Financial Sector Guidance Webinar January 30, 2014

Financial Sector Guidance Webinar
January 30, 2014
Cynthia Cummis WRI & Remco Fischer UNEP FI
www.unepfi.org
www.ghgprotocol.org
Agenda
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Background on GHG Protocol and UNEP FI
History of the financial sector guidance project
Current project scope
Role of the TWGs
Timeline and next steps
Q&As
www.unepfi.org
www.ghgprotocol.org
Overview of the GHG Protocol
The Greenhouse Gas Protocol was launched in 1998 by
GHG Protocol Standards
Multi-stakeholder collaboration of businesses, NGOs,
governments and others
Vision:
Empowering the world to avoid and respond to climate
change through the wide use of internationally
accepted greenhouse gas standards and practices.
Corporate Standard
Product Life Cycle
Standard
Project Protocol
Corporate Value Chain
(Scope 3) Standard
Mission:
GHG Protocol provides the foundation for
comprehensive measurement and management
strategies to reduce emissions and drive more
efficient, resilient, and profitable businesses and
organizations.
www.unepfi.org
www.ghgprotocol.org
Sector guidance is needed for the financial sector
The GHG Protocol Scope
3 Standard provides a
framework for reporting
emissions from lending
and investing
A financial sector workgroup was engaged in Scope 3 Standard development
o
Barclays Capital
o
Export-Import Bank of the U.S.
o
KFW Development Bank
o
Citi
o
IDB
o
National Australia Bank
o
Credit Suisse
o
IFC
o
PaxWorld Management LLC
www.unepfi.org
o
Sovereign
www.ghgprotocol.org
Results of a one year scoping process
Workshops were held in New York and London, an online survey was conducted,
and UNEP FI consulted with members
Summary of scoping process:
Is measuring and reporting emissions associated with
lending and investments an important business issue?
•Broad interest in better understanding,
measuring and managing financed emissions
•Broad interest in the availability of a
standardized methodology for measuring and
reporting financed emissions
•Understanding ‘carbon risk exposure’ is the key
driver to measure financed emissions
•The nexus between ‘financed emissions’ and
‘carbon risk exposure’ is not well understood
•Complexity and cost-benefit of measuring
emissions varies widely depending on
financing/investment activity
www.unepfi.org
www.ghgprotocol.org
We have a number of tools in the Value Chain Standard already
•
High level guidance for calculating GHG
emissions from investments and lending
•
List of third-party data sources to assist
in emissions calculations (financial and
process based data are available)
– Link to data sources page:
http://www.ghgprotocol.org/ThirdParty-Databases
•
Calculation guidance with set of
recommended methodologies for
lending and investing
www.unepfi.org
www.ghgprotocol.org
Governance structure
Convening Secretariat
UNEP FI & GHG Protocol
Advisory Committee
UNEP FI & GHG Protocol, key businesses, government, accounting firms, and
NGOs
Technical Working Groups
1.
1. Companies
Companies &
&
Projects
Projects
2. Governments
3. Consumers
4.
4. Cross
Cross Cutting
Cutting
Issues
Issues
5.
5. Carbon
Carbon Asset
Asset
Risk
Risk
Potential
Potential
Subgroups
Subgroups
Potential
Potential
Subgroups
Subgroups
Potential
Potential
Subgroups
Subgroups
Potential
Potential
Subgroups
Subgroups
Potential
Potential
Subgroups
Subgroups
www.unepfi.org
Stakeholder Advisory
Group (Open to all)
Financial Institutions,
NGO’s, industry analysts,
accountants, governments,
consultants
www.ghgprotocol.org
Advisory committee
Advisory Committee
Member Name
Organization
Stanislas Dupre
Karsten Loeffler
Julian Poulter
Daniel Marroquin
Kaj Jensen
Christopher Bray
Mark Campanale
James Hulse
Sabine Miltner
Chris Walker
Nick Robins
Tom Kerr
2 Degrees Investing Initiative
Allianz Group
Asset Owners Disclosure Project
Banamex
Bank of America
Barclays
Carbon Tracker Initiative
CDP
Deutsche Bank
EY
HSBC
IFC
Nathan Fabian
Bill Harnett
Steve Priddy
Julie Fox-Gorte
Christopher Rowe
Cory Weiss
Sefton Laing
Richard Pearl
Giorgio Capurri
Robyn Luhning
Tim Hassett
Namita Vikas
Jochen Harnisch
Investor Group on Climate Change (IGCC)
Local Government Super
London School of Business and Finance
Pax World
Prudential Investment Management
PwC
RBS
State Street
Unicredit
Wells Fargo
WWF US
YES Bank
KWF
www.unepfi.org
www.ghgprotocol.org
Two guidance documents will be produced in parallel
Accounting Guidance
TWG 1:
Companies and
Projects
Chair: Eliza Eubank,
Citi
TWG 3:
Consumers
Chair: Myriam
Cisneros Molina,
Sociedad Hipotecaria
Federal
www.unepfi.org
Carbon Asset Risk Guidance
TWG 2:
Governments
Chair: Magnus
Borelius, City of
Gothenburg
TWG 4:
Cross-cutting
Issues
Chair: Emma Herd,
Westpac Institutional
Bank
www.ghgprotocol.org
Four principal objectives of the accounting guidance
1. Provide a credible and internationally-harmonized GHG standard for
