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November 2019

20 November
BayernLB arranges first blue social bond for DKB

ABN Amro, BayernLB, DZ Bank, Natixis and UniCredit joined forces to place a blue social bond for BayernLB subsidiary DKB. The Pfandbrief is part of DKB’s social bond programme and fulfils both the Social Bond Principles (SBP) and the UN’s Social Development Goals (SDGs). The EUR 500 million in funds raised will be used to finance water supply and the disposal of effluents. The order book stood at over EUR 2 billion.

The social Pfandbrief is underpinned by a “blue” lending pool of EUR 1.3 billion from DKB’s social bond programme. Around 90 investors contributed to an order book that was four times oversubscribed. The blue social bond has a maturity of 10 years and a coupon of 0.01 percent. 62 percent of the bond’s subscription came from Germany, with 38 stemming from foreign investors. The share of ESG investors was 30 percent.

Further information

September 2019

25 September
Institutional investors want to invest climate-neutrally

The combined pension funds and insurers within the Net-Zero Asset Owner Alliance have agreed at the climate summit in New York to make their investment portfolios, totalling USD 2.4 trillion, climate-friendly. By 2050, these portfolios are to be completely climate-neutral; the Net-Zero Asset Owner Alliance has set milestones for 2025, 2030 and 2040. In order to achieve their goal, investors are looking to persuade emitters of harmful greenhouse gases, such as coal-fired power plant operators, to switch to a more environmentally friendly production, but also to dispose of their shares if necessary.

The Net-Zero Asset Owner Alliance was initiated at the beginning of 2019 by Allianz, Caisse des Dépôts, Caisse de dépôt et placement du Québec (CDPQ), Folksam Group, PensionDanmark and Swiss Re. Since then, Alecta, AMF, CalPERS, Nordea Life and Pension, Storebrand and Zurich have come aboard as founding members. The Alliance, convened by the UNEP Financial Initiative and the Principles for Responsible Investment (PRI), is also supported by WWF. It is part of the Mission 2020 Campaign, an initiative led by Christiana Figueres, former Executive Secretary of the United Framework Convention on Climate Change (UNFCCC).

BayernInvest, a wholly-owned subsidiary of BayernLB, already announced last week at its first-ever Economics Investor Summit 2019 that it will conform all its own-managed portfolios to the 1.5-degree target set by the Paris Climate Agreement by no later than 2025 – in line with the individual customers’ investment strategies. Moreover, BayernInvest as a company itself is setting the course for climate neutrality by 2022.

11 September
Climate protection pays off

Investing in climate protection is not only necessary in view of the consequences for people and the environment, but is also economically attractive. This was the finding of a recent study by the Global Commission on Adaptation. The Commission estimates that investments of USD 1.9 trillion by 2030 in measures to adapt to climate change can generate a net profit of USD 7 trillion. The study focuses on how the economy can be protected against loss caused by climate change and, at the same time, realise opportunities. According to the Commission, this entails such measures as improving the early warning systems for natural disasters, which are becoming increasingly frequent, cultivating useful plants that are more drought-resistant, and improving flood protection.


August 2019

23 August
BayernLB assists with dual tranche green hybrid bond for EnBW AG

BayernLB has acted as joint lead manager in arranging a green hybrid bond for EnBW, the proceeds of which will be used solely to fund climate-friendly projects. The rating agency ISS-oekom, which specialises in sustainability matters, has confirmed that the EnBW bond complies with the Green Bond Principles. In addition, the green hybrid bond has been certified in accordance with the high standards of the Climate Bonds Initiative (CBI). The tranches have a volume of EUR 500 million each and maturities of around 60 years.

Press release

20 August
BayernLB, ING and LBBW place record-breaking green Schuldschein for Porsche AG

BayernLB, ING and LBBW have joined forces and arranged a green Schuldschein for Porsche AG. ING furthermore served as “green advisor” in the transaction. This is not only the first green Schuldschein to be issued for an automobile manufacturer but also the biggest green Schuldschein ever. It was placed in tranches of five, seven and ten-year terms, with both fixed and variable interest rates. The investor base ended up being highly diversified, as was desired, and, thanks to the strong interest of the 100 or so investors in Germany and around the world, the originally planned amount of EUR 300 million was raised to EUR 1 billion.

Porsche AG will be using the capital towards its green finance framework project for researching, developing and producing electric cars (Porsche Taycan) and to invest in efficient factories that manufacture battery-run vehicles only. That the plans are aligned with the Green Bond Principles was confirmed by independent agency ISS-oekom.

Press release

12 August
IPCC calls for overhaul of land use

In its latest special report on the interplay between agriculture and climate change, the IPCC (Intergovernmental Panel on Climate Change) is calling for a radical reform of global land management. According to the scientists’ analyses, the land surface air temperature has already risen by around 1.5 degrees Celsius since the end of the 19th century. Just under a quarter of the greenhouse gas emissions responsible for the temperature increase comes from land use, especially forest-clearing and farming. If the planet continues to heat up, the scientists fear, food production could be so negatively impacted that supply bottlenecks ensue. The IPCC recommends drastically reducing deforestation, protecting wetlands better and moving away from meat.


