The Climate Principles: Finance leaders launch first global climate change framework

2 December 2008

A group of major international financial institutions has joined with The Climate Group to launch a new code to guide best practice across the sector to deal with the risks and opportunities of climate change.

The new code, titled The Climate Principles, is the first comprehensive industry framework for the sector's response to climate change and has been adopted by Crédit Agricole, HSBC, Munich Re, Standard Chartered and Swiss Re.

The Climate Principles will not only guide operational greenhouse gas (GHG) emission reduction commitments, but also provide strategic direction across the full range of financial products and services including research, asset management, retail banking, corporate banking, insurance and re-insurance, investment banking and project finance. It is intended to align with, and build on, existing initiatives to ensure a consistent and effective sectoral approach to addressing climate change.

Steve Howard, CEO, The Climate Group said, "A rising tide lifts all boats, which is why we have decided to launch a global framework that will unify the response of a sector that is vital to accelerating action on climate change. The current global turmoil has reinforced the fact that global problems require global solutions. Early recognition of the risks and opportunities of climate change is essential to this sector's future success."

Francis Sullivan, from HSBC and Chair of The Climate Principles said, "Signatories will incorporate carbon and climate risk into their research activities and investment decisions, engage with clients to understand climate risks and opportunities and develop products and services that support them in managing those risks and exploiting those opportunities."

The establishment of The Climate Principles enables financial institutions to demonstrate the importance they place on embedding climate change considerations into core business strategy and activity and to publicly disclose progress against key indicators. All international financial institutions are invited to support and adopt The Climate Principles. The Climate Group and initial group of adopters look forward to expanding discussions with interested stakeholders and seeing additional financial institutions adopt the Principles.


How The Climate Principles will work

The Principles will strengthen existing commitments made on climate change by the financial sector as well as enabling financial institutions to respond innovatively to areas that are yet to be tackled.

Guidance is tailored to suit each part of the finance sector. Retail banks will address the level of customer enthusiasm for tackling climate change and the barriers currently preventing them from taking action.

Insurance and reinsurance institutions will advise clients on climate risks and mitigation technologies. Corporate and investment banks will work on financing solutions to facilitate investment in low carbon technologies and greenhouse gas (GHG) reduction projects as well as measuring the climate impacts of their investments. In addition, investment banks will build expertise to support development of trading in emissions, weather derivatives, renewable energy credits and other climate related commodities. Project financiers will also request that clients disclose project GHG emissions and seek reduction and offset solutions.

Key benefits of The Climate Principles include:

. Environmental Rigour
Ensuring a robust global approach to tackling climate change.

. A Global Standard
Standardising the way financial institutions address and advise on climate change.

. Increasing Transparency
Monitoring the progress of financial institutions against disclosure guidelines.

. Sectoral Reform
Continuously moving finance sector leadership on climate change forward and facilitating best practice sharing.

The Principles will be managed by a Steering Committee, chaired by a representative member. The Climate Group will be the secretariat of The Climate Principles, provide administrative support to the Steering Committee and will review disclosure against the Principles on an annual basis using publicly available information and identify emerging consistent and best practice.

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