1、CDC Climate Change Strategy Executive Summary Investing for clean and inclusive growth Climate Change Strategy Climate change: At a tipping point Executive Summary Nick ODonohoe Foreword from our Chief Executive Officer In the midst of the COVID-19 pandemic, it would be easy not to look beyond the n

2、ext grim statistic or horrifying headline. At CDC we are swinging the weight of the whole organisation behind supporting our investee companies and financial partners to fight the economic fallout of the pandemic. But we must not lose sight of our longer-term commitments and the opportunity. As gove

3、rnments, multinational institutions and private investors plan the global economic comeback from COVID-19, there exists a once in a generation opportunity to build back better for an inclusive, green and resilient recovery. Since 2017, CDC has provided over $1 billion in climate finance. Climate cha

4、nge remains the single largest challenge faced by the planet and is the defining issue for our generation and for those who will follow. That is why we have launched this ground-breaking Climate Change Strategy that will shape every single investment decision we make moving forward. As a development

5、 finance institution, one of the most important questions this strategy has to answer is: how do we support economic transformation and poverty reduction in a socially just manner that not only delivers on peoples needs for prosperity and improved living standards, but also builds the foundations fo

6、r net zero emissions by 2050 and increased resilience? This strategy articulates how we will rise to the challenge to deliver coherently on the climate and development challenges by aligning to the goals of the Paris Agreement and deliver on all of the SDGs. In short, how we will support clean, incl

7、usive and resilient growth in Africa and Asia. So what does that mean in practice? Like any investor, we need to operate within the remaining global carbon budget to limit global warming to 1.5C. This strategy sets out a two-pronged approach to achieve this. Firstly, we will transform our investment

8、 portfolio so that it will reach net zero emissions by 2050. Secondly, we will make an investment only if it supports a countrys unique plan to meet its ambition to become a net zero economy by 2050 a pre- requisite to limit global temperature rises to 1.5C. Alongside this, we will invest more of ou

9、r capital in sectors that deliver on global climate and development goals such as renewable energy and forestry. To kick-start our approach, we have set an ambitious target to invest 30 per cent of our total annual commitments in 2021 in climate finance. Crucially, we will not make new investments e

10、ither directly or through a fund in fossil fuel sub-sectors that we have classified as misaligned with the Paris Agreement. In the rare cases where we would consider making a fossil fuel-related investment beyond these sub-sectors, it would only be to support a country in its transition to a net zer

11、o carbon future. We will also apply our expertise to create high-value, decent jobs in green sectors to support a transition to net zero in a way that embraces wider development goals. Staying within 1.5C does not mean there will be no negative impacts from climate change, so the final important foc

12、us of our strategy is on adaptation and resilience. We will increase our investment in those businesses that increase an economys ability to adapt to and become resilient to the impacts of climate change. And well take a systematic approach to assessing physical climate risk across our investments t

13、o help our investees to adapt. As we recover from this crisis, there could be no better way of putting our investments to work than to create a greener, more inclusive and resilient future for everyone. Nick ODonohoe Chief Executive Officer 1 CDC Climate Change Strategy Executive Summary Investing f

14、or clean and inclusive growth Contents 1 Foreword from our CEO 2 Addressing the climate emergency 3 Our guiding strategic principles 5 Aligning to the Paris Agreement 6 Building block: 1 8 Building block: 2 9 Building block: 3 10 Applying a climate lens to our priority sectors 12 A whole of organisa

15、tion approach Foreword Put simply, climate change undermines development and affects everything we aim to achieve through our mandate. The development, economic and business cases for climate action are clear. According to the World Bank, climate change has the power to push 100 million people back

16、into poverty in just over ten years. And it will hit communities in Africa and South Asia the hardest. Overall, countries in Africa and South Asia are the most vulnerable to, and the least prepared for, climate change. However, those countries also offer significant opportunities for green economic

17、transformation using new net zero and resilient approaches. From food to energy and manufacturing to construction, right across the economy there are opportunities to make changes that will both meet the challenge of climate change and deliver prosperity within a new, green economy. These are challe