July 2019

29 July
Earth Overshoot Day was 29 July

Our reserves of wood, agricultural land, fish and other natural resources needed to last a whole year if the Earth is to be kept in a state of natural equilibrium, were already used up by 29 July. The date was arrived at by some number crunching by think tank Global Footprint Network.
In 2017, humanity needed another three days to consume its natural resources for the year, while the year before it was seven.
Earth Overshoot Day has been calculated since 1970. That year it fell on 29 December.

More information

11 July
CEOs see climate change as biggest threat

Climate change and other environmental risks pose the greatest threat to company growth, according to CEOs around the world. Of the roughly 1,300 executives surveyed by KPMG in its 2019 Global CEO Outlook, 22% deemed these risks to be the most troubling. Ranking second were the resurgence of protectionism and the uncertainties associated with disruptive technologies, each considered by 18% as the biggest cause for concern.

More information (in German)

05 July
Global reforestation can stop climate change

Planting around 900 million hectares of forest could be an effective way of combating climate change and staying under the 1.5°C cap set by the Intergovernmental Panel on Climate Change (IPCC). This was found in a new study carried out by researchers at the science and technical university ETH Zurich. Some 2.8 billion hectares of land worldwide is currently covered by forest, and the proposed reforestation would be possible without negatively affecting cities or agricultural areas. The new forests, cumulatively around the size of the USA, could store 205 billion tonnes of CO2. That’s about two thirds of the roughly 300 billion tonnes of CO2 that humans have been releasing into the atmosphere since the beginning of the Industrial Revolution.

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02 July
Finland to be carbon neutral as early as 2035

Finland is aiming to be carbon neutral by 2035 – sooner than any other industrial nation. The government is namely looking to offset CO2 and other greenhouse gas emissions mostly through absorption by its forests. Following the year 2035, Finland’s target balance will even be negative: more CO2 is to be captured and sequestered from the atmosphere than emitted by Finnish companies and private households. The 2035 target makes Finland an EU pioneer, leading Iceland, which plans to become carbon neutral by 2040, and Sweden, which wants to do the same by 2045. Germany’s target year still stands at 2050.

June 2019

18 June
World Water Development Report: UNESCO criticises inadequate access to clean drinking water

According to UNESCO’s recent World Water Development Report, more than 2 million people worldwide lack safe access to clean drinking water. Half of these people live in Africa, the report states. It asserts that drinking water that meets hygiene standards is only available to a mere 24 percent of the sub-Saharan population. Moreover, only just under half of the world population has access to clean and functioning sanitary facilities. The UN’s intention, as stated in No. 6 of the UN Sustainable Development Goals (SDGs), is to have clean water and appropriate sanitary facilities available to everyone by 2030.

See also

17 June
Netherlands issues green bond of just under EUR 6 billion

The Netherlands is the first triple A-rated nation to issue a green bond. The proceeds are intended to finance green and climate-related expenditure and capex, including projects in the fields of renewable energy, energy efficiency, clean traffic and adapting to climate change. The green bond with a volume of EUR 5.98 billion has a coupon of 0.5 percent and maturity of 15 January 2040. The order book was closed with a total volume of EUR 21.2 billion. The issue price was set at EUR 98.89, which equates to a yield at issue of 0.557 percent.

03 June
Implementing the UN sustainable development goals

Climate Action, goal no. 13 of the UN Sustainable Development Goals (SDGs), is by far the most urgent of the 17 goals the United Nations has set for itself. This is the result of a survey conducted by the SustainAbility Institute in which 454 experts were interviewed worldwide. According to these experts, the most progress in the past few years has been made in achieving goal no. 17, forming strong partnerships for sustainable development. The reason for this is the increase in cooperation between sectors and companies for the implementation of the SDGs. Non-government organisations, social entrepreneurs and the UN are deemed the most important drivers in this development, while national governments are being criticised for their inadequate engagement.

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May 2019

14 May
187 countries agree to new global regulation on plastic waste

Soon only sorted, cleaned and recyclable plastic waste will be eligible for global trading, as the export of lower-quality plastic scraps will require the permission of the importing countries. No fewer than 187 nations agreed to this new regulation at a UN conference in Geneva. The framework agreement is legally binding and constitutes an amendment to the 1989 international Basel Convention on controlling transboundary movements of hazardous wastes and their disposal.

April 2019

30 April
World conference on biodiversity

In Paris yesterday the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) kicked off its conference on the first assessment on global diversity to be carried out since 2005. The aim of the IPBES plenary session is to reach a global consensus by 4 May on the state of the planet’s ecosystems and the challenges and potential solutions regarding their preservation. IPBES is a multinational organisation that advises governments on scientific policy affecting biological diversity and ecosystem preservation. It works along the lines of the Intergovernmental Panel on Climate Change (IPCC).
The draft report concludes that animals and plants are becoming extinct today at a pace that is up to one hundred times higher than the average rate taken over the past ten million years. The scientists at IPBES believe that anywhere from 500,000 to one million of the estimated ten million plant and animal species are critically threatened. A major cause is the loss of wildlife habitat.
A new study backed by the EU Commission shows that protecting natural habitats is good for the economy. While protected areas, which make up around 18 percent of the EU’s land mass, incur some EUR 6 billion in costs each year, they create about EUR 300 billion in savings, according to the researchers, for example through flood protection and bee pollination.

