Rising interest rates: What is the short- and…
The European Central Bank (ECB) has just announced its first rate hike since 2011. We asked William Telkes, Chief Economist and Vice President, Head of Private…
The United Nations Member States adopted in 2015 a set of 17 sustainable development goals, commonly called the SDGs, to be achieved by 2030. It is a mixed set of social, environmental and economic development goals ranging from ending poverty, improving health and education, reducing gender inequalities, tackling climate change and protecting our forests and waters. These goals come with a number of targets to be achieved by 2030, directly benefitting the well-being of people. Countries then define their own key performance indicators to measure progress towards the SDGs.
The sustainable development goal 13 is about taking urgent action to combat climate change and its impacts. Under the UN, the Paris Agreement on climate change was adopted in 2015 with Member States establishing national targets to tackle climate change. These targets have to become more ambitious every five years. Currently however policies in place around the world are not strict enough to combat climate change, we are rather heading towards a 3°C increase in temperature than the 1.5-2°C increase as prescribed by the Paris Agreement. But on regional levels the right targets are being put into regulation to move towards meeting the goals of the Paris Agreement. The EU has adopted the goal to reduce the emissions of greenhouse gases by minus 55% from the 1990 level by 2030 and to become carbon neutral by 2050. Luxembourg, has adopted the same targets, with 2005 as a reference year, through its new climate law from December 2020.
The UN integrated national financing frameworks are a guide for financing national sustainable development priorities and the SDGs defined at the country level. What needs to be financed is laid out in a country’s sustainable development strategy and action plan, like Luxembourg’s 3rd national sustainable development plan for 2030. One of the priorities of this plan is, for example to guarantee the availability of financing for climate actions, access to clean energy and other SDGs. Making finance flows consistent with the pathway towards low greenhouse gases emissions and resilient development is also a requirement of the Paris Agreement. This has led to the development of Luxembourg’s Sustainable Finance Roadmap and Sustainable Finance Strategy and on the EU level the EU sustainable finance action plan. The collaboration with the private sector is essential to mobilise sufficient financing for the implementation of climate action in the real economy.
According to climate projections, a decrease in precipitation in the summer months and an increase in winter precipitation are to be expected in the future, while at the same time an increased risk of flooding and extreme weather events. These have consequences for construction and housing, the energy sector as well as agriculture, ecosystems and biodiversity. A series of actions to reduce the impacts of climate change and extreme weather events are for example presented in Luxembourg’s National Climate Adaption Plan for the period 2018-2023. Every household and every company has its own specific vulnerability to natural disasters, hence the right adaptation measures are individual.
The first step towards becoming a more sustainable bank is to define a clear sustainability strategy, an ambitious action plan and setting up the right internal governance structures to implement them. Like for any other company, Spuerkeess can raise awareness among its staff on how to identify and address climate risks and opportunities and how to define sustainable activities for the bank’s day to day business activities. In addition, banks can start to offer more attractive products and services that specifically finance sustainable activities while reducing over time the lending, financing and asset management of activities that clearly hurt the climate and the SDGs. Directly engaging with companies that are carbon intensive to help them finance the transition to low carbon business models is also important. Further, access to better sustainability data and transparency is key for sustainable finance to grow more rapidly.
About the blog:
There is an urgent need for rapid transition to Global Environmental Sustainability. Thanks to changemakers, progress is possible. "Why does it matter?" is a bi-monthly series that takes a quick look at the forefront of today's trends around sustainability. From May 2021 on, we aim to elucidate this important topic through the eyes of our experts.
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