18、nges that must both be met. Countries in Africa and South Asia are tackling the climate emergency alongside other urgent needs, notably the need for economic growth, increased energy access and improved living standards to meet the needs of their citizens and to meet the UN Sustainable Development G

19、oals (SDGs). Therefore, the key question for CDC as a development finance institution has been: how do we support economic transformation and poverty reduction in a socially just manner that not only delivers on peoples needs for prosperity and improved living standards, but also builds the foundati

20、ons for net zero emissions by 2050 and increased resilience? Since 2017 we have already taken significant steps towards addressing the climate emergency by committing over $1 billion of climate finance to Africa and South Asia and focusing on renewable energy and resource efficiency across a wide ra

21、nge of investments. However, we want to do more. Through this strategy we will ensure that our activities and portfolio are aligned with the Paris Agreement. Our goal is to play a meaningful role in tackling climate change, and supporting countries and communities in a successful and just transition

22、 to net zero and resilient economies. Our strategy addresses each of these areas. This Executive Summary describes our key commitments and should be read in conjunction with our full strategy document Investing for clean and inclusive growth. Addressing the climate emergency The Paris Agreement This

23、 landmark global agreement, reached in 2015 by all 197 parties of the United Nations Framework Convention on Climate Change, has three equally important objectives: 1. to keep global average temperature rise this century well below 2C, and to pursue efforts to limit it to 1.5C; 2. to adapt to climat

24、e change and reduce countries vulnerabilities to climate impacts; and 3. to align finance flows with countries pathways to low greenhouse gas (GHG) emissions and resilient development. It was the first agreement of its kind and succeeded because it allowed each country to set its own emission reduct

25、ion targets and adopt its own strategies for achieving them. The Agreement puts in place several frameworks to assist developing nations and the most vulnerable nations to meet the target. Read more about how were aligning with the Paris Agreement on page 4. Our guiding strategic principles We will

26、adopt international standards of best practice as a framework The Task Force on Climate-related Financial Disclosures (TCFD) is recognised as the main international framework for integrating climate change opportunities and risks into the management systems of financial institutions and businesses.

27、We have therefore organised our strategy using TCFDs four pillars: Strategy, Governance, Risk management, and Metrics (see the chart on page 4). We will operate within the remaining carbon budget We will operate within the remaining global carbon budget to limit global warming to 1.5C. This is line

28、with Article 2.1a of the Paris Agreement which requires all financial flows to be consistent with the goals of the Agreement, including the need for investments that support climate resilience. We will support economic transformation The change required to address the climate emergency is not increm

29、ental. If we do not make a fundamental shift in how economies and sectors work, we will exceed a 1.5C increase in global warming as early as 2030. Therefore, through our activities we will support economic transformation in each country to meet the challenge to be climate resilient and consistent wi

30、th net zero emissions by 2050. As the UKs development finance institution, we have a specific responsibility to ensure the transformation is socially just for workers and communities, and delivers on the need for economic growth and improved living standards. We will apply the strategy to the whole

31、organisation Our strategy is a whole of organisation approach. This is because we recognise the threat that climate change poses to the delivery of our mandate and our dual objectives of achieving development impact and a financial return. Climate change is the biggest global development challenge w

32、e will face over the coming decades, therefore it influences all of our development impact. We must also make financially sound investment decisions to avoid holding stranded assets. To meet these dual objectives, we will implement our strategy across our governance structure, and through our invest

33、ments across all product lines and all sectors. About the Task Force on Climate- related Financial Disclosures The TCFD is a private sector initiative launched by the Financial Stability Board under Mark Carneys leadership. Chaired by Michael Bloomberg, its membership included a range of industry re

34、presentatives such as BNP Paribas, JPMorgan, UBS, BlackRock, Moodys, Deloitte, KPMG, Unilever and Tata. The TCFD framework and recommendations published in 2017 provide guidance for financial sector organisations, including asset owners, asset managers, banks and insurance companies, to understand t