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17 April
Largest offshore wind farm in the Baltic Sea opened

The Arkona offshore wind farm, which is considered the largest wind farm in the Baltic Sea, officially went into operation on 16 April 2019. It is a joint venture between the energy supplier E.ON and the Norwegian energy company Equinor, who shared the costs of around EUR 1.2 billion. The wind farm, consisting of 60 turbines, has a capacity of 385 megawatts and can supply approximately 400,000 households with electricity.
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15 April
22 countries form a climate coalition

In the fight against climate change, the finance ministers from 22 countries – among them Germany, France and the United Kingdom - have signed an agreement to promote better cooperation on climate protection and noticeably increase the cost of CO2. In the joint paper, the ministers propose various measures to reduce CO2 and other greenhouse gas emissions. These include effective emissions trading and environmental taxes proportionate to CO2 emissions. The ministers are also considering cutting subsidies for fossil fuels. According to IMF Managing Director Christine Lagarde, around USD 5.2 billion was paid worldwide in subsidies for coal, oil and gas in 2015.

March 2019

18 March
EU Parliament calls for climate-neutral economy

Amid the fight to stop climate change the EU Parliament has adopted a resolution requiring a greenhouse-gas-free economy by 2050. The EU Members of Parliament deem such a transformation necessary for achieving the goals under the Paris Climate Agreement. The MEPs are also looking to cushion the social impact of this industrial transition by setting up a special fund for regions that will be especially affected by the decarbonisation. According to the resolution, the transition to climate neutrality can potentially translate into 2.1 million new jobs by 2050.

More information

12 March
BayernLB successfully places first social covered bond from France

In its role as joint lead manager, BayernLB has successfully placed the first-ever social covered bond from France. The issuer of the 8-year, billion-euro note is Caisse Française de Financement Local (CAFFIL), a subsidiary of the French development bank SFIL.

This social covered bond is the first of its kind in Europe to be issued from the public healthcare sector. The public debt instrument will be used to refinance loans granted to French public hospitals. These loans, in turn, help provide all citizens throughout the country – regardless of their social or financial background – access to healthcare. When presented at roadshows in Germany, France, the UK, the Netherlands, Denmark and Finland, this product was met with great enthusiasm especially, but not exclusively, by investors focussed specifically on sustainable alternatives.

More than 110 investors placed over EUR 2.6 billion worth of orders. This enabled the new issue premium to be priced at zero – an outstanding success both for the issuer and while also demonstrating BayernLB’s placement power. Another aspect worth noting is that over a third of the issue was placed with investors who highly value sustainable investments.

This issue is yet another milestone in the Bank’s green finance activities, with BayernLB having assumed for the first time the role of joint lead manager of an ESG bond from France.

6 March
UN warns of underestimated dangers to the environment

UNEP, the United Nations Environment Programme, has warned in its new report “Frontiers 2018/2019” that there are currently five global environment risks that have so far been underestimated. These are: advances in synthetic biology, the fragmentation of ecosystems as a result of expanding infrastructure, permafrost thaw, excess nitrogen worldwide and a maladaptation to climate change.

With permafrost degrading at an alarming rate, the report points out that around half of the world’s soil organic carbon is stored in permanently frozen peat. As peatland sites thaw they release greenhouse gases like CO2 and methane, which in turn only further exacerbate climate change. The authors therefore believe permafrost to be a potential “tipping element” for the greenhouse effect.

The danger of a maladaptation lies wherever local adaptive measures bring short-term improvements but worsen the situation long term, according to the report. As an example the authors cite the Coastal Climate-Resilient Infrastructure Project in Bangladesh aimed at protecting portions of the country from the rising sea level. Although there are already clear signs that these areas will be under water in the year 2050, such measures encourage people to migrate to these regions.

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February 2019

15 February
Australia to reach Paris Agreement climate goals earlier than expected

Australia is set to reach the goals for 2030 set under the Paris Climate Agreement as early as in 2025. This was the finding of a recent study published by the Australian National University in Canberra. The conclusion was drawn from the country’s proliferation of renewable energy. According to the study, Australia will be in a position in 2024 to cover around 50 percent of its electricity demand through renewable energy sources. In 2019 roughly 250 watts per capita in additional, renewable energy is to be installed. The most recent upgrade in Germany amounted to 100 watts, whereby the EU average lies at not even half of this figure.

A recent study by the Organisation for Economic Co-operation and Development, or OECD, purports that Australia is still relying heavily on coal. At present, approximately 63 percent of its electricity demand is covered through coal.
Read more

13 February
2015 to 2018 hottest years on record

The past four years were the hottest since global weather data began to be recorded, according to the UN. In a new analysis the World Meteorological Organization, or WMO, refers to a “clear sign of continuing long-term climate change”. It cites 2018 as the fourth-warmest year on record, with a global mean temperature of one degree Celsius above the pre-industrial average (from 1850 to 1900). The 20 hottest years on record all took place within the last 22 years, the WMO has furthermore stated. Europe especially was affected by the higher-than-average temperatures. “The long-term temperature trend is far more important than the ranking of individual years, and that trend is an upward one”, said WMO Secretary-General Petteri Taalas. And if this trend continues, he added, the global average temperature could rise three to five degrees by the end of the century. Taalas warned that “we are the first generation to fully understand climate change and the last generation to be able to do something about it”.

