Move the Money guide for financial institutions

In a historic decision at COP28, the world’s nations finally agreed to transition away from oil, coal and gas. More and more actors are now responding accordingly, putting more pressure on financial institutions to reconsider their fossil fuel investments. This guide is for banks, fund managers, and asset managers who want to future-proof their business – and avoid being stuck with stranded assets.

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  • At last year’s UN Climate Conference in Dubai, COP28, 197 nations plus the European Union signed an agreement to transition away from fossil fuels and triple their investments in renewables until 2030. It has been known for decades that investing in fossil fuels carries significant climate risk. Now, due to the unanimous decision at COP28, it is obvious that these kinds of investments also carry a growing financial risk. A study published in Nature calculates that global stranded assets as present value of future lost profits in the upstream oil and gas sector will exceed US$1 trillion.
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    More and more companies and individuals are already acting on these risks, moving their money from climate problems to climate solutions. With this transition comes enormous business opportunities. The International Energy Agency (IEA) calculates that $4,5 trillion needs to be invested annually in clean energy by 2030. If you are an asset manager, this is where your future growing markets are to be found. Here is a guide for financial institutions who want to stay relevant and future-proof their businesses.
    1. Calculate and compile your investments in – and financing of – oil, coal, and gas. This will help you understand where you have your biggest potential to move your money.
    2. Create a realistic transition plan with concrete deadlines and targets. This will send an important signal to potential investors, and will help you keep those investors that would otherwise have moved their money to more sustainable funds. If you can’t get out of some of these investments immediately, don’t worry. Most investors will understand that it will take some time to make the transition in an orderly manner.
    3. Develop an investment policy that explicitly states a zero-tolerance stance on new fossil fuel investments. Make sure that the policy also excludes all companies involved in expanding the extraction of oil, coal, or gas. The policy should clarify that any funds divested from fossil fuels are to be reinvested in sustainable, green solutions.
    If you're unsure about the criteria for an effective policy, consider reaching out to other financial institutions that have already divested in the same market where you operate. Often, they are willing to offer assistance, even to competitors. Collaboration is crucial in addressing the climate crisis. Additionally, good policy examples can frequently be found on various websites. Allow yourself to be inspired and adopt best practices with pride!
    4. Join coalitions with other financial institutions that are working for the climate. A few general examples: Net-Zero Banking Alliance. the Glasgow Financial Alliance for Net Zero (GFANDZ), Science-Based Targets, Exponential Roadmap Initiative and The UN Race To Zero Initiative (via SME Climate Hub if you are a small or medium sized company). Pick those that are relevant for your own operations.
    5. Communicate if you have joined coalitions and publish your new policy, both internally and externally. Explain why it is important to Move the Money, and share ideas on how to do it.
    Show your support. If you haven't done so yet, sign up for the #MoveTheMoney campaign. Thanks for your climate action!
    Should you have any suggestions for enhancing this guide further, please do not hesitate to contact our Editor via email:
    • Munene Mugambi

      3 w

      We cannot insist enough on the need to move our finances. Money is the key resource in everything. No fossil fuel funding, no fossil fuels. When we eventually move our funding to the right projects, we will then see our fortunes in climate change overtime.

      • Boniface Kuria

        3 w

        We should share this with Financial Institutions in our countries of residence and encourage them to move the money.

        • Rotich Kim

          4 w

          The information is the key we need more of such articles

          • Varsa Mahananda

            4 w

            I have grown up around people where majorly all of them made fun of you when you worried about saving water, not using plastic, etc. I think articles like this should reach the masses so it opens their eyes and makes them realise that climate change is real.

            • Rukia Ahmed Abdi

              4 w

              Very informative article. For a long period, COP annual resolutions have always been thrown under the bus. I am happy that resolutions for COP28 are being acted upon

              • Rotich Kim

                4 w

                This writing has more information on cop28 it is well illustrated and educative

                • Patrick Kiash

                  4 w

                  This article is very educative and informative, indeed our choice matters. I signed #MoveTheMoneyCampaign attached in this article and it led me to the more voices that agreed we must act for a noble cause of renewables before 2030, but time to #act is now.

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