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December 2018

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.
Read more

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

May 2018

23 May
EU Commission: initial outcome of EU Action Plan for sustainable finance

In March 2018 the EU Commission unveiled its Action Plan for sustainable finance. The Commission has recently presented some of the first concrete results of the Plan, stressing in the process once again the financial market’s role in the pursuit of the Paris climate objectives. The proposals that were also presented have to do with the planned standardisation of the system for classifying sustainable activities, as well as with the requirements imposed on institutional investors in terms of taking environmental, social and governance (“ESG”) factors into their capital-investment decisions. The EU Commission has furthermore installed a series of mechanisms for checking how ESG aspects may be integrated into professional consultation for retail customers. For more information, go to:

8 May
BayernLB anticipates USD 210bn for the green bond market in 2018

In 2018 BayernLB is expecting further growth for green bonds. With USD 86.7bn worth of issues in 2016 and USD 156bn last year, the experts at BayernLB are expecting another increase this year – to USD 210bn.

7 May
BayernLB releases green bonds study

BayernLB Research has released a new study on the current political climate for green finance and the recent developments on the green bond market (“Green Bonds: Mächtig Rückenwind für die neue Asset-Klasse”). The bottom line: whether for investors or issuers, there are a number of arguments to be made for green bonds. At present, however, growth of the asset class is hampered by the lack of standardisation and the resulting greater need on the part of investors for analyses. On the other hand, the strong tailwind from the political side – and in particular from the EU action plan published in March 2018 – could prompt changes in this area.

4 May
BayernLB adds sustainable infrastructure fund to its product line

BayernLB helps its customers in their quest for a sustainable investment and is therefore now selling a fund for which Encavis Asset Management AG selects, audits and keeps tabs on the renewable-energy plants. Encavis Infrastructure Fund II, SICAV-RAIF Renewables Europe II invests in renewable-energy plants, with an eye towards a balanced and diversified portfolio. The assets that it invests in are mostly solar and wind farms in Europe, especially Germany, Austria and France.

April 2018

30 April
Climate meeting begun in Bonn

In the run-up to the World Climate Conference in Katowice, Poland, this December, representatives from over 190 countries are meeting in Bonn from 30 April to 10 May to discuss the measures to be taken under the Paris Agreement. The participants are looking to come up with standardised rules for measuring and reporting greenhouse gas emissions in every country. The purpose of such rules is to ensure comparability among the countries’ contributions to climate protection as well as transparency in ascertaining which country has made which contribution.

17 April
BayernLB is providing support in placing the largest ABN AMRO green bonds to date

ABN Amro Bank NV has issued its third and largest green bond to date under the joint management of BayernLB, ABN Amro, DZ Bank and SEB. The returns from the issue will be used exclusively to finance and refinance wind farms and to improve the energy efficiency of buildings. The seven-year bearer debenture with an issue volume of €750 million, an account size of €1.25 billion and a 0.875% coupon was subscribed to by around 100 investors, 80% of which are explicitly sustainability-focused investors.

12 April
Finland is ending coal-fuelled energy generation in 2029

Finland’s Minister of the Environment, Kimmo Tiilikainen, has announced that the Scandinavian country will ban the use of coal in generating energy from 2029. According to the Minister’s statement, the Finnish government is also looking into a subsidy scheme that will reward companies for stepping away from coal ahead of time.

3 April
Energy transformation exhibition at the German Centre Shanghai

From 13 April to May 30 2018, the German Centre Shanghai is hosting an exhibition about the energy transformation in Germany. The exhibition is organised by the German Federal Foreign Office and the German Association for International Cooperation (Deutsche Gesellschaft für Internationale Zusammenarbeit, or GIZ) and demonstrates the steps that Germany is taking towards an environmentally friendly energy supply. China is among the more than 60 countries worldwide that have taken the German Renewable Energy Sources Act (EEG) as a model for developing their energy policy. The German Centre Shanghai was founded in 1994 for the purpose of promoting foreign trade and has been a subsidiary of BayernLB since 1996.

February 2018

27 February
European Council approves reform of EU emissions trading

The European Council has formally approved a reform of the emissions trading system for the period after 2020. An important element of the reform is that the cap on the total volume of emissions will be reduced by 2.2% annually (linear reduction factor). Emissions trading is a central component for achieving the EU climate goals. The system operates in all 28 EU countries plus Iceland, Liechtenstein and Norway. It limits emissions from approximately 11,000 heavy energy-using installations and airlines operating between these countries and covers around 45% of the EU’s greenhouse gas emissions.