New guidance from #ISSB #GRI to help put the Just in #JustTransition

#TransitionPlans #TransitionFinance #sustainableFinance #ResponsibleFinance

That's not to discount the value of better data, but to recognize that data has uses and limitations, both when it is backwards looking and when it is forward looking and predictive. There is no perfect metric and human experience is needed to make sure data is applied towards equitable outcomes.

Risk metrics that overly weight risk in emerging markets inhibits financing flows where it is needed most, and contributes to the problems of debt structures that are too rigid to support resilient #TransitionFinance.

The Doom Loop | Advait Arun Insurance markets and climate risk

"Falsely precise climate risk measurements could arbitrarily worsen or ameliorate these dynamics, too. These problems are not created by insurance markets, but rather endemic to the financial system."
www.phenomenalworld.org/analysis/the...

The transition is an ideal situation for new models to emerge because past risk experience doesn't map as well to future risk prospects, which is going to force significant changes in how financing adapts within a changing climate, especially if insurance faces its own climate reckoning.

As has been seen, Islamic banks in particular struggle to use equity-based products because of the realities of bank regulation, but there is a lot more room for different financing channels now than in decades past when the choice was bank or investment house / investment fund.

Islamic finance prioritizes a link to underlying real economic activities, and many people want it to focus more on equity-based structures. This could also provide value in a transition finance scenario because debt rigidities can lead to sharp cliff-edge 'jump to distress' pricing.

The short version is that transition finance for things like coal phase out are very complex, and also very rigidly structured at the project level. When transition depends on an uncertain future path & speed, rigidities cause problems and lengthy debt negotiations at each step slow the transition.

A longer discussion of the challenges of using debt-based finance for #TransitionFinance and the opportunity for #IslamicFinance to define a better approach

#SustainableFinance #ResponsibleFinance
www.linkedin.com/pulse/islami...

One of the issues that isn't fixed by frameworks or guidelines for #TransitionFinance is the challenge that companies making the investments needed may get penalized with lower credit ratings vs peers who ignore #TransitionRisk #SustainableFinance

Making sustainability work for OIC financial institutions & Islamic finance Systemiq, a company focused on promoting systems change work, has released its “Blue Whale Inquiry” seeking to combine insights into the current challenges facing sustainability gathered from 50 leade...

In doing so, there should be a priority placed on the delivery in support of ambitious goals, rather than focusing mostly on an approach to #ESG dictated by compliance and disclosure obligations. #ResponsibleFinance

www.linkedin.com/pulse/making...

For financial institutions in #OIC markets in in #IslamicFinance, will benefit from current instability affecting #sustainability by doubling down on more ambitious goals.

- breaking the hold of short-term financial returns on decision-making,

- leadership among the #GlobalSouth countries through adoption, and

- delivery on more sustainable economic models, and the use of #technology including #AI to avoid “being trapped in an acronym-heavy compliance regime”.

Three important catalysts highlighted in the #BlueWhale Inquiry report from #Systemiq. 🧵

For resource-intensive economies, physical and transition risks could drive a ‘climate change risk… On a global level, and in guidance for financial sector regulators, climate change actions are often presented as a sliding scale between…

A look at how physical and transition risks could amplify one another that is especially relevant to #OIC markets, with big impacts for #ResponsibleFinance #ClimateFinance & greater urgency to prioritize a #JustTransition sharingrisk.medium.com/for-resource...