11 February
Energy consumption in the EU up again

Energy consumption in the EU went up for the third year in a row in 2017. At 1,561 Mtoe (tonne of oil equivalent, in millions), primary energy consumption stood at 1 percent above that of the previous year. This means that the distance to the EU’s energy-efficiency finish line for 2020 has grown longer again. The EU is namely looking to cut primary energy consumption down to 1,483 Mtoe by 2020. In 2014 the EU member states managed to get tantalisingly close to this goal. Since then, however, consumption has been on the rise again.
Read more ›here

8 February
Green bonds: next boost ahead

BayernLB expects somewhere between EUR 175bn and 185bn in new green bond issues for 2019 – 5 to 10 percent more than in 2018. Given the still-low amount of maturities in this relatively young market, the net issuance volume should be very high. The rather subdued activity among traditionally active issuers, particularly development banks, supranationals and other sovereign-like institutions, is now being taken up by new issuers, especially in the corporate and banking sectors.

Green bonds might get a boost from the EU’s Action Plan “Financing Sustainable Growth”. Talks are underway on introducing both a Europe-wide standard definition of green bonds – the EU Green Bond Standard – and a “green supporting factor”, i.e. lower risk weightings for green bonds. Such preferred regulatory treatment of green bonds, combined with an established classification system in the form of a green bond label, would amount to an enormous gain in popularity for this asset class, as investors would see a higher, risk-adjusted yield, and issuers lower funding costs.

7 February
Germany far behind 2020 climate protection goals

Germany will by far fail to meet its climate goals for the year 2020, according to the government’s most recent Climate Action report for 2018. Rather than reducing greenhouse gas emissions by the targeted 40 percent compared to 1990, the base year, the country is on track to see a mere 32 percent decrease. In 2017 it achieved a reduction of 27.5 percent. Progress is expected for the energy sector by 2020, due in part to the EU emissions trading reform. Some of these advances, however, will be offset by higher emissions in transport and buildings, according to the report. The reduction target for 2030 is 55 percent.

January 2019

17 January
Antarctic ice melt is gaining pace

Ice in the Antarctic is currently melting six times as fast as in the 1980s. Since 2009, the Antarctic has lost almost 252 billion tonnes of ice a year; between 1979 and 1900 it was only 40 tonnes a year. These are the key results of a new study by the University of California. Since this process is furthered by global warming, the study’s author Eric Rignot, chair of Earth System Science at the University of California, Irvine, commented “we expect multi-meter sea level rise from Antarctica in the coming centuries”. Even from 1979 to 2017, melting ice at the South Pole caused the sea level to rise by around 1.5 centimetres, states the analysis. The study's authors are particularly concerned that a large amount of ice also disappeared in East Antarctica, which was previously considered immune to the effects of global warming. "This region is probably more sensitive to climate change than has traditionally been assumed, and that's important to know, because it holds even more ice than West Antarctica and the Antarctic Peninsula together," the study’s researchers warn. The scientists used the most long-term analyses of Antarctic ice so far for the study. They are based on high-resolution aerial photographs from Nasa and satellite data from several aerospace authorities.
More information

17 January
Carmakers plan to invest 300 billion US dollars in e-mobility

In the next five to ten years, car manufacturers intend to invest around USD 300 billion in developing electric cars and battery technology. This emerged from a recent analysis by Reuters news agency. German carmakers have particularly ambitious plans. The Volkswagen Group has announced that it will invest USD 57 billion by 2025 just in developing electric car batteries and another USD 34 billion is earmarked for product development. According to Reuters, Daimler is planning investment of around USD 42 billion and BMW intends to spend USD 6.5 billion. In total, German car manufacturers’ investments add up to almost USD 140 billion. Chinese carmakers want to devote around USD 57 billion to electromobility, while US auto firms will commit around USD 39 billion.

Reuters evaluated statements by a total of 29 carmakers from China, France, Germany, India, Japan. South Korea and the US in producing its market analysis. It did not take account of plans by suppliers or tech companies.
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9 January
Munich Re publishes natural disasters overview for 2018

According to calculations by the reinsurance company Munich Re, natural disasters led to losses of around USD 160 billion worldwide in 2018. Of this total, the devastating wildfires in California alone accounted for USD 24 billion, with Hurricane Michael causing USD 16 billion worth of damages and the drought in Europe USD 3.9 billion. Around 50 percent of the overall financial losses worldwide were insured. This makes 2018 one of the ten most expensive years in terms of total losses caused by natural disasters; for the insurance sectors, it was in fact the fourth most expensive year since 1980.

Munich Re points to the impacts of climate change in connection with the California wildfires and reckons that there are clear indications that climate change is increasing their frequency and extent. According to climate experts, the same applies to other disasters like hurricanes and droughts.
More information

December 2018

21 December
European ministers of the environment agree on CO2 limits for trucks

The CO2 emissions of new trucks and buses are to be cut by 15 percent by 2025 and 30 percent by 2030, according to a resolution passed by the EU ministers of the environment. This marks the first time that CO2 limits have been set for trucks and buses. The next step will entail negotiations with the European Parliament, which has already spoken out in favour of tougher limits. Just a few days ago, representatives of the European Commission, the European Parliament and the European Council agreed on a joint proposal to regulate CO2 emissions of cars and light commercial vehicles from 2021. The proposal calls for car manufacturers cutting the CO2 emissions from their new fleet in the EU by 37.5 percent from 2021 to 2030.

