Financial Sector Guidance Webinar January 30, 2014 Cynthia Cummis WRI & Remco Fischer UNEP FI www.unepfi.org www.ghgprotocol.org Agenda • • • • • • 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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