By Danielle Pamela Neben, NFI Editor
Firstly, a big thank you to all of our speakers and our sponsors: Nordea, Danske Bank, SEB, DNB, Triodos Bank, Ålandsbanken, FIM/S-Bank, Worldline, South Pole, PwC, Kaiku, Carbon Tracker, Merkur Andelskasse, Nykredit and our hosts IBM and PwC!
I will be writing a few articles in the coming week to share with you what we have learned these last days with NFI. Today I share with you some pictures and my initial reflections. I am not sure whether to say I am scared or inspired by the presentations we had in Helsinki and Copenhagen. We have a huge question ahead of us in terms of how we will deal with climate change with the threat of continuous fossil fuel development.
THE CARBON BUBBLE
Our banking system and pension funds continue to fuel the financing of this sector which is incredibly damaging for the earth. The accounting standards exacerbate the problem. Why? This is pure asset lending on oil reserves, with no consideration for climate risks. And our precious earth cannot absorb these reserves. These reserves need to stay in the ground. So how can we be lending against them?
We are also providing pure asset lending on fossil fuel asset: pipelines, oil platforms, coal stations. With no depreciation and positive terminal value in discounted cash flow models. But this cannot be right? 42% of coal plants across the globe are losing money. 35% of coal capacity costs more than building new renewables.
Hedge funds in New York are starting to look at the bigger threats in this industry. Is this the next big short?
The oil & gas sector has used $1bn in lobbying to stop the Paris Agreement. Is this a good use of shareholder funds?
Do we need an IFRS 9 for lending against fossil fuel assets to have a correct approach to valuation?
HOPE FOR THE FUTURE
I was inspired by the many programs that the various banks in the region are working on. Anne-Maria Salonius from Ålandsbanken shared with us the most amazing product > Credits cards recording each individual’s carbon footprint. Transformational innovation with social impact from a bank of 700 people.
James Vaccarco at Triodios Bank shared their core objective: positive impact banking. Finding social entrepreneurs wanting to do good with innovative ideas and financing through depositors wanting to make change. You can see each company financed in their Triodos Bank app. 100% transparency. And this little Triodos Bank is one of the founders of UN Principles for Responsible Banking.