Sumeet Manchanda

Legally binding climate targets mean something! Twice in two years the UK government has been taken to court for not doing enough to meet its carbon reduction targets. And both times the government has lost. In 2022, the courts agreed that the government's Net Zero Plan did not clearly show how the plan would achieve the targets set out in the #ClimateChangeAct. And the government was sent away to beef its plan up. This year, the plans have been challenged again. And again, the government has lost. Later today, the High Court is expected to announce timelines for Department for Energy Security and Net Zero to come back for a third time with a credible plan. #climatechange #netzero #climateemergency https://lnkd.in/ekSM4AxC

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With tomorrow’s UK election likely to deliver a Labour government, Stephanie Kelly and I sized up the implications for UK climate and energy policy. See below for our key takeaways 👇

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A fantastic brief and essential read for directors of financial institutions on water risk from CDP and Annabel Nelson The brief outlines a clear call to action for Boards: 🌍 1. Adopting a systems approach: Understanding how climate change and water are interrelated, aligning internal governance to embed consideration of water into strategy and business decision-making. 🧐 2. Assessing risks and opportunities: Identifying and evaluating your business’ impacts, dependencies, risks and opportunities on water. 💪🏻 3. Using change levers: Using your influence to support sustainable water usage and management. 📄 4. Documenting and disclosing: Transparency drives accountability, supports trust and helps to mitigate risk. Easy reading at 17 pages, get it downloaded for your train journey. https://lnkd.in/d98ZvQpf

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When developing this research, I aimed to make #socialrisks and #esg risks accessible and measurable for the industry to understand the #financialimpact and to include the insights in #infrastructure #investment decisions

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🍃☘️🍀 NEW: the Committee on climate change: Net Zero means Investment Great to see supporting investment in low-carbon technologies lie at the heart of the Climate Change Committee’s (CCC) latest Progress Report and its recommendations to the new Government. The report makes sobering reading ‘policy reversals and delays…. together with inconsistent messaging, have hindered progress just when acceleration was needed. With the 2030 target only six years away, and the impacts of climate change intensifying, rapid action is needed to get things back on track.’ The Report emphasises the need for policies which support and encourage investment, with a focus on removing barriers to deployment. This has also been a consistent message from our industry during engagements with officials and stakeholders. The new CCC Report aligns with the BVCA’s own Manifesto for Growth on a number of calls for the new Government, including: 📉 Setting out clear commitments and actions on public investment and policy including for sectors with clear planning and fiscal arrangements in key areas. 🏗 Improving public infrastructure and speeding up the planning process to bolster investment opportunities, especially outside London and the South East. ♻️Supporting businesses working towards Net Zero targets, while allowing them to grow. As the CCC’s Report says: “Together, government, investors, businesses and consumers can drive a rapid shift away from fossil fuels and towards an increasingly cheaper, more secure and lower-carbon future.” The #privateequity and #venturecapital industry is well positioned to drive the transformation of our economy in the years to come and it is crucial for the UK to sustain its global competitive edge by remaining an attractive destination for investment. Cc Harriet Assem Christopher Khoury CA(SA) Breeze Haywood Isobel Clarke Sarah Adams Juliette Gerstein Will Todd Patricia Sebastian Cole Parker #sustainability #greengrowth #greeninvestment #ESG

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Useful benchmarks, which we will refer as appropriate in EFRAG sector ESRS.

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Following the announcement last week on the timeline for UK endorsement of #ISSB, this week the FCA published details in its Primary Market Bulletin of how its rulemaking will be affected. In particular: - Once the UK endorsement is completed in 2025, the FCA will consult on amending its rules to move from TCFD to UK-endorsed ISSB disclosure standards. It also intends to consult on strengthening its expectations for listed companies’ transition plan disclosures, with reference to the Transition Plan Taskforce (TPT) Disclosure Framework at the same time. - Companies may also wish to start reporting voluntarily against ISSB Standards prior to the conclusion of the UK endorsement process. The FCA may explore additional guidance to support issuers subject to its Listing Rules by indicating how reporting based on ISSB Standards can remain consistent with its existing TCFD-based rules, which issuers must continue to meet. https://lnkd.in/ekGUJWu4. 

