Some information on this website may be out of date following the recent announcement of the death of The Queen.

SMI Quarterly Newsletter – 04 May 2022

May 2022 Newsletter

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As we move through the second quarter of 2022, we reflect upon the positive progress made by the Sustainable Markets Initiative (SMI) thus far this year, and the contributions of our Task Forces and strategic partners, whilst also looking towards the events and activities scheduled for the summer.  We are thankful for your ongoing support and for all your activities in pursuit of a more sustainable future.  

In the last three months the focus has been on planning for the Terra Carta Seal 2022, establishing the Sustainable Buildings Task Force, preparing for a number of upcoming key events, including CHOGM and G7, and transitioning the role of Chief Operating Officer from Patty Clement to Lesley White, with continued support from Bank of America.

Key convening events this quarter have included an Africa Leaders Roundtable hosted by His Royal Highness The Prince of Wales in February, and a Sustainable Buildings Roundtable on 4th March.

Each quarter we shine a spotlight on a particular SMI activity or output, and the Spotlight featured in this newsletter is the recent launch of resources by the Asset Manager & Asset Owner Task Force providing recommendations on how to accelerate the flow of capital, at scale, towards viable and credible transition finance structures, investor expectations of banks to raise their climate ambitions, a framework of principles and best practices that asset owners can consider when building net-zero and climate change factors into their portfolios and similarly, the factors to consider when engaging with the shipping industry. Furthermore, this edition highlights the Hydrogen Task Force’s efforts to grow commitment to hydrogen pledges to accelerate the development of hydrogen infrastructure.

This quarter’s newsletter also includes a special feature on the Scaling Private Sector Investment Initiative (SPSI) a programme to understand the barriers to swift financing and execution of sustainable development projects and contribute to building leverageable sustainable financing solutions and ecosystems, as part of the SMI’s broader ambition to reform global financial systems and unlock investment.  With contributions from Deloitte, EY, KPMG and PwC, and support from BCG, SPSI has developed a Project Development Tool allowing countries, cities, and local private sector initiators to conduct an early assessment of project attractiveness to and readiness for private sector financing, and published a report that provides recommendations on unlocking the investment-to-investables pipeline, particularly in emerging markets.

Similarly, the Natural Capital Investment Alliance (NCIA) was formed in recognition of the need to mobilise investment in Nature-based economic opportunities and aligns closely to the themes of the Terra Carta . The NCIA aims to attract members from the investment management community, to create scale and synergies in order for Natural Capital to develop as a mainstream investment theme. At COP26 in Glasgow, the Alliance announced 12 new members, bringing the total membership to 15.

Following the launch of Terra Carta Impact Reporting in January, over 15 case studies have been published. These case studies explore our collective efforts to accelerate the transition to a sustainable future, sharing insights, creating conversations, demonstrating progress and encouraging action. Case studies include PepsiCo’s approach to balancing out the carbon cost of business travel through an innovative insetting programme, and the benefits of restoring flower-rich grasslands to mitigate the impacts of climate change.

The SMI Partners are a growing group of the world’s leading businesses, organisations and individuals working with us to deliver and amplify specific SMI and Terra Carta assets, tools, events and initiatives, and to promote shared aims and goals. This edition highlights two of the SMI Collaboration Partners: The Earthshot Prize and the Council for Inclusive Capitalism .

Finally, the SMI cannot be successful without the support of its Community and the secretariat continues to operate an effective secondment programme with several new roles recently being filled, owing to the increase in number of corporate partners contributing. These include a Chief Financial Officer, a Communications Director, an Events Manager and the NCIA Manager.

The SMI has a number of further exciting secondment opportunities available across the country engagement team, operations, industry, reporting, research and communications teams. Businesses interested in more information should email the SMI at info@sustainable-markets.org.

Industry Activity: Task Forces

Over 35 industry and investment roundtables have now been convened by His Royal Highness, The Prince of Wales since January 2020. By invitation, industry leaders are convened to discuss ways to kickstart bold and imaginative action. Many of the roundtable invitees come together to form Task Forces developing materials, tools, partnerships and plans to accelerate global progress towards a more sustainable future.  

The SMI Task Forces have also continued to explore cross-sector collaboration. As an example, the Hydrogen Task Force and Asset Manager & Asset Owner Task Force held the first of a series of joint discussions on how investors can best support the continued development of hydrogen infrastructure. Meanwhile, the Hydrogen Task Force continues to reach out to other SMI Task Force members to secure further hydrogen pledges across demand, supply, financial and technical support. Hydrogen pledges help drive the production and use of hydrogen as a crucial element of the Energy Transition. The SMI and the World Business Council for Sustainable Development (WBCSD) announced an initial 28 pledged companies on Industry Day at COP26 and continue to engage new organisations to join.

hydrogen hero

Please visit the Task Force page to further explore the activities of all the Task Forces.