18 December
EU sets stricter CO2 limits for cars

Following their “trilogue” negotiations, representatives of the EU Commission, the European Parliament and the European Council reached an agreement on a joint proposal for regulating CO2 emissions from passenger cars and light commercial vehicles from 2021 onwards. The proposal calls for car manufacturers cutting the CO2 emissions from their new fleet in the EU by 37.5 percent from 2021 to 2030. As an interim but binding goal, emissions from passenger cars and light commercial vehicles alike must go down 15 percent by the year 2025. The new targets go in effect once they are passed by the Council and Parliament.

17 December
World community commits to climate rules

After tough rounds of negotiations at the World Climate Conference in Katowice, Poland, the international community reached a consensus on binding terms for implementing the Paris Agreement. The main outcome of the conference took the form of a “rulebook” for putting the international accord into practice. Having agreed in Paris to define, and deliver regular progress reports on, their nationally determined contributions (“NDCs"), the contracting states have now reached an agreement in Katowice as to just how they will go about doing this. The delegates set clear and legally binding rules for the structure and substance of these climate protection contributions and for reporting and checking on their progress. Starting in 2024, all countries will issue reports in accordance with these rules, whereby poorer countries will have more time to meet the technical prerequisites necessary for this purpose.

One issue that remained unresolved, on the other hand, was how to assess the latest report by the Intergovernmental Panel on Climate Change. The IPCC issued an urgent warning in its report in October that the global average temperature must not rise by more than 1.5° Celsius if catastrophic consequences for the environment, society and the economy are to be avoided. In particular the island nations, which are especially vulnerable to sea level rises, insisted on putting this recommendation in a prominent place in the final document. Pushback came, however, from Saudi Arabia and the US. In a compromise statement, the IPCC scientists were thanked, but without the substance of the report being further addressed.

A third key issue was support for third-world countries from the industrialised nations. The poorer countries called for the national reports to include the topic of loss and damage caused by climate change, which they reckon is due mainly to the decades-long CO2 emissions by the industrial nations. An appropriate passage was incorporated into the closing declaration. It does not constitute, though, any internationally binding obligation on the part of the industrialised nations to compensate the developing countries for such loss or damage.

The directly related issue of financial support for the developing countries was also on the table. The industrialised countries pledged to provide USD 100 billion a year in public and private funds from 2020 onwards. The money is to be used among other things for promoting climate-friendly technologies. It is also to be channelled towards measures for adapting to climate change, such as the construction of higher dykes.

6 December
Climate risk index: industrial countries also increasingly impacted by climate change

At the United Nations’ 24th annual climate change conference in Katowice, Poland, the environment and development think tank Germanwatch presented its latest climate risk index. According to the data, 2017 was the most devastating year in recent history in terms of extreme weather. Storms, floods, heatwaves and other extreme weather events claimed more than 11,500 lives and cost over EUR 330 billion in damage. In Germany 27 people died last year as a result of such events, with material damages adding up to nearly EUR 3.2 billion.
Germanwatch reports that about 11,500 extreme weather events took place over the last 20 years, costing more than 520,000 lives and EUR 3.1 trillion worth of damages. Germanwatch derives its data from statistics released by the reinsurance company Munich Re and the International Monetary Fund.
Of the ten countries hit hardest from 1998 to 2017, eight were developing countries with low- or lower-middle-income economies. In this long-term analysis, Germany ranks as the 25th most impacted country. France even ranks 20. Over 170 countries are monitored.
More information

November 2018

29 November
EU to be climate-neutral by 2050

The EU Commission has presented a strategy to comprehensively “decarbonise” its member states by 2050. The Commission has set its sights on cutting net emissions of greenhouse gases to zero over the next generation. Unavoidable greenhouse gas emissions are to be absorbed and stored in so-called sinks. These include natural sinks created, for example, by expanding forests, and technical sinks such as the capture and permanent storage of greenhouse gas emissions using carbon capture and storage (CCS) technology. Having estimated the necessary annual investments e.g. in energy supply and transport at around EUR 180 billion at the beginning of the year, the EU Commission now expects additional annual investment requirements of up to EUR 290 billion.
More at: EU-Strategy Decarbonisation

28 November
Slight downturn in Germany’s investment climate for renewable energy

In conjunction with the Thinktank Germanwatch and the NewClimate Institute, Allianz SE has presented its Climate and Energy Monitor 2018. It compares the G20 countries in terms of their attractiveness for investment in an emissions-free energy infrastructure. In addition, the authors calculate the amount of investment required to achieve the climate objectives agreed in the Paris Agreement. The main assessment criteria are the stability of energy and climate policy, specific and transparent support for renewable energy sources, a fair competitive environment in relation to fossil fuels and market experience with renewable energy. Macro-economic factors such as inflation, openness to foreign investors and legal certainty are also taken into account.