35、heir financial exposure to climate risk and help companies disclose this information in a clear and consistent way. As of February 2020, support for the TCFD has grown to over 1,027 organisations, representing a market capitalisation of over $12 trillion. 32 CDC Climate Change Strategy Executive Sum

36、maryCDC Climate Change Strategy Executive Summary Introduction In developing our strategy, we ensured that it was underpinned by the following key principles. Climate change is a unique global challenge in terms of scale, urgency, magnitude and complexity of action. From increased flooding and droug

37、hts to poor air quality, the effects are complex, severe and are happening now. Without decisive action, it will be particularly devastating for those living in Africa and South Asia. We have structured our climate strategy against the four pillars recommended by the TCFD. This Executive Summary lar

38、gely focuses on the first pillar, Strategy, and covers what we invest in, and how pages 511. There is a brief summary of the remaining three pillars on pages 1213. You can read further information in our full strategy. Aligning to the Paris Agreement African and South Asian countries played a critic

39、al role in securing the goal in the Paris Agreement to limit global warming to 1.5C, which requires action from all countries. The Paris Agreement also recognises that in developing countries, including those within Africa and South Asia, the current low level of emissions driven by lower economic a

40、nd public sector activity and lower energy access, for example, means that emissions in these regions will continue to rise in the coming years before they peak and start to fall. Even so, investment today needs to lay the foundations for reaching net zero emissions by 2050. This is recognised in th

41、e Least Developed Countries 2050 Vision for a climate-resilient future, which seeks to create net zero carbon emissions and prosperous economies “with sustainable growth within ecological limits”. Its critical that CDC supports economic transformation in these regions in a way that delivers sustaina

42、ble, inclusive and resilient long-term growth, and this strategy will guide how we will do this through all our investments. Our strategy is made up of three building blocks which align our activities and investments with the goals of the Paris Agreement: 1. Net zero by 2050: investing for a net zer

43、o world, because investment decisions today affect emissions tomorrow. 2. Just transition: supporting a just transition to a net zero economy by keeping the creation of decent jobs and skills development at the forefront of the change. 3. Adaptation and resilience: strengthening adaptation and resil

44、ience of sectors, communities, businesses and people to the effects of climate change. Net zero by 2050 Just transition Adaptation and resilience Portfolio with net zero emissions by 2050 Investments consistent with countries pathways to net zero by 2050 Increase resilience in our portfolio companie

45、s, including a gender lens Invest in sectors targeted for resilience Focus on job creation, re- and upskilling in new low carbon/resilient sectors, aligned with approaches on skills and leadership, gender, and job quality 5 CDC Climate Change Strategy Executive SummaryCDC Climate Change Strategy Exe

46、cutive Summary 4 + Climate case for CDC + Institutional ambition + Tools + Sector perspectives + Partnerships + Board oversight + Management oversight + Investment process and portfolio management + Portfolio emissions + Climate finance + Sector metrics + Green/brown metrics + Risk governance + Phys

47、ical and transition risk tools and processes + Scenario analysis + Transaction level + Sector investment strategies + Climate capabilities + Accountability + Expertise + Board structure + Organisational integration + Building into investment process + Portfolio management + Transaction level + Portf

48、olio level Climate Change Strategy How we operate How and what we invest in What StrategyGovernance Risk management Metrics How 1234 Read more about this on pages 1213 Read more about this on pages 511 Our approach to climate change: using the four pillars of the TCFD Introduction What we invest in,

49、 and how. Paris alignment Building block: 1 Building block: 2 Across all sectors Building block: 3 Our approach to Paris alignment How and what we invest in + Climate case for CDC + Institutional ambition + Tools + Sector perspectives + Partnerships + Transaction level + Sector investment strategies + Climate capabilities How and what we invest in What Strategy How 1 + Board oversight + Management oversight + Investment process and portfolio management + Portfolio emissions + Climate fina