This month’s opinion begins what will be a world tour in the months ahead to drill down into the conversation on green finance from one jurisdiction to another, from one point in time to another. The tour of WAIFC members will be conducted in no particular order, depending only on public information available.
While there are mainly commonalities in green finance questions in WAIFC member jurisdictions, it is useful to take a ground-level view to understand how truly complex this reworking of economies is in practice. The diversity of topics hitting everyone’s radar screens underscores how many influences must be considered when steering forward at a given moment.
This April, a Bank of Korea post outlined six current topics that needed public attention, in the home country and happenings abroad that affect the home market:
- “South Korea needs to ramp up its transition efforts.” According to the central bank, South Korea needs to quickly reform its green finance policy if it is to accelerate its decarbonization efforts. A BoK publication found that the country’s emission reduction efforts are moving ahead more slowly than other developed nations, and the level attained has fallen below the G7 nations average. As other developed nations have been transitioning away from carbon-intensive practices in business and public life, South Korea still has even further to go. The BoK recommended that South Korea’s financial institutions increase their offer of green finance tools. This sort of public prompting sends very strong messages to the institutions it oversees.
- ISSB considers biodiversity reporting approaches. The International Sustainability Standards Board (ISSB) is considering incorporating in its own work some of the reporting frameworks others have defined and adopted on biodiversity, ecosystems and ecosystem services. The frameworks under consideration include the Task Force on Nature-related Financial Disclosures, IFRS S1, and the Sustainability Accounting Standards Board. These initiatives have enough similarities that the ISSB could usefully build on them for its own standards; ISSB research staff have also found differences, some with “greater specificity,” between the Board’s literature and the biodiversity, ecosystems and ecosystem services disclosure standards. The next phase for ISSB is to further assess the differences.
What the BoK was flagging in this post is the way the public must come to define what needs to be measured and ultimately accounted for by businesses and governments. As climate change accelerates and experts gain knowledge, the basic metrics for green finance are also moving around.
- Bank climate alliance vote on dropping 1.5 C pledge.[1] The Net Zero Banking Alliance[2] has asked members to vote on dropping a pledge to align their assets with the Paris Agreement of limiting global warming to 1.5ºC. The idea is to save at least something of the direction of what has been a multiyear voluntary goal for the banking industry after an abrupt exodus of US banks in December.
Instead, the new proposal would ask members to commit to keeping their activities aligned with a less ambitious goal to keep warming below 2ºC. The Alliance was launched by then UN envoy Mark Carney, now the new Canadian Prime Minister; and created to stimulate the lowering of carbon emissions through direct financial incentives. But the Alliance has faced pressure from Republicans in the US. In order not to find themselves at a competitive disadvantage, European banks have also threatened to pull out unless the rules are softened, as financial institutions around the world have started to backtrack on their net-zero commitments.
- The UNEP FI (United Nations Environment Program’s Finance Initiative) issued a report on the advance of AI. AI technologies are making nature-based solutions more accessible, transparent, and scalable for businesses and their finance providers, if they pick up these tools. There is a push to solve data challenges due to differing collection methodologies, while technology can help manage nature-related risk. The UN noted that insurance services are also likely to play an increasing role in the carbon transition by identifying and addressing nature-related issues from that different perspective on risk/return. The public finance of de-risking of green finance will also continue to grow, the UNEP FI predicted, given the rapidly growing costs of both addressing climate questions and not addressing climate questions.
- The COP 30 is likely to integrate more of the questions our natural environment is facing rather than the historic focus on our own species, according to a report by Moody’s Ratings.[3] The nations with the richest biodiversity on their territories are likely to take the stage in Belem, Brazil, later this year. Land trade-offs could also become a critical question, becoming more acute as use for the transition away from fossil fuels and biodiversity preservation comes rapidly into play.
- The BoK also noted the plethora of job firings at US science agencies, which could threaten key climate data that insurers use to manage risks and determine pricing for consumers.[4] The Reinsurance Association of America is lobbying to preserve data collection at the National Oceanic and Atmospheric Administration, which is planning to cut 1,000 staff. The agency oversees the National Weather Service and monitors real-time storm data used to forecast potential life-threatening storms. Insurers have also raised concerns about cuts to other US federal agencies tasked with tracking hurricanes and hailstorms, and monitoring drought conditions which can raise wildfire alarms. If the data are not preserved, insurers would need to collect modeling data from private satellite operators, a cost that would likely be passed onto consumers.
What the Bank of Korea notices underscore is how interconnected and multifaceted these questions ultimately are.
[1] That half of one degree Celsius has significance. Among the effects postulated are more frequent and intense heatwaves, and increased risk of drought; heavier rainfall and flooding; the expected loss of twice as many plant and vertebrate species, and three times as many insect species; the risk of bleaching nearly all the world’s coral reefs; more ice-free Arctic summers; increased heat-related human illnesses and deaths, and changing patterns of disease spread; declining agricultural yields leading to greater food insecurity; sea level rise with attendant damage to coastal infrastructure; and greatly increased human migration. Perhaps these warnings should not simply be in a footnote.
[2] https://www.unepfi.org/net-zero-banking/ This Alliance is a volunteer association of banks under the United Nations umbrella.
[3] https://www.environmental-finance.com/content/news/natures-integration-into-decarbonisation-plans-to-be-prominent-at-cop30-says-moodys.html. The link is noted here, but the article is behind a firewall.
[4] https://www.ft.com/content/33a4d1f6-848f-4b63-86c6-9330fe6f6d89. This link to the Financial Times may also be behind a firewall. It was published on 14 March 2025.