U.S. Financial Services Leaders Support Principles for Low-Carbon Transition

February 18, 2021 by

U.S. financial services leaders have stated their support in principle for a U.S. transition to a low-carbon economy.

The support comes following the release of the Principles for a U.S. Transition to a Sustainable Low-Carbon Economy by the U.S. Climate Finance Working Group.

The group is comprised of 11 financial services trade associations that have come together around climate and sustainability topics relevant to their respective areas of the financial services industry and the broader corporate sector.

Working Group members include: American Bankers Association; Bank Policy Institute; Financial Services Forum; Institute of International Bankers; Institute of International Finance; Investment Company Institute; and Securities Industry and Financial Markets Association.

Several heads of large U.S. banks and investment firms, including Bank of America, Goldman Sachs, JPMorgan Chase, and Citigroup, issued statements following the expression of support.

“Financial services companies are playing a key role in helping the economy make the transition to a low-carbon, sustainable future,” said Brian Moynihan, CEO and Chairman of the board of Bank of America. “The U.S. Climate Finance Working Group has performed an important service by framing the core set of risks, opportunities, and market-based principles that will help us reach that outcome.”

The principles are intended to serve as a framework, offering perspectives from the banks, investment banks, insurers, asset managers, investment funds, pension funds and other financial intermediaries. They include:

  • Set science-based climate policy goals that align with the Paris Agreement
  • Increase and strengthen U.S. international engagement
  • Price carbon and leverage the power of markets
  • Promote more robust climate disclosure and international standards
  • Ensure climate-related financial regulation is risk-based
  • Build capacity on climate risk modeling and scenario analysis
  • Strengthen post-disaster recovery, risk mitigation and adaptation

Green Transport

“Green transport” was one of the top green sectors of growth last year.

A new report examines the top five green sectors with the biggest growth in 2020 and the top five green stocks with the biggest growth.

The report from Money.co.uk shows green transport saw an average increase of 647% per share, with the average per-share starting price of $26.54 rising to $198.25 per share.

Green transport’s growth was largely driven by the stocks of Tesla, although other companies in this sector which had a good year include BYD Company and FuelCell Energy, according to the report.

Following that sector were alternative energy (375%), solar power (224%), renewable energy (84%) and wind power (81%).

The top green stocks with the biggest growth in the last year were led by Plug Power (PLUG), which started the year at $3.24 per share and rose to $33.91, a 947% increase.

The top five green stocks were rounded out by Tesla (NASDAQ: TSLA), whose shares rose 720%, Enphase Energy (NASDAQ: ENPH) whose shares rose 498%, FuelCell (NASDAQ: FCEL) whose share rose 456% and BYD Company (OTCMKTS: BYDDY) whose shares rose 423%

“Tesla’s stock enjoyed a meteoric rise in 2020, growing by over 700% from the start of the year, before becoming the biggest company ever to join the S&P 500 Index in December, joining as the sixth-largest publicly traded firm in the country, behind the likes of Apple, Microsoft, Amazon, Google and Facebook,” the report states.

Fossil Fuel Pollution

Fossil fuel pollution is killing 8.7 million people annually across the globe, according to new research that paints a picture of deadly consequences from pollution.

Research by a team of U.S. and UK scientists published in Environmental Research shows the 8.7 million figure is double the previous high-end estimate of fine-particle pollution mortality, and three times the combined number killed by HIV/AIDS, tuberculosis, and malaria in 2018, according to a recent Bloomberg article published in Insurance Journal.

The researchers found there were 350,000 premature deaths per year in the U.S. attributable to fine-particulate pollution generated by fossil-fuel combustion, which is up roughly 100,000 to 150,000 from previous estimates.

Researchers added to the latest findings using data on the real health effects of “PM₂.₅,” deadly airborne particulate matter consisting of particles smaller than 2.5 millionths of a meter, studying the relationship between levels of air pollution and their effects in different regions, and using an improved model of how air pollution travels.

“I’m a pediatrician,” Aaron Bernstein, interim director of the Center for Climate Health and the Global Environment at Harvard’s Chan School of Public Health, told Bloomberg. “When I’m taking care of a child who’s struggling to breathe because they breathe polluted air, the parent of that child is maybe very concerned about the world that their child is going to grow up into, and lead their lives in, when they’re 40, 50, 80 years old. But I assure you they worry a lot more about the child not breathing right now.”

NAIC

The National Association of Insurance Commissioners recently discussed the work of its Climate and Resiliency Task Force, which is responsible for coordinating state-level efforts to address growing climate risk in the insurance sector.

The task force coordinates the NAIC’s efforts on climate and resiliency issues, including facilitating dialogue among regulators, the industry, insurance consumers and other stakeholders. It addresses national issues and provides information and tools to states.

The task force is expected to hear reports at the NAIC National Meeting on major issues facing state regulators, including pre-disaster mitigation, solvency, climate risk disclosure, innovation and technology.

Members of the task force are also expected to consider risk reduction measures and the role insurance regulators can play in advancing these efforts.

The goal, according to the mandate of the task for, is to help these regulators: better protect and prepare policyholders and insurance markets to withstand physical and economic consequences of climate risk; evaluate financial regulatory approaches to climate risk and resiliency; consider appropriate climate risk disclosures for insurers; consider solutions and strategies within the insurance sector; and review the use of predictive modeling to better assess climate exposures.

The task force is co-chaired by California Insurance Commissioner Ricardo Lara and South Carolina Insurance Director Ray Farmer.

“The Climate and Resiliency Task Force is taking on the important charge of evaluating regulatory approaches to help make their communities more resilient and finding innovative solutions that offer consumers better protection,” David Altmaier, NAIC President and Commissioner of the Florida Office of Insurance Regulation, said in a statement.

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