From carbon emissions to deforestation and collapsing water cycles, both the corporate and financial sectors contribute hugely to the fossil fuel economy. When tackling the climate emergency, both sectors have a fundamental part to play in the transition to a green economy through disclosure, transparency and carbon emission reporting. And that’s where CDP and UK PACT (Partnering for Accelerated Climate Transitions) come in.
UK PACT is a flagship program under the UK’s International Climate Finance (ICF) portfolio that funds projects aiming to accelerate partner countries’ transitions to low-carbon development.
The collaboration between CDP and UK PACT so far has focused on China, Brazil, Indonesia and Thailand, with the aim of supporting the achievement of net-zero targets through climate disclosure and supporting capacity and skill development of key stakeholders.
Brazil:
Brazil is the largest economy in Latin America and home to immense natural resources, including 44% of the world’s forests. However, the country has been severely impacted by COVID-19, economic recession and continued deforestation. The project in Brazil, aimed to increase awareness of new ways of working, policies and approaches to help reduce carbon emissions and deforestation among banks, investors and insurers. Through a series of webinars, events and direct engagement, the project has helped build knowledge on the importance of Taskforce on Nature-related Financial Disclosure (TNFD) and Task Force on Climate-Related Financial Disclosures TCFD and increasing transparency of climate risk and opportunities.
As a result, there was a 40% increase in the number of companies and a 107% increase in financial institutions disclosing through CDP’s climate change questionnaire from 2020 to 2021. In 2021, 10% more companies in Brazil disclosed that they had incorporated climate-related risks and opportunities in their strategies and/or financial planning than in 2020, and 20% more indicated they had board level oversight of deforestation risks.
China:
Green finance is central to China meeting its energy and climate goals and recovering from COVID-19. The UK PACT China project aimed to support the establishment of green finance in China through building a better regulatory environment, enhancing the disclosing capacity of the markets, and driving wider transparency.
Working with the government and regulators, CDP and UK PACT have developed new frameworks for disclosure and negotiated a timetable with the Environmental and Ecology Ministry. These frameworks formed part of a new online portal alongside a pilot group for high impact sector UK and Chinese firms to join joint-learning sessions on greater disclosure and transparency.
The project has driven improved transparency in Chinese financial sectors and capital markets with an increase of over 20% in the number of Chinese financial institutions and listed companies disclosing through CDP in 2021.
In addition, the project established a UK-China pilot study group (involving three UK and six Chinese companies) to share best practice in TCFD-aligned disclosure through webinars, and organised three workshops for the Chinese financial institutes and listed companies on TCFD-aligned disclosure.
During the duration of the project, we saw a 50% increase in the number of Chinese listed companies disclosing to CDP. Two more Chinese investors became CDP signatories in mainland China which will help drive transparency for their investees and support them with their green financing and investment decisions. 29 Chinese institutions became TCFD supporters in 2021 as a result of promotion and knowledge sharing at various events.
Southeast Asia:
Despite being at high risk from climate change effects, Indonesia, and Thailand's efforts to meet their Paris Agreement NDCs are being slowed by their COVID recovery and a spike in carbon dioxide emissions. As a result, a green recovery ecosystem that brings together policy, corporate ambition, and sustainable finance is needed.
The Southeast Asia UK PACT project aimed to accelerate emission reduction and encourage green inclusive economic recovery through enhancing transparency and the disclosure capacity of corporates and financial institutions.
The project developed and successfully delivered a capacity building program for listed companies and financial institutions in partnership with the Indonesia Stock Exchange (IDX), the Stock Exchange of Thailand (SET) and the British Embassies in Bangkok and Jakarta. The project equipped participants with tools and knowledge on climate disclosure and actions that recognize financial risks and opportunities associated with climate change and ESG practices and focused on the use of disclosure data to identify green finance opportunities.
4,700 attendees from over 370 companies in Indonesia and Thailand participated in 14 capacity building workshops. As a result, 71% Indonesian and 73% Thai companies disclosing through CDP reported having an active emissions target in 2021 – a 10% improvement from 2020 in both countries.
In the face of the deepening climate crisis, the time for business-as-usual is over. The time for transparency and action is now.