Finance

To make COP27 a success, finance is key

Published

2 years ago

October 14, 2022

Robin Millington is the CEO of Planet Tracker.

Simon Stiell, the brand new chief of the United Nations Framework Conference on Local weather Change, has his work minimize out for him. Certainly, there’s no magic wand to greening the worldwide economic system, however he does have the convening energy to assist carry policymakers, buyers and monetary establishments collectively in a extra aligned means.

Buyers and policymakers want to hitch forces to guard pure capital — i.e., the sum of the world’s shares of pure property from which we derive providers like forestry, fishing, supplies for constructing our houses and minerals to run our telephones and electrical autos.

From deploying mitigation and adaptation measures and easing the impression of environmental loss and injury to making sure the inexperienced transition is honest for growing nations, good coverage and good finance need to go hand in hand.

Take aquaculture, for instance, an business that provides 49 % of the worldwide demand for fish, in line with the U.N.’s Meals and Agriculture Group. Round 3 billion individuals depend on seafood as their main protein. In the meantime, aquafeed for the business has an rising reliance on soy, which is, in flip, driving deforestation. However revolutionary inexperienced bonds, issued by main firms like Mowi and Grieg Seafood, are offering the capital wanted to scale the usage of extra sustainable feed with novel elements, equivalent to blackfly larvae and algae.

Such debt financing is clearly each possible and fascinating, and connecting the dots between industries and implementing supportive insurance policies can have a constructive impression.

In current months, the world has turn into conscious about the worth of nature. Meals costs have risen dramatically, partially because of the battle in Ukraine, however meals shortages had been already rising because of the impression of local weather change. Russia’s struggle exponentially exacerbated the issue, nonetheless, creating a focus for a difficulty that, sadly, had been brushed apart too typically.

Now, meals safety and points associated to our meals provide chains are rising to the highest of nationwide agendas.

This 12 months alone, round 30 nations imposed meals export restrictions, fearing that meals insecurity may result in civil unrest. And whereas our bodies such because the U.N. demand that such protectionist measures are diminished to maintain commerce open and free, nature-dependent nations proceed to place up commerce boundaries by bans, export licenses and/or export taxes, which result in the disruption of provide chains.

Between 2010 and 2019, such nature-dependent exports accounted for 40 % of whole annual world commerce, over a 3rd of which originated from non-democratic regimes. Actually, 25 % of renewable commodities — agricultural exports equivalent to cereals, meat, dairy and seafood — had been sourced from 90 non-democratic nations with a mean annual export worth of $602 billion.

This additionally raises the specter of the assist we’re giving, as a world group, to regimes that proceed to drive deforestation, air pollution and human rights violations, and that might simply minimize off important provides at any time — as we have now seen with Russia. Provide chain vulnerabilities are actually clear to all.

So, what are monetary establishments and policymakers to do, when 1 / 4 or extra of renewable commodities are in danger?

Firstly, a shift towards shorter provide chains and “pleasant” jurisdictions, or “friend-shoring,” needs to be seen with warning. Although these insurance policies encourage safe native provide and may reinforce nationwide meals safety, provide chains are a lot too complicated to completely rein in. Furthermore, in recent times, some strikes towards deglobalization have been coupled with the rise of nationalism, in all its antidemocratic and xenophobic sentiment.

To reset the meals system for a extra sustainable, wholesome and equitable meals future, buyers and policymakers ought to as a substitute deal with supporting the transition towards a extra sustainable international food regimen, whereas additionally engaged on methods to assist soften the impression of provide chain shocks from local weather, illness or geopolitics.

Nonetheless, monetary markets are additionally enjoying a major function in backing industries which have a dangerous impression on our pure capital. For instance, Planet Tracker’s “Gran Chaco” analysis, which focuses on the danger of deforestation within the largest dry forest in South America, in addition to the 12 soy merchants that management 89 % of soy exports from the Paraguayan and Argentinian Gran Chaco — revealed that within the insurance policies of the 20 largest fairness buyers funding the “Deforestation Dozen,” solely one in all them explicitly acknowledges the realm as a high-risk biome.

Shifting ahead, the increase in environmental, social and governance information implies that buyers can now start to know the impression of their investments. Structured information gathering on pure capital points and legislating for disclosure might help buyers determine dangers and alternatives, and it additionally lays the groundwork for higher regulation as a way to deal with particular points.

This type of enhanced accountability is what can turbocharge the transition towards not solely a internet zero future but in addition a simply and nature-positive one on the tempo required.

“We are able to do higher, we should” — these had been the parting phrases of outgoing U.N. local weather chief Patricia Espinosa. And this implies doing higher at analyzing and appearing on the interaction of points, as we use what’s left of the Earth’s pure capital. It additionally means boosting the way in which monetary markets assist insurance policies — we’d like finance funneled into our options.

There was a lot constructive momentum for this at COP 26 in Glasgow final 12 months. Now, going into COP 27, we should speed up that momentum.

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Finance

UAE's Central Bank Sets New Standards with Open Finance Regulation | The Fintech Times

Published

2 hours ago

July 1, 2024

Press Room

UAE's Central Bank Sets New Standards with Open Finance Regulation | The Fintech Times

The Central Bank of the UAE (CBUAE) has issued the Open Finance Regulation, a significant component of its financial infrastructure transformation programme.