financial intermediaries (FIs) to measure, report, and track performance
2. Guide FIs on the internal interpretation and use of the data
3. Create an understanding of how financed emissions are linked to carbon
risk exposure
4. Guide the external readers of reported information on how disclosed
information can and cannot be meaningfully used
www.unepfi.org
www.ghgprotocol.org
Four principal objectives of the Carbon Asset Risk (CAR)
guidance
1. Identify the types of financial risks that can result from the GHG
emissions / intensity / exposure of ‘carbon assets’ - projects or
companies with high exposures to present and future GHG emissions
2. Provide insight on how these risks are typically distributed across
different types of capital associated with a carbon asset
2. impact future business decisions or investments in carbon assets -projects or companies with high exposure to GHG emissions
3. Provide actionable approaches to help financial institutions and investors
evaluate the presence and degree of potential risk associated with
carbon assets
4. Provide guidance on effective and appropriate strategies that financial
institutions and investors could pursue to manage potential risk
www.unepfi.org
www.ghgprotocol.org
Structure of the accounting guidance
PART I: General Information
PART II: Key Accounting Concepts
5. Key Concepts
6. Collecting Data
1. Introduction
2. Business Goals
3. Accounting & Reporting
Principles
4. Accounting & Reporting
Recommendations
PART III: Companies & Projects
7. Accounting Guidance by
Investment and lending type for
companies and projects
TW
G1
PART IV: Governments
PART V: Consumers
PART VI: Tracking & Reporting
8. Accounting Guidance by Lending
Type
9. Accounting Guidance by Lending
Type
TW
TW
G
G2
2
TW
TW
G
G3
3
10. Setting GHG Reduction Targets
and Tracking Emissions Over
Time
11. Developing & Using Performance
Metrics
12. Reporting Guidance
PART VII: Interpreting Data
13. Data Interpretation by Internal
Users
14. Data Interpretation by External
Users
www.unepfi.org
Appendices
15. Avoided Emissions (inclusion
TBD)
16. Potential Future Emissions from
Fossil Fuel Reserves (inclusion
TBD)
Notes
17. Abbreviations
18. Glossary
19. References
20. Recognitions
www.ghgprotocol.org
Structure of the CAR guidance
Part 1
Introduction, Objectives
and Scope
Part 2
Types of potential risks
associated with carbon
assets
Part 3
Part 7
Mapping the carbon
intensity of different
sectors and identifying
those that are most
exposed to potential risk
Strategies that
financial institutions
and investors can
pursue to manage
potential risk
Phase 1
Part 4
Part 5
Part 6
Mapping an asset’s
sources of capital (i.e.,
the “capital stack”) and
discussion of how risk is
typically distributed
across different types of
capital
Key factors to consider
when assessing the
presence and degree of
potential risk associated
with carbon assets
Approaches that
financial institutions and
investors can use to
evaluate potential risks
associated with carbon
assets
Sector based guidance
Phase 2
www.unepfi.org
Mining, Oil and Gas, Power, etc.
www.ghgprotocol.org
Project timelines
Date
Project Phase
Feb 2014
Launch TWG Process
Sept 2014
First drafts completed
Oct – Feb 2015
First public comment phase and road testing
Mar – May 2015
Review comments and revise draft guidance
Jun – Jul 2015
Second public comment period
Aug – Oct 2015
Final round of revisions based on feedback, review and sign off
Nov – Dec 2015
Copy editing, design and publication
Jan 2016
Publication
Jan 2016 onwards
Outreach
www.unepfi.org
www.ghgprotocol.org
Roles and responsibilities of TWG’s and next steps
Responsibilities
Commitments
• For the set of technical accounting issues designated to the group:
• Review relevant existing methodologies and practices;
• Analyze the issues and challenges; and
• Develop recommendations around content of guidance
• Draft sections of text on the designated topics and review draft text at
frequent intervals
• Seek and respond to feedback on draft chapters from the Advisory
Committee and public comment process
Technical working group members are requested to make a two year
commitment to participate in the guidance development (i.e., early 2014 –
late 2015). This is expected to involve:
•2 conference call of 90 minutes each per month in 2014 and occasional calls
in 2015
•1 in person meeting in 2014 and 1 in person meeting in 2015 (if needed)
•The necessary time to prepare and review materials (5-10 hours per month
in 2014)
You will be hearing from your TWG Chair soon with details
on your first call (likely mid Feb)
www.unepfi.org
www.ghgprotocol.org
Thank you for your
participation!
This effort would not be possible
without your support
Cynthia Cummis WRI
[email protected]
Remco Fischer UNEP FI
[email protected]
www.unepfi.org
www.ghgprotocol.org
Q&A
www.unepfi.org
www.ghgprotocol.org

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