An overhaul of bank capital rules would be the most effective step that regulators could take to support climate action, a group of 50 sustainable finance experts said yesterday.
In a survey carried out by the non-profit Climate Safe Lending Network, academics, commercial banks, non-governmental organizations, investors and central banks were asked to rank 10 proposals for how financial regulation could be changed to boost climate efforts.
Respondents included the Bank of England, the European Central Bank and Spain’s Banco Bilbao Vizcaya Argentaria SA, as well as Boston Common Asset Management LLC and Amalgamated Bank in the US, and the UK’s Big Society Capital Ltd.
The proposal drawing the most support was for regulators to impose tougher rules around the amount of capital that banks need to keep as a buffer if they want to lend to companies responsible for emitting high levels of greenhouse gases.
At the moment, banks can lend to fossil-fuel companies relatively cheaply because the risk-weights applied to the lending do not take into account the systemic risks of doing so, the report said.
By making it more expensive to lend to these companies, banks would lower their exposure to the risk, build up capital buffers to absorb potential losses from any loan defaults and focus investment on other parts of the economy.
On a scale of 1 to 5 assessing the potential impact of the policy proposal, with 5 the highest, the survey respondents rated it 4.13, while the feasibility of its implementation was rated 0.3 on a scale of minus-1 to plus-1, with plus-1 most feasible.
“Stranded assets create a credit risk that is not captured by the current framework,” said Andrew Turvey, prudential risk director at Belmont Green Finance Ltd.
However, Sarah Breeden, executive director for UK deposit takers supervision at the Bank of England, said that more clarity was needed on the path of forward climate policy for the option to be more feasible.
“We would have better sight on how risks might arise and more data to support policy change,” she said.
The next most-backed proposal was for regulators to set out a clear framework for what it means to be compliant with reaching net-zero emissions by 2050, and in line with the goals of the 2015 Paris agreement.
“This is the type of guidance that could be a game changer,” Boston Common Asset Management managing director Lauren Compere said.
The proposal was ranked 4.0 on potential impact and 0.3 on feasibility.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
EARLY TALKS: Measures under consideration include convincing allies to match US curbs, further restricting exports of AI chips or GPUs, and blocking Chinese investments US President Donald Trump’s administration is sketching out tougher versions of US semiconductor curbs and pressuring key allies to escalate their restrictions on China’s chip industry, an early indication the new US president plans to expand efforts that began under former US president Joe Biden to limit Beijing’s technological prowess. Trump officials recently met with their Japanese and Dutch counterparts about restricting Tokyo Electron Ltd and ASML Holding NV engineers from maintaining semiconductor gear in China, people familiar with the matter said. The aim, which was also a priority for Biden, is to see key allies match China curbs the US
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
The popular Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) arbitrage trade might soon see a change in dynamics that could affect the trading of the US listing versus the local one. And for anyone who wants to monetize the elevated premium, Goldman Sachs Group Inc highlights potential trades. A note from the bank’s sales desk published on Friday said that demand for TSMC’s Taipei-traded stock could rise as Taiwan’s regulator is considering an amendment to local exchange-traded funds’ (ETFs) ownership. The changes, which could come in the first half of this year, could push up the current 30 percent single-stock weight limit
RSS