This regulation aims to ensure the soundness and efficiency of open finance services, promote innovation, enhance competitiveness and bolster the UAE’s status as a financial technology hub.

The new regulation mandates that all financial institutions supervised by the CBUAE must participate in the open finance framework concerning their products as well as services.

Licensed financial institutions (LFIs), as data holders and service owners, must provide access to customer data and the ability to initiate transactions, contingent on the express consent of users. This provision also aims to align services with consumer needs.

The regulation

The framework is designed to facilitate LFIs in accessing and utilising consumer financial data to create personalised experiences and tailored offerings. This regulation also enables consumers to consolidate their financial information through seamless data sharing across platforms.

The regulation encompasses a trust framework, an application programming interface (API) hub, as well as a common infrastructural services. These elements collectively support the cross-sectoral sharing of data and the initiation of transactions on behalf of users. The open finance platform also includes a consumer consent model for sharing financial data with trusted third parties within an integrated business system.

H.E. Khaled Mohamed Balama, governor of the CBUAE, said: “The introduction of open finance regulation establishes global standards for open finance and accelerates the adoption of digital financial services. This
initiative enables licensed financial institutions to harness consumer financial data.

“On the other hand, it empowers consumers to obtain the best financial solutions, which will drive competition and innovation. We will continue our efforts to develop the financial services sector in the UAE and support its competitiveness globally.”

The regulation, published in the Official Gazette, will also come into effect in phases, as notified by the CBUAE.

Finance

Pakistan President Zardari gives his assent to tax-laden Finance Bill criticised by opposition

Published

10 hours ago

June 30, 2024

Press Room

Pakistan President Zardari gives his assent to tax-laden Finance Bill criticised by opposition

Pakistan president Asif Ali Zardari
| Photo Credit: PTI

Pakistan President Asif Ali Zardari on June 30 gave his assent to the government’s tax-heavy Finance Bill 2024, which drew sharp criticism from the Opposition which labelled it as an IMF-driven document that was harmful to the public for the new fiscal year, according to a media report.

Finance Minister Muhammad Aurangzeb presented the Budget in the National Assembly on June 12, drawing sharp criticism from the opposition parties, especially jailed former premier Imran Khan’s Pakistan Tehreek-e-Insaf (PTI), as well as coalition ally Pakistan Peoples Party led by former foreign minister Bilawal Bhutto-Zardari.

On June 28, Parliament passed the Pakistani Rs 18,877 billion Budget for the fiscal year 2024-25, detailing the expenditures and income of the government.

The Opposition parties, mainly parliamentarians backed by currently incarcerated former premier Khan, had rejected the Budget, saying it would be highly inflationary.

During the National Assembly session, opposition lawmakers criticised the Budget, asserting that it was now an open secret that the document was dictated by the International Monetary Fund (IMF). Leader of the Opposition Omar Ayub Khan had denounced the budget as “economic terrorism against the people”.

Earlier this week, the PPP — which had initially boycotted the debate over the Budget — decided that it would vote for the finance bill despite certain reservations.

On Friday, the National Assembly passed the budget with some amendments. The motion was preceded by fiery speeches from the opposition, who described the budget as unrealistic, anti-people, anti-industry, and anti-agriculture, the Dawn newspaper reported.

President Zardari on Sunday gave assent to the bill in accordance with Article 75 of the Constitution, the media wing of the President House said, adding that the bill would be applicable from July 1. Under Article 75 (1), the president has no power to reject or object to the finance bill, which is considered to be a money bill as per the Constitution.

On June 28, the Government extended exemptions in specific sectors while announcing new tax measures in several areas to generate additional revenue in the coming fiscal year to meet the International Monetary Fund’s criteria.

Pakistan is in talks with the IMF for a loan of $6 billion to USD 8 billion, the report said. Earlier this week, PM Shehbaz confirmed that the budget was prepared in collaboration with the IMF.

Amendments include introducing a capital value tax on property in Islamabad, implementing new tax measures on builders and developers and increasing the Petroleum Development Levy (PDL) on diesel and petrol by Pakistani Rs 10 instead of the proposed Pakistani Rs 20.

According to the budget documents, the gross revenue receipts have been estimated at Pakistani Rs 17,815 billion, including Pakistani Rs 12,970 billion in tax revenues and Pakistani Rs 4,845 billion in non-tax revenue.

The share of provinces in the federal receipts will be Pakistani Rs 7,438 billion. The growth target had been set at 3.6% during the next fiscal year. Inflation is expected to be 12%, budget deficit 5.9% of GDP and primary surplus will be one per cent of the GDP.

Finance

Ukraine has a month to avoid default

Published

17 hours ago

June 30, 2024

Press Room

War is still exacting a heavy toll on Ukraine’s economy. The country’s GDP is a quarter smaller than on the eve of Vladimir Putin’s invasion, the central bank is tearing through foreign reserves and Russia’s recent attacks on critical infrastructure have depressed growth forecasts. “Strong armies,” warned Sergii Marchenko, Ukraine’s finance minister, on June 17th, “must be underpinned by strong economies.”

Following American lawmakers’ decision in April to belatedly approve a funding package worth $60bn, Ukraine is not about to run out of weapons. In time, the state’s finances will also be bolstered by G7 plans, announced on June 13th, to use Russian central-bank assets frozen in Western financial institutions to lend another $50bn. The problem is that Ukraine faces a cash crunch—and soon.