In the current ranking, Germany cedes first place to France, which offers the most attractive conditions for investment in renewable energy of all the G20 countries. The UK is in third place, followed by Italy and China. The authors attribute the worst investment climate to Argentina, Indonesia and Russia.

To comply with the Paris climate goals, investments in renewable energy will have to grow considerably: the study’s authors assume that G20 countries will need to invest some additional USD 886 billion a year in the energy sector. To pave the way for this, opine the authors, all countries will have to further improve the political climate for low-carbon investments.
More information: Allianz SE: Climate and Energy Monitor 2018

23 November
WMO: CO2 concentration in the atmosphere at record high

With a reading of 405.5 ppm (parts per million), the concentration of carbon dioxide in the Earth’s atmosphere is at a new record high. This was the finding published by the World Meteorological Organization, or WMO, in its annual Greenhouse Gas Bulletin. The data is from the year 2017. CO2 levels measured 403.3 ppm in 2016 – up, in turn, from 400.1 ppm in 2015. According to WMO Secretary-General Petteri Taalas, the last time the Earth saw a concentration of this scope was three to five million years ago. At that time, Taalas says, the average temperature of the planet was two to three degrees higher than it is today. In order to cap global warming to 2° Celsius, as agreed in Paris, CO2 levels must not surpass the 425 ppm mark, according to the latest analyses.
More information

19 November
EU Commission releases progress report on EU climate change adaptation strategy

In its latest progress report on the EU strategy on adaptation to climate change, the EU Commission paints an alarming picture of the effects of climate change in the EU. According to the report, the climate changes that have been observed so far are today already exerting a far-reaching impact on ecosystems, economic sectors and the health and well-being of people in Europe. The Commission tallies all the financial losses reported for Europe from 1980 to 2016 that were incurred by extremes in weather and other climate-related factors at more than EUR 436 bn.

The Commission estimates that the annual amount in losses sustained by Europe’s critical infrastructures could – if no action is taken – increase tenfold to EUR 34 bn due to climate change alone. The industrial, transport and energy sectors would be hit the hardest.

There are ever-growing indications, the EU Commission furthermore warns, that Europe will be also be vulnerable to the impacts of climate change taking place beyond its borders, for example when it comes to trade, international payments, migration or security. Given the multi-faceted, complex and global ties between populations, ecosystems and economies, climate risks do not respect borders, the Commission wrote.
More information

6 November
Deutsche Kreditbank (DKB) awarded top marks again in the ISS-oekom sustainability rating

For the fourth time in a row, the renowned rating agency ISS-oekom has given DKB a B- for its sustainability performance. This is currently the highest grade issued by ISS-oekom for commercial and public sector banks. By conferring this top rating, ISS-oekom confirms DKB's “Prime” status, which is awarded exclusively to companies that demonstrate an above-average commitment to sustainable development. The organisation thereby certifies DKB’s leading position in the industry when it comes to integrating sustainability factors into lending and capital investment and complying with labour laws and ethical business standards.

DKB’s superior expertise in sustainability issues, as acknowledged by the rating, is a key foundation for issuing sustainable bonds. DKB has been issuing green bonds since 2016, which it uses to fund part of its loans for solar and wind power projects. An additional sustainable funding programme for capital market products, the social bond programme, was launched in 2018 to enable the issue of social bonds. They are used to back loans relating to social housing, public utilities, healthcare, education and research, and inclusion. DKB is the first German bank to issue both green and social bonds.

6 November
BayernLabo publishes first Social Bond Report

In November 2017 BayernLabo issued its first social bond, promising the investors that it would report each year on the use of the proceeds. The housing and urban development bank has now delivered on its promise with the publication of its first Social Bond Report. The report transparently outlines how BayernLabo has put the EUR 500 million borrowed under the bond to use. These funds went exclusively towards the financing or refinancing of subsidised loans, according to the report, which are granted under three credit programmes

  • Bavarian subsidised interest rate programme for promoting home ownership
  • Bavarian modernisation programme
  • Municipal support programme to create rented housing in Bavaria

From 2014 to 2017, these three programmes helped to promote the construction, acquisition and modernisation of more than 10,000 apartments in total. In addition, over 1,500 places were created in licensed in-patient care facilities with the help of these programmes. In its most recent assessment, the independent rating agency ISS-oekom emphasises the long-term added value of the social bond and confirms that the use of the funds are in keeping with the spirit of BayernLabo’s social bond programme.

ISS-oekom, an ESG rating agency, has furthermore declared that BayernLabo remains far above average for the sector when it comes to commitment to sustainable development. In its latest ratings, ISS-oekom ranks the development bank fifth of the 52 banks rated and awards it the coveted “Prime” status. More information

October 2018

29 October
New York State sues Exxon Mobil for downplaying climate change risks

New York State has filed a lawsuit against Exxon Mobil for misleading its investors. The attorney general's office is alleging that the oil and gas corporation has deliberately downplayed the potential risks to its business posed by climate change regulations. According to the State of New York, Exxon Mobil assured its shareholders that these risks had been taken into account. However, a separate analysis shows that this did not happen. A spokesman from Exxon Mobil dismissed the accusations as baseless.

