Guide helps least developed countries prepare INDCs

28 April 2015 Consultancy.uk

Ricardo-AEA and the Climate & Development Knowledge Network have published a guide to help least developed countries prepare their intentions to reduce emissions under a new UN agreement to be created during the next Conference of the Parties in December 2015, their so-called Intended Nationally Determined Contributions.

Intended Nationally Determined Contributions
During the Conference of the Parties (COP), held in Warsaw in November 2013, Parties to the UN Framework Convention on Climate Change (UNFCCC) decided to “invite all Parties to initiate or intensify domestic preparations for their intended nationally determined contributions […]” in preparation of creating a new international climate agreement by the conclusion of the UNFCCC COP in Paris in December 2015. Parties agreed to publicly outline the post-2020 climate actions they intend to take under a new international agreement to reduce emissions, taking into account its domestic circumstances and capabilities. These intentions, which are called the Intended Nationally Determined Contributions (INDCs), should be communicated to the UNFCCC secretariat before 1 October 2015.

UNFCCC

To help least developed countries (LDCs) prepare their INDCs for the UNFCCC, consulting firm Ricardo-AEA and Climate & Development Knowledge Network (CDKN) have developed and published a practical guide on the INDCs. The Guide to INDCs was initiated at the request of some LDC and offers a practical example of how an INDC could be structured, with examples to illustrate a narrative and sources of background information.

As LDCs have contributed the least to global warming, their burden of cutting emissions “should reflect their special circumstances” and take into account national circumstances and levels of capacity, preparedness and ambition.

Guide CDKN and Ricardo-AEA helps least developed countries

Commenting on the guide, Kiran Sura, Head of Advocacy Fund for Negotiations Support at CDKN, says: “While many of the LDCs we work with are keen to show their commitment to a global ambitious deal on climate change, many are struggling to put together their national contribution as the current guidance is insufficiently detailed. We hope this guidance and template, built from CDKN and Ricardo-AEAs experience of supporting LDCs over many years, will be a useful tool to help bridge this gap.”

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Private equity firms ramp up sustainability focus

19 April 2019 Consultancy.uk

In line with business leaders across the industrial gamut, private equity firms are increasingly on board with sustainability projects. According to a new study, the investment arms for major funds are implementing a number of strategies aimed at supporting sustainable economic development in line with global goals.

While the business world has finally begun to acknowledge the danger of climate change, effective action plans remain difficult to achieve. The Paris Agreement has stipulated a clear target for the decades leading up to 2100, although massively reducing emissions while not crashing the economy could be a tall order.

Businesses that are able to acquire capital can use it to boost productivity and output, thereby creating a virtuous cycle of development. However, some businesses are better able to utilise resources than others, both in terms of their relative productivity, as well as the value of the respective outcomes relative to costs (including environmental harms). Financing can therefore provide an avenue to select businesses that are aligned with various global sustainability goals, while shunning those that drive little or unsustainable social value creation.

Top moves made by investment arms towards responsible investment

Profit has for the longest time been the central criterion for investment decisions. Yet profit at any cost is increasingly seen as creating considerable social harms, while often delivering only marginal value. As a result, the private equity sector, which was initially sluggish to change its ways with regards to sustainability, has started to see the topic as an opportunity as much as a challenge.

A new study from PwC has explored how far sustainability goals have become part of the wider investment strategy for private equity (PE) firms. The report is based on analysis of a survey of 162 firms and includes responses from 145 general partners and 38 limited partners.

Maturing sustainability

Top-line results show that responsible investment has become an issue for 91% of respondents. For 81% of respondents, ESG (environmental, social, and corporate governance) was a board matter at least once a year, while 60% said that they already have implemented measures to address human rights issues. Two-thirds have identified and prioritised Sustainable Development goals that are relevant to their investment segments.

Change in concern and action on climate-related topics over time

While there is increasing concern around key issues, from human rights protections to environmental and biodiversity protection, the study finds there are mismatches between concern and action. For instance, concern among investment vehicles around climate change has increased since 2016.

In terms of risks to the PE firm itself, concern has increased from 46% of respondents in 2016 to 58% in the latest survey. However, the number who have taken action remains far below those concerned, at 9% in 2016 and 20% in 2019. Given the relatively broader scope of investment opportunities, portfolio companies face higher risks – and more concern – from PE professionals, at 83% in the latest survey. However, action is less than half of those concerned, at 31%.

Changing climate

In terms of the climate footprint of the portfolio companies, 77% of respondents state concern in the latest survey. 28% of respondents are taking action through the implementation of measures to mitigate their concerns.

Concern and action taken on ESG issues

In terms of the more pressing issues for emerging responsible investment or ESG issues, governance concern of portfolio companies comes in at number one (92% of respondents), while 60% have taken action on it. Firms have focused on improving awareness – setting up policies and a range of training modules for their professionals around responsible investment decision making. Cybersecurity takes the number two spot, with 89% concerned and 41% implementing strategies to mitigate risks.

Climate risks take the number three spot in terms of concern for portfolio companies (83%), but falls behind in terms of action (31%). Health and safety track records are a key concern at 80% of businesses, with 49% implementing action. Gender imbalance within PE firms themselves ranks at 78%, which is being dealt with by 31%. A recent survey from Oliver Wyman showed that there is gender balance at 13% of GP teams in developed countries.

Biodiversity is also an increasingly pertinent topic, with risks from pollution and chemical use increasingly driving wider systematic risks around environmental outcomes. It featured at number eight on the ranking of most likely global risks for the coming decade, with its impact at number six. As it stands, biodiversity is noted as an issue at 57% of firms, with 15% implementing action.