Spotlight: Asset Manager & Asset Owner Task Force

The SMI Asset Manager & Asset Owner Task Force announced the launch of a suite of resources designed to support investors in the transition to a more sustainable future. The resources are intended to help institutional investors as they pursue net-zero ambitions and span guidance on asset stewardship, asset allocation and portfolio construction, and recommendations for accelerating transition finance.

 

AMAO Banking

1.       Asset Owner Practitioner’s Guide: Net-Zero Allocation

The members of the Net-Zero Asset Allocation Working Group, working on behalf of the SMI Asset Manager & Asset Owner Task Force, propose a framework of principles and best practices dedicated to all types of asset owners to include climate change and net-zero considerations in portfolio construction.

Download the full Net-Zero Allocation Paper here.

 

2.       Recommendations for Accelerating Viable Transition Finance Structures

These are a set of recommendations to serve as an actionable guide for asset managers, asset owners, Multilateral Development Banks (MDBs), Development Finance Institutions (DFIs), and policymakers to accelerate the flow of capital, at scale, towards viable and credible transition finance structures. Despite the wide range of viable transition finance structures, these recommendations call for a credible and inclusive transition definition, a supportive enabling and policy environment, and appropriate levels of blended finance and investment de-risking. The recommendations are accompanied by a pre-recorded webinar on Transition Finance. Click below to watch Asset Manager & Asset Owner Task Force members Audrey Choi, Hendrik du Toit and Rick Lacaille discuss accelerating efforts around transition finance on the path to net-zero:

Download the full Recommendations for Accelerating Viable Transition Finance Structures here .

 

3.       Investor Expectations for Shipping Transition to Net-Zero Emissions

Climate risk is investment risk. As investors continue to orient their asset stewardship programs to reflect this reality, hard-to-abate sectors each present their own stewardship and engagement challenges. This document lays out considerations investors can take into account when engaging with companies in their portfolios engaged across the shipping industry to support to transition of this sector to net zero. The Task Force looks forward to continuing this work across hard-to-abate industries.

Download the full Investor Expectations for Shipping Transition to Net-Zero Emissions document here .

 

4.       Investor Expectations for Banking Transition to Net-Zero Emissions

Recognising the scale and urgency of the action needed, the AMAO Task Force has developed a set of investor expectations asking banks to raise their climate ambitions by striving for a goal of global net-zero emissions by 2050. The Task Force is asking to make this commitment in order to manage climate-related risks and proactively position themselves for a low carbon economy.  These asks are meant to serve as an example of best practice - they are not intended to be overly prescriptive and accelerate actions that - if taken - will lead to faster decarbonization of a critical industry.

Download the full Investor Expectations for Banking Transition to Net-Zero Emissions document here .

 

For a complete view of the outputs of the SMI’s Asset Manager & Asset Owner Task Force, please visit the Asset Manager & Asset Owner Task Force page here .

Scaling Private Sector Investment programme

SMI’s Scaling Private Sector Investment programme (SPSI) sought to understand the barriers to swift financing and execution of sustainable development projects and contribute to building leverageable sustainable financing solutions and ecosystems. This initiative was commissioned by the SMI with contributions from Deloitte, EY, KPMG and PwC, and support from BCG. Using the SMI’s convening power, the goal of SPSI was to find new ways to harness private capital and bring together critical stakeholders to work towards the standardisation that is essential to scaling private capital flows.

Coastline from a drone

From May to October 2021, SPSI produced two outputs that are informing and facilitating the SMI’s engagement with local sustainability projects across the globe:

 

1.       SMI Project Development Tool

The SMI Project Development Tool is an open-source tool allowing countries, cities, and local private sector initiators to conduct an early assessment of project attractiveness to and readiness for private sector financing. The Tool is designed to support project sponsors in preparing consistent, high-quality project plans for sustainable projects. It is intended to improve the quality of discussions with investors and accelerate the closing of investment deals, providing prompts to questions that investors are likely to ask at each stage of the investment conversation, from concept development soundings to formal fundraising.

To access the SMI Project Development Tool, create an account here .

 

2.       Scaling Private Sector Investment – Updated Report

This report focuses on unlocking the investment-to-investables pipeline, particularly in emerging markets. This is a follow-up to the interim report launched at the G7 in 2021. It recommends the creation of a global virtual network of Project Delivery Units (PDUs) to augment the capacity of individual, in country PDUs by sharing best practice through the development of an open source ‘hub’ of knowledge including trainings and learnings within each sector to help address local knowledge gaps and connect projects with knowledge partners, financial institutions and global peers. Readers can access the full report here .

Natural Capital Investment Alliance Update

At the World Leaders’ Summit, COP26 in Glasgow, 12 new members of the Natural Capital Investment Alliance (NCIA) were announced, alongside plans to mobilise at least USD 10 billion of private capital towards Natural Capital investment. The NCIA was created by His Royal Highness The Prince of Wales through the SMI, with Climate Asset Management, Lombard Odier and Mirova as founding members. The Alliance was formed to mobilise investment in Nature-based economic opportunities. It aims to attract members from the investment management community to achieve the following goals:

  • To serve as a central hub for global corporations and financial institutions seeking to scale-up their investments into Natural Capital, in support of biodiversity restoration, including through high integrity carbon offsets.