Climate-related risks include legal and liability risks, physical risks resulting from the direct effects of climate change, and the so-called transition risks.
For further information on climate-related risks, read more

22 October
Bill Gates and European Commission launch joint renewable energy investment fund

The Breakthrough Energy fund, led by Microsoft founder Bill Gates, and the European Commission have agreed to set up a joint investment fund. The Breakthrough Energy Europe (BEE) fund has a capitalisation of EUR 100 million. This aim of this public private partnership is to help European businesses to develop and market new clean energy technologies, e.g. in the field of battery cell storage.
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8 October
IPCC releases special report urging 1.5°C cap

The UN Intergovernmental Panel on Climate Change (IPCC) has released a special report today outlining the impact of limiting global warming to 1.5°C above pre-industrial levels. The 91 scientists behind the report reckon that it is still possible to cap global warming by 1.5°C. They warn, however, that urgent, comprehensive action must be taken now in order to make the energy supply and transportation and infrastructure, but also corporations, climate-friendly.
By the year 2030 emissions will have to be reduced by 45 percent from the 2010 levels. By the middle of the century, the entire amount of CO2 emitted in the air will need to be down to zero. A 2.0°C rise in the Earth’s surface temperature would exert a much harsher impact on people and the environment than would an increase of 1.5°C, according to the IPCC.

4 October
EU Parliament to reduce CO2 cap further for new cars

The EU Parliament has agreed on stricter limits for CO2 emissions from new cars. The plan is to lower the CO2 cap by 40 percent of the 2020 emissions level by the year 2030. An interim reduction target of 20 percent by as early as 2025 has already been set. The Parliament is going beyond the EU Commission's goal, which is to cut CO2 emissions by 30 percent by the year 2030. The Parliament members are also requiring that automobile manufacturers ensure that at least 35 percent of all newly registered cars emit less than 50 grams of CO2 per kilometre by 2030.

September 2018

10 September
BayernLB again given top-10 sustainability rating by ISS-oekom

In its most recent scrutiny, the rating agency ISS-oekom (formerly known as oekom research) has given the BayernLB Group a C+, just as it did last year and thereby confirming the Bank’s ranking among the top 10 in the sector. The grade C+ falls under the “Prime” category. This status is awarded exclusively to firms which demonstrate an above-average commitment to a sustainable development. The firm to receive the highest grade in the sector was DKB, a BayernLB subsidiary. It was in fact the only bank in the industry to be issued a B-. Ninety-five banks in total were rated in the sector.

10 September
BayernInvest to join the 11th annual FNG conference

ESG investing affects not only volume but also qualitative aspects. Investors have decided to go beyond merely shutting out controversial issuers and sectors and to take account of ever more sustainability factors in their overarching strategies. This movement and a host of other topics will be addressed at the 11th annual FNG conference – “Nachhaltige Geldanlagen 2018” – on 19 September at the Frankfurt School of Finance & Management in Frankfurt, Germany. BayernInvest, a BayernLB wholly-owned subsidiary and the Bank’s centre of expertise for asset management and Master-KVG (capital management), will be presenting its sustainability-related services at this information and networking forum.

August 2018

31 August
Nine out of ten Germans support the energy transition

Over 90 percent of Germans support the energy transition currently sweeping their nation, with nearly one in every four households (23 percent) already using transition technologies. These are two of the key findings of the most recent poll conducted by the KfW banking group, which surveyed nearly 4,000 households in Germany this year. Germans are showing a big interest in electric mobility: around one in six households (16 percent) plan to acquire an electric car. And yet some still have reservations about this type of automobile: 84 percent of the respondents cited the sparsity of charging stations as the main reason not to purchase an electric car, followed by the low range offered (81 percent) and the high purchase price (79 percent). Eleven percent of households currently use at least one smart-home application for heating, lighting or electricity, while more than half can imagine using such an application. What’s holding people back are data security issues and the fact that such applications are prone to error.

22 August
EU Commission raises the bar for climate protection

The EU Commission plans to raise the EU’s official target for greenhouse gas reductions – 40 percent by the year 2030 – to 45 percent. The Commission is looking to get the EU countries to sign a resolution to this effect before this December’s UN Climate Change Conference in Katowice, Poland. One of the items on the agenda is how the Paris Climate Agreement should be concretely implemented.
The new target is to be met mostly through the tougher standards for 2030 – which have already been passed by the EU – aimed at enhancing the use of renewable energy. In June 2018 the EU Parliament, EU Commission and EU Council all agreed to have the EU countries use renewable energy plants to generate 32 percent, on average, of the energy required collectively for all of the three main consumption sectors – utilities, transportation and heating – by the end of 2030. Before this decision the target had been set at 27 percent. Stricter targets for improving energy efficiency are also being discussed, though a binding agreement still proves elusive.

16 August
Climate change turns trees into lightweights

Due to climate change, trees are growing faster. However, they absorb a smaller amount of carbon than previously assumed and are therefore becoming lighter and lighter. As a result, the contribution of forests to climate protection is overrated. These results stem from a study by the Technical University of Munich (TUM). The scientists attribute this trend to the long-term increase in temperature and the resulting lengthening of the vegetation period. However, the nitrogen input from agriculture, industry and traffic also play a part. Lighter wood is less solid and has a lower calorific value. This has an impact on its use in construction and energy production. Less stability also increases the risk of damage through wind and snow in forests.

