Words that are now true more than ever, in a world facing a complex geopolitical situation, once again shivering from the first gusts of the winds of war.
By imposing stricter capital requirements on fossil-fuel lending, governments and banking regulators can help to redirect a huge flow of funds to necessary climate-friendly projects. To those who claim that such a step would be too costly, the appropriate response is: “Compared to what?”
Many of us had hoped, perhaps naively, that global leaders gathering at the United Nations Climate Change Conference (COP26) in Glasgow last fall would significantly accelerate international and national efforts to slash greenhouse-gas emissions. It was not to be. Governments made some progress on methane emissions, deforestation, and the transition to electric vehicles. But other necessary action – above all, much more ambitious national pledges and plans – was postponed for another year.
The world cannot afford to waste any more time. On current trends, we have ten years before we exhaust our global carbon budget, reach interlinked points of no return, and crash through the 1.5º Celsius limit on global warming that governments and scientists warn is essential if our children and grandchildren are to have a livable future.
So, what is to be done? As a top priority, regulators and central banks should charge banks the real price for their polluting fossil-fuel portfolios, thereby permanently shifting incentives in favor of financing the green transition.
As the International Energy Agency has made abundantly clear, the exploitation and development of new oil and gas fields must stop. The IEA also warns that the world cannot build any new coal-fired power plants if it is to achieve net-zero emissions by 2050 and thus limit the increase in global temperature to a safe level.1
Tightening the capital requirements regarding the financing of fossil-fuel projects can help us meet this goal. Specifically, banks should be required to pay a “one-for-one” capital charge for any new fossil-fuel lending – as recently proposed by an international coalition of investors, academics, and civil-society groups. In addition, regulators should introduce a capital charge for existing fossil-fuel loans. This levy would depend on the nature of the activity being financed and would increase over time.
Changing banks’ investment incentives in this way would have immediate and rapid effects on their strategies and portfolios. In taking these simple but important steps, policymakers would align capital regulations with the growing international climate consensus among central banks, many of which now accept that their mandates contain an implicit requirement to act on climate change in order to help ensure financial stability.
The Basel Committee on Banking Supervision is currently considering how regulation should treat climate-change risks. These technocrats need to take the initiative and make climate polluters pay, thereby underscoring the absolute necessity of a halt to new fossil-fuel lending.
When bank lobbyists claim that such a step would be too costly, the appropriate response is: “Compared to what?” The reinsurer Swiss Re, which has some of the world’s best climate modelers, estimates that one-fifth of all countries face possible ecosystem collapse because of biodiversity loss and forecasts that failure to act on climate change could cost as much as 18% of global GDP by 2050. The European economy could contract by 10.5%. This cost – the multitrillion-dollar, hot-house reality of inaction and delay – is too great to bear.
In comparison, the problems of stranded assets and non-performing loans that will emerge as investors increasingly shun fossil fuels are far easier to manage. Most banks will be able to absorb these losses and reorient their loan books to speed the green transition. If some cannot make the shift because they are “all in” on fossil fuels, national regulators may need to establish “bad banks” to take the literally toxic assets off their books and restructure them. They have intervened in similar ways before, and they can do so again.
SGS & Partners Limited (SGS) is pleased to announce a strategic agreement with Matteo Colafrancesco Tax and Legal Advisor (MCADV) as to foster professional synergies in their respective areas of expertise, with a focus on international reorganizations and cross border transactions.
Leverage Shares, the pioneer of physically-backed single stock ETPs, is expanding its suite of Short and Leveraged (S&L) ETPs. The innovative provider is listing the first-ever leveraged ETPs offering 3x geared and -1x inverse exposure on Airbnb, Disney, Palantir, Peloton and a -3x inverse version of their flagship Tesla ETPs.
The launch of these ETPs offers investors analytics via some of today’s most innovative companies, and access to sectors like:
- streaming services;
- personal health;
These short and leveraged ETPs provide a cost-efficient alternative to those who want excellent exposure. Indeed, Leverage Shares has also added new stocks on which it now offers exchange-traded products. These include:
- Plug Power:
“We’re known for listening to our investors and our latest batch of products proves just that – we are giving sophisticated traders additional instruments to include in their toolbox. Experienced investors can express strong convictions though our 3x ETPs or minimize downside risk by hedging with our inverse products”Oktay Kavrak, Product Strategy, Leverage Shares
Moreover, Leverage Shares is adding 21 more names to its industry-leading array of S&L ETPs on single stocks.
“We are very pleased that Leverage Shares chose to partner with us to launch their new family of ETPs based on the iSTOXX Single-Stock Leveraged Indices. We see strong demand in the market for expressing high-conviction investment ideas, and these indices enable investors to do so in a way that is rules-based and transparent.”Brian Rosenberg, Chief Revenue Officer, Qontigo
The 21-strong line-up offers exposure to leading US and Asian stocks at a fraction of the price.
- ISA/SIPP eligible;
- Listed at just $5 a share;
- No Margin Account Needed;
- Available in GBP, USD and EUR;
- Each ETP is 100% physically backed;
- Listed on London Stock Exchange, Euronext Amsterdam and Paris.
On Saturday, the Financial Conduct Authority (FCA), banned Binance and affirmed that the firm cannot conduct any “regulated activity” in the country.
Although low interest rates have traditionally been viewed as positive for economic growth because they encourage businesses to invest in enhancing productivity, this may not be the case. Instead, extremely low rates may lead to slower growth by increasing
Business cycles can end with a rolling readjustment in which asset values are marked back down to reflect underlying fundamentals, or they can end in depression and mass unemployment. There is never any good reason why the second option should prevail.
The World Bank recently started advising governments to assume the bulk of the risk in public-private partnerships, so as to attract more private-sector players. But in addition to introducing an unacceptable moral hazard