  • To share investment knowledge and expertise on investing in Natural Capital, underpinned by strong principles.

  • To showcase and demonstrate scalability of appropriate investment vehicles and the multiple opportunities across asset classes.

    Bamboo forest

For further information on the Alliance, please visit the NCIA page on the SMI website here .

Terra Carta Impact Reporting

Following the launch of the first edition of the Terra Carta Impact Reporting on 11th January 2022 to mark the anniversary of the Terra Carta, over 15 case studies have been showcased on the Terra Carta Impact Reporting site here . These are designed to explore our collective efforts to accelerate the transition to a sustainable future, sharing insights, creating conversations, demonstrating progress and encouraging action.

The Terra Carta is a charter of ambitious and practical action to help the private sector accelerate their progress towards a sustainable future and has thus far enlisted support from hundreds of organisations. As the SMI and adoption of the Terra Carta builds momentum, it becomes increasingly important to report on our progress against this mandate and impact to date.

Terra Carta

 

Recently published case studies include:

 

1. Inset Business Travel (PepsiCo)

In this case study, Jim Andrews, the Chief Sustainability Officer for PepsiCo, provides insights into their innovative Business Travel Inset Programme, designed to make carbon and climate real to employees by raising awareness of the impact of their business travel. The Programme collects a fee from each business unit that is directly linked to the greenhouse gas emissions generated by each associate’s business-related air travel. They then invest those fees into regenerative agriculture projects within their supply chain to reduce and sequester an equal amount of carbon. Please see here for further details about the programme on the Terra Carta Impact Reporting site.

 

2.       Restoring Flower-Rich Grasslands (Grasslands+ Initiative)

In this case study, the Chief Executives of Plantlife, Butterfly Conservation, and the Bumblebee Conservation Trust shine a light on the importance of grasslands in mitigating climate change and the biodiversity crisis, and how their initiative Grasslands+ is leading the way. The partners of Grasslands+ work together to establish the best ecological and stakeholder engagement models to deliver grassland restoration. They work to find cost-effective and practical models for engaging networks in restoration activities, they enroll researchers to measure and report impact, and they influence the enabling environment by promoting green finance and investment in grasslands as a nature-based solution. Please see here for further details about the programme on the Terra Carta Impact Reporting site.

Visit the Terra Carta Impact Reporting site here for a full list of published and upcoming case studies.

SMI Partners

The SMI Partners are a growing group of the world’s leading businesses, organisations and individuals working with us to deliver and amplify specific SMI and Terra Carta assets, tools, events and initiatives, and to promote shared aims and goals. Below we highlight two of the SMI’s Collaboration Partners:

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1.       The Earthshot Prize

Developed and launched by The Royal Foundation of The Duke and Duchess of Cambridge, The Earthshot Prize (TEP) is a prestigious global environment prize, designed to incentivise change and help repair our planet over the next ten years. The Prize aims to turn the current pessimism surrounding environmental issues into optimism, by highlighting the ability of human ingenuity to bring about change, and inspiring collective action. 

The Earthshot Prize is supported by its Global Alliance Partners, a network of non-profit organisations worldwide which share the ambition of the Prize to incentivise change and help to repair our planet over the next ten years. Global Alliance Partners are committed to the environment and sustainable development, and will bring expertise, global reach and serve as nominating organisations each year. The SMI became a Global Alliance Partner of The Earthshot Prize in 2021, and the two organisations continue to work together to advance shared aims in the pursuit of a more sustainable future.

For more information on The Earthshot Prize, please visit the website here .

 

2.       Council for Inclusive Capitalism

The Council for Inclusive Capitalism is a non-sectarian global collaboration of leaders in business, investment, and public sector organisations who believe there is a moral and market imperative to extend the benefits of our economic system to all people while protecting the planet. Through the collaborative work of its members, the Council strives to advance market moving reforms and reshape the way capitalism works to improve the lives of people across the globe.

The Council is made up of Stewards (business, investment, and institutional leaders who commit their organisations to take action to build inclusive economies and societies) and Allies (non-profits, foundations, and international organisations whose missions and values align with those of the Council). The SMI became an Ally of the Council for Inclusive Capitalism in 2021, and the two organisations continue to explore avenues of parallel activity and shared goals.

For more information on the Council for Inclusive Capitalism, please visit the website here .

Looking Towards the Summer

The SMI looks towards the summer, and a calendar of critical events during this period. The Commonwealth Heads of Government Meeting (CHOGM) will be held during the week of 20th June 2022 in Kigali, Rwanda. Leaders of the Commonwealth will travel to Kigali to reaffirm common principles and decide upon future actions to improve the lives of their citizