreed data sources and scenarios will avoid having disparate and not comparable results, wh

42、ile ensuring a level playing field. We also expect disclosure to be enhanced with increased availability of non-financial corporates climate- related data. 8Climate finance report 2019 “ If this recovery is to be sustainableif our world is to become more resilient we must do everything in our power

43、to promote a “green recovery.” In other words, taking measures now to fight the climate crisis is not just a “nice-to- have.” It is a “must-have” if we are to leave a better world for our children.” Kristalina Georgieva, IMG Managing Director Find more detailed information The COVID-19 pandemic is a

44、 global emergency that is shaping economies across the world, impacting lives and jobs and the production models of entire nations. As immediate crisis response, governments are developing longer-term economic stimulus packages to combat the crisis and towards rebuilding the economy. It is crucial t

45、hese packages to promote health, equity, and environmental protection, including climate change, so that when we eventually overcome the COVID-19 pandemic, measures are in place the day after to accelerate the growth of an inclusive, resilient net-zero carbon economy by 2050 at the latest. Santander

46、 understands the key role that the Group plays as part of the financial sector in the rebuilding of our society after the COVID-19 crisis. We recognise the importance of aligning economic recovery around social and green principles and so, we have signed the manifesto launched on May 5th by the Gree

47、n Recovery Alliance European group to support and implement the establishment of Green Recovery Investment Packages. Santander has become one of the main signatories of this alliance with more than other 30 European financial institutions, 79 members of the European Parliament, civil society groups,

48、 NGOSs, think tanks, and business associations. The documents calls for a global alliance, as a global and coordinated economic response to come out of this crisis. We already have the tools and technologies, the plans, the will and the strategy that now we must turn into action. COVID-19 will not m

49、ake climate change go away, if we fight and win these two battles at the same time. “By doing so, we will only be stronger together.” Action on Climate and the UN SDGs AFFORDABLE AND CLEAN ENERGY Finances creation and development of green energy projects. INDUSTRY, INNOVATION AND INFRASTRUCTURE Invests in shifting the energy industry towards a low-carbon economy. SUSTAINABLE CITIES AND COMMUNITIES Funds sustainable energy solutions for people and companies. RESPONSIBLE CONSUMPTION AND PRODUCTION Fosters and promotes respons