Entries for 'Carbon Markets'

Amid tighter monetary and financial market conditions, ESG fund flows remain subdued and volatile. After large outflows in March, April saw a slight recovery in investor appetite for ESG funds. However, outflows from emerging market ESG funds accelerated in April.

The voluntary carbon markets continue to gain momentum despite financial market volatility in recent months. The proliferation of net zero targets by large corporates remains the major driver of market expansion.

ESG fund flows have picked up, amid easier financial conditions and growing demand. Global climate flows surpassed $1.1 billion in 2022 - up over 25% from $870 billion in 2021. On average, ESG stocks and bonds are up by some 5% in 2023 ytd. Global sustainable/ESG debt issuance was down over 15% to $1.3 trillion in 2022, from $1.5 trillion in 2021. We project global ESG debt issuance to climb to $1.7 trillion in 2023 and near $2 trillion in 2024.

Progress by the Integrity Council for the Voluntary Carbon Market (IC-VCM) and the release of the Core Carbon Principles (CCPs) will help address ongoing concerns about voluntary carbon credit quality—a must to support market expansion; Greater price transparency will also help: in this first edition of our new Voluntary Carbon Markets Monitor, we introduce a registry transparency index to assess disclosure of the registries that track and validate the quality of carbon credit projects.

We are pleased to share the latest edition of our new quarterly chartbook, designed to monitor sustainable flows (to ESG funds, climate finance flows, and climate finance to emerging markets), ESG market development, the electric vehicle industry, and the evolution of the voluntary carbon market.  The chartbook also includes our regular ESG Country Scorecard—a useful indicator of progress in areas including carbon efficiency as well as broader environmental and social issues in emerging and frontier markets. We welcome your comments!

Voluntary carbon markets (VCMs) are featuring prominently in discussions at COP27, as multiple initiatives are being launched to support their critical role in scaling up finance to emerging and developing economies.

Climate finance and ESG investing were top themes at our IIF Annual Membership Meeting and the IMF/WB Annuals; Energy security concerns, inflationary pressures and budget strains are jeopardizing timetables for climate goals.

Offset issuance in voluntary carbon markets has slowed this year amidst concerns over excess offset supply; Rising corporate net-zero pledges and technology advances (e.g. blockchain-based protocols) should support market growth, however, lack of price transparency and standardization remains a significant barrier for market growth; The finalized Article 6 Rulebook could spur efforts to integrate voluntary and compliance markets over time; Defining global threshold standards for high quality carbon credits should help bring greater price transparency and liquidity to voluntary carbon markets; A large share of carbon offset projects originates from emerging markets; pure removal-based offsets remain too scarce

Against a challenging market backdrop, flows to ESG funds fell to just $75 billion in Q1 2022-a sharp slowdown from their recent pace. Inflows in March ($15 billion) were at their weakest since March 2020; Sustainable debt issuance dropped to $285 billion in Q1, down 30% from Q4 2021; However, investor demand will remain underpinned by the continued acceleration in corporate net-zero pledges.

Offset issuance in voluntary carbon markets declined sharply in Q1 2022-the slowest pace of issuance since Q3 2020. Most of the issuance came from China, the DRC, Indonesia, India, the U.S. and Turkey in Q1.

The EU Carbon Border Adjustment Mechanism (CBAM)—which would charge importers of steel, aluminum, and other inputs a tax equivalent to the EU’s domestic carbon price—calls for a gradual phase-in of reporting “embedded emissions”; From 2023, reporting on iron, steel, aluminum, fertilizer, electricity, and cement will take effect, and importers will start paying a tariff on these products from 2026; In 2020, the EU imported some $50 billion in “CBAM products” from countries outside of the EU Emissions Trading System; Russia, China, and Turkey export the most CBAM products to the EU; Italy and Germany are by far the largest importers.

The IIF Sustainable Finance Monitor covers key developments in the global sustainable finance agenda. In the December issue, we discuss the how a US framework for sustainable finance could take shape under a Democratic Administration. In addition, we share the latest policy and regulatory updates, an overview of open sustainable finance consultations, news on key initiatives, frameworks and tools, our ESG market snapshot, and a calendar SFWG activities in 2021.

The IIF Sustainable Finance Monitor covers key developments in the global sustainable finance agenda. In the October issue, we discuss the IIF's Taskforce on Scaling Voluntary Carbon Markets and the transition to net zero emissions, share key updates on policy and regulatory developments, the latest on key initiatives, frameworks and tools, our ESG market snapshot, and SFWG activities and events.

Voluntary carbon offset (VCO) issuance has grown strongly in recent years, doubling in 2019 to nearly 130 MtCO2e; However, trading volumes have been subdued since peaking at 135 MtCO2e in 2008.

This IIF Staff Paper examines what the European Council will prioritize in the second half of this year. Although Berlin had drafted an ambitious program – transitioning to a greener economy, boosting digitalization, reforming migration policy and redefining the bloc’s relationship with the UK as well as China – the German Presidency will now instead prioritize tackling the challenges of the COVID-19 pandemic.