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Lord Callanan, DESNZ minister for Energy Efficiency and Green Finance, speaking today at The Investment Association Sustainabilty & Responsible Investment conference in London. In amongst an interesting discussion, a couple of nuggets for policy geeks (even if specific dates are still missing): - UK Taxonomy consultation will be out soon - Also planning to consult shortly on transition planning disclosures - Green jobs action plan and report from Solar Energy Taskforce also coming. #TheInvestmentAssociation Isha Gupta | Rosalind Fergusson

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Tim Short argues in the Financial Times that Thames Water needs to be placed into Special Administration. We agree. He argues: - It no longer looks possible for the company to remain under the current ownership, or fully in the private sector. - As it occurs, the levels of investment approved by the regulator, although substantial, are much less than the companies requested. In ordinary circumstances, this would raise a question: why is the regulator allowed to reduce investment requests at all? - But these aren’t ordinary circumstances. As the Guardian reports, 108 of the projects agreed in the previous five year by Thames Water as part of its Asset Management Programme (AMP) have not been delivered. Many of the previous public objections have been spurious: but this is a serious problem, of a different level to the other known issues. - The upgrade failure is different. The company has admitted that it did not deliver. They spent the money but haven’t finished the work. In effect, they’ve been paid for work that they haven’t done. - This is qualitatively distinct to the other manifold failures of the company, because delivering the AMP upgrades is not optional. There is no question legally about whether it is optional. There is no defence. - The failure to deliver on the agreed infrastructure upgrades results in twin insoluble difficulties for the company. Firstly, it can no longer argue that it has not cheated in how much it has returned to equity. Secondly, it can no longer plausibly offer the public a major and transparent investment programme, because people can say “you didn’t do it last time.” From Fourier Asset Management LLP's perspective, we have long argued that the whole capital stack is unsustainable and that it is unlikely that any new equity could be provided by any investor while both the business and balance sheet are wholly unstable. Therefore, all parts of the capital stack are likely to require significant haircuts. #infrastructure #distresseddebt #credit

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Lots of interest in the room here to understand how to finance the net zero transmission. Hearing from a range of market participants including Robert Wigley OStJ, BSc, Hon DBA, FCA of UK Finance, Tim Lord of HSBC, Karen Ellis of WWF , Mahesh Roy of Institutional Investors Group on Climate Change (IIGCC), Julia Reinaud of Breakthrough Energy all moderated by Heather Buchanan of Bankers for Net Zero (B4NZ). Walking through the issues across each part of the challenge moving from climate tech to investors and an increasing need for inclusion in nature in transition plans. The focus is on creating real world change rather than just “prettifying” investments. Financial institutions will be at the forefront of financing the transition - they have a huge role to play in helping move the agenda along. What are practical difficulties? 1. Credibility - are we just greenwashing? We need to explain that sometimes you need to invest in certain sectors such as aviation or steel to green out the sector - which may increase your exposure in the short-term but is the right thing to do to decarbonise these sectors. 2. Operating in new areas - regulated and need to manage risk - education and upskilling in the banking sector to address newer, riskier areas of business. 3. Policy uncertainty - need to know where the Government going to be in the next 5-10 years time? Transition plans for companies provide credibility with high impact, larger emitters and allow engagement between companies and investors. So what do we need? Thoughts included: Appropriate policy signalling; the creation of a green army (who will actually do the work); support for innovators through an appropriate ecosystem; moving at pace (we need to test and learn quickly as time is against us); the creation of a climate budget; a true net zero investment plan; mandating Transition Plans (ideally to incorporate nature); a nature positive economic strategy; end fossil fuel subsidies; what you can’t measure you can’t manage - build a full picture and raise awareness across the ecosystem - what is needed? Fasttracking, focusing and funding. Thanks to the panel. #sustainability #investment #finance #banking #innovation CEN-ESG