10 August
BayernLB takes part in Climate Bonds Initiative

BayernLB is teaming up with Climate Bonds Initiative, an international non-profit organisation, and is thereby taking on an active role in developing the market for climate and green bonds. The CBI works towards getting the international bond market to focus more on climate protection financing. In addition to providing the latest market data, the CBI sets high, transparent market standards. Issuers can have their climate bonds certified under the Climate Bonds Standard. For investors, this certification is solid proof that the issuer intends to use the funds to finance a project that will demonstrably make a positive contribution to climate protection.

Climate bonds are a subset of green bonds, which are currently among the fastest growing in the asset class of bonds. BayernLB expects an issuance volume of some USD 210 bn for the current year, following the approximately USD 157 bn in issues for 2017. Over the past three years BayernLB has gained vast experience both in structuring and placing green securities for customers, and in issuing its own bonds. The Bavarian bank participated in, for example, the issue of a green Schuldschein by the wind turbine manufacturer Nordex – the first note loan of this kind to be certified by the Climate Bonds Initiative.

08 August
Munich Re withdraws from coal business

Against the backdrop of climate change, Munich Re is withdrawing to a large extent from capital investments in coal and its insurance. In the future, the world’s largest reinsurer is no longer going to invest in shares or bonds of companies which generate more than 30 percent of their turnover with coal. For individual-risk transactions as well, coal power plants and mines in developed countries will no longer be insured. Munich Re is looking to align its climate strategy with the goal of the Paris Climate Agreement, namely to limit the global rise in temperature to well below 2 degrees Celsius.

08 August
Forecast: EEG surcharge not set to increase any further

The think tank Agora Energiewende does not anticipate any further increase of the EEG surcharge for next year. At the moment, it is forecasting a figure of 6.7 to 6.9 cents per kilowatt hour of electricity. This year's surcharge for the promotion of renewable energies is 6.79 cents, therefore the considerable increase in the surcharge which experts predicted last year has not materialised.

The surcharge is used to promote the expansion of renewable energies. All electricity customers have to pay it, while discounts are in place for certain industry sectors and businesses. The four network operators in Germany each determine the amount of the surcharge every year on October 15th.

01 August
German Cabinet passes TEHG amendment bill

The German Federal Government has passed a bill amending the Greenhouse Gas Emissions Trading Act, or TEHG. The amendment lays the groundwork for keeping EU emissions trading afloat over the coming trading period (2021 to 2030) in Germany. By passing the bill, Germany is transposing the new EU emissions trading directive, which went into effect last April.

The key points of the reform are as follows:

  • It will be applied in all 28 EU countries plus Iceland, Liechtenstein and Norway;
  • It will incorporate about 12,000 energy-intensive plants and aviation companies that provide services between the above-mentioned countries in order to cover about 45 percent of greenhouse gas emissions in the EU;
  • A linear reduction factor will be introduced: the cap on the total volume of emissions will be cut by 2.2 percent annually;
  • It will double the number of certificates withdrawn from the market every year due to oversupply to 24 percent. They will be stored in a market stabilisation reserve.

The application procedure for distributing the certificates free of cost will begin in Spring 2019.

July 2018

10 July
German Federal Environment Ministry launches another subsidy programme for municipal climate protection projects

Municipalities, municipal companies, sports clubs and other organisations now have until 30 September 2018 to apply for a climate protection project subsidy under the “Local Authorities Guideline”. The programme promotes projects aimed at devising and implementing new climate protection strategies. It also subsidises energy-saving measures for schools and kindergartens. More information at: Application climate project protection subsidy

3 July
Germany breaks new record in renewable energy

In the first half of 2018 Germany generated 104 billion kilowatt hours of electricity from wind and solar energy and hydroelectric and biomass plants – a new record. This is the first six-month period ever to see the 100 billion kWh mark exceeded. Over half of the electricity generated by these renewable energy sources – some 55 billion kWh – came from wind farms. Solar farms accounted for around 21 billion kWh, with biomass facilities trailing close behind at roughly 20 billion kWh of power. These figures, released by E.on, do not include the electricity generated by privately owned photovoltaic plants, which is used directly and not fed into the grid.

June 2018

18 June
Petersberg Climate Dialogue 2018 to address climate protection and social justice

At the joint invitation of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety and the government of the Republic of Poland, ministers and other government officials from around 35 countries are meeting in Berlin on 18 and 19 June for the Petersberg Climate Dialogue IX. The conference is focussed on the implementation of the Paris Climate Agreement and the preparations for the upcoming Climate Change Conference in Katowice, Poland. Under the motto “Changing together for a just transition”, social aspects relating to climate protection will be on the agenda for the first time. The International Trade Union Confederation, or ITUC, will be taking part in this discussion. More at: Petersberg Climate Dialogue

14 June
Climate Action Report 2017 adopted

On 13 June the Cabinet of Germany adopted the Climate Action Report 2017. According to the report, Germany can reduce its CO2 emissions to around 32% of the 1990 figure by the year 2020. A 40% reduction was the original goal. If it weren’t for the “Climate Action Programme 2020”, adopted in 2014, this discrepancy would be even wider, according to the German government. The report lists around 110 individual measures, along with the amount of CO2 that is expected to be prevented by each in the year 2020. The report is available in pdf format under: Climate Action Report