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"Around 43% of properties are likely to be affected by subsidence in London by 2030." This is of course getting lots of press and the matter is clearly urgent as in just 5 more summers 43% of all Greater London's properties will be "affected" by subsidence. As Bowie said - we've 5 years that's all we've got... I am calling today for a taskforce for insurers to start buying up vacant offices and vape shops to act as community claim liaison centres for insurers and for a major scheme of rehousing and resettlement away from London to maybe Wales or Guildford. Wait...wait, just reading the document - source, yes lets read the references, ah, 72, ref 72, so that's: https://lnkd.in/edQCvqgy I am sure the author and team have a real mission to warn in a modern way about why London isn't prepared for climate change. But on this issue this is a complete mis-reading not only of the science but just of the web story. Here is what BGS says: "Experts at the BGS, the UK’s geoscientific advisor which helps to advance our knowledge about changes in the environment, warns that the number of properties in Great Britain facing subsidence issues and damage to property from shrink-swell is on the rise, with figures of just 3 per cent in 1990 likely to reach 10 per cent by 2070. Projections suggest that the number of properties in London likely to be affected by climate will rise from 20 per cent in 1990, to 43 per cent by 2030, and almost 3 times 1990 values (57 per cent) by 2070." Of course affected by climate might mean flooding, heat impacts, higher retrofit costs and adaptations and subsidence, including sinkholes, landslides etc etc etc This is needed work and reporting and most of it good sense and sensible recommendations - but dragging the wrong sentence from a speculative piece of work online is the road to bad policy. #subsidence #claims #property #London #lossadjusters #insurers Did you know by the way the UK is the first Islamist state with nuclear weapons - didn't know that did you? https://lnkd.in/efcYJkTm

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1.0 is broken. "Here is the voluntary carbon credit market 2.0" 🌎 📊 I was really pleased to hear the Global Chair of The Integrity Council for the Voluntary Carbon Market (ICVCM) Annette Nazareth speak - and ask her questions on a topic close to my heart. Post 1 of 2: as this is a shout out to my top speakers at the Carbon and Energy Professionals New Zealand conference in Ōtautahi Christchurch. CARBON CREDIT MARKET GLOBALLY 🌐 - "This is the voluntary carbon credit market 2.0" ⛰ - 1.0 is broken ⚡ - The new ICVCM standard has raised the bar on carbon credit projects globally 🔝 - "No projects have yet been certified under this new standard" ...! (good to know) 🔜 - The big players have had their programmes approved e.g. Verra, GoldStandard ⚜ - Evidencing 'Additionality' and 'Permanence' of a project are still the focus points/ hot topics - Impact to indigenous people and local communities are included in the standard - "Continuous improvement" of the standard is built-in. There will be a 3.0 at some point too! ICVCM has released the standard which, going forward, carbon credit projects globally should be certified against. The goal is to mobilise the private sector to fund climate action of high integrity projects. And last but not least - in fact most importantly - gross emission reductions is the first priority.

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#WeekendReading ⚡️ #Carbon pricing is essential for the UK's climate policy framework, providing revenue that can be used to support further #climate actions and mitigate the economic impact of environmental policies 🌍🌱 Read more in our full briefing ⬇️ https://hubs.la/Q02zXY1z0

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The Science Based Targets initiative (SBTi) has updated its guidelines to allow a broader use of environmental attribute certificates, including carbon credits, to address Scope 3 emissions in their net zero target framework. This pivotal update aims to enhance corporate efforts in tackling the most challenging emissions that occur outside direct control, like those from supply chains or product use. "Recognizing the complex nature of Scope 3 emissions, the expanded use of certified credits will help companies achieve more robust and scientifically aligned net zero targets," states the Science Based Targets initiative board. This change is expected to significantly influence the carbon credit market and assist companies in meeting ambitious climate goals. Learn more about the revised standards and their implications here: https://loom.ly/Cd2Dt4o #SustainabilityinAction #ESGSummitEurope2024 #NetZero #ClimateAction #SBTi

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Excellent insight as always from CDP on the state of transition planning across markets. A huge amount of effort has been put into this by Scott Twigg and the team, and the end result has a considerable amount of public value. Headline trends in the study echo what we are seeing through our transition planning work at EY with both corporates and financial institutions, and what I've observed through a year of engaging with preparers and users at Transition Plan Taskforce (TPT) • 1.5°C-aligned climate transition plans are visibly increasing • operational need and investor pressure are increasingly prominent drivers for corporate plans, augmenting regulatory direction of travel • there is a growing realization that transition planning is first and foremost about generating and preserving value, not ticking boxes Other side of the coin: transition planning is difficult when done right, and the jury is still out on how to define "credibility". Both these challenges need initiative from corporates, finance, and policymakers to create a much needed transition "market signal" which facilitates finance to and from where it needs to go. Keep an eye out in this space for the highly anticipated Transition Finance Market Review Vanessa Havard-Williams is leading. https://lnkd.in/gJhaDGPF Shaun Carazzo David Kennedy Rob Doepel Pablo Carvajal Anindita Pal Ben Morrison Ian Behling Richard Walsh Diana R. Gee Lachlan Rowe James Mann Azim Shamir Emma Matarasso

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🚨Using the military communication tactic BLUF for a world of busy readers🚨 🆘 In a world where paying for pollution only happens (at scale) if governments mandate it; allowing carbon credits to be used in lieu of a financial emissions liability in government programmes can be a catalyst for building demand (and liquidity) for carbon credits. 🆘 Linking government carbon programmes to increase the number and heterogeneity of participants should increase liquidity and lower transaction costs for all participants. And for those who haven’t stopped reading yet 🫣  In the latest episode of 'New Frontiers in Climate Finance', host Angel Miao discussed the research of Raúl C. Rosales, PhD on the economic and environmental benefits of incorporating the Woodland Carbon Code into the UK ETS. I had the opportunity to talk about demand and liquidity in carbon markets. These are inextricably linked. ⭐️DEMAND⭐️ 😭 You can’t have a market without buyers. 😍The beauty of government mandated carbon mechanisms is that they create demand by identifying the polluter, and take those physical emissions and turn them in to financial liabilities. 👍These financial liabilities are then paid for by acquiring a carbon asset (mostly in the form of an allowance but sometimes in the form of a credit). 👍The purchase of these assets, offset the financial liability. The polluter does not become carbon neutral - they still emitted - but they incur the economic pain of polluting and are therefore incentivised to find lower cost abatement opportunities. 👎Today, the only carbon markets that operate at scale is where the government creates financial liabilities for polluting. 👎We don’t voluntarily create financial liabilities for physical emissions yet (at scale). 👍 👍 Therefore linking carbon credits to a government mandated programme creates demand and starts to build liquidity. ⭐️LIQUIDITY⭐️ More participants and in particular the more heterogeneous the participation typically contribute to better liquidity. Here's why: 👍 With more participants, there are more potential buyers and sellers in the market. This increases the likelihood that someone will be available to take the opposite side of a trade, thus enhancing liquidity. 👍 The more heterogeneous the participation means there are more diverse strategies, risk tolerances, and time horizons. Different needs bring different perspectives of value to the market which can then be expressed through price. 👍👍Better liquidity is characterised by tighter bid-offer spreads, greater market depth, more stable prices (less volatility) and easier execution of trades. 😀 which lowers transaction costs. 🙏 🙏🙏 if you got this far 🙄

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Such a tremendous piece of work published by the Green Finance Institute co-authored by Dr Nicola Ranger and Tom Oliver of Environmental Change Institute (ECI), University of Oxford, University of Reading & UNEP-WCMC reinforcing #biodiversity loss and #environmental degradation create material risks for the UK economy and financial sector: 🌿 Deterioration of the UK’s natural environment could lead to an estimated 12% loss to GDP, 🌿 In comparison, the financial crisis of 2008 took around 5% off the value of the UK GDP, while the Covid-19 pandemic cost the UK up to 11% of its GDP in 2020 and, 🌿 This is leaving the economy and financial sector exposed, while these risks continue to rise unchecked. The full analysis includes recommendations and next steps for governments, central banks, financial institutions and regulators: https://lnkd.in/gq7xxmhc Daniele Strippoli | Ed Shedd | Anne-Marie Malley | Katherine Lampen | Matthew Guest | Philip Coleman | Yolaine Kermarrec | Steve Farrell | Steven Lizars | Tom Harris | Jessica Hodges | Simon Brennan | William Mitchell | Greg Minter-Brown | Amirah Khan | Nicholas Bilney | Christian T. #nature #biodiversity #water

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Thames Water: B and A tranches are both at risk of taking total or significant writedowns. Given the size of under investment, the question for Ofwat is how much equity is required to maintain leverage around the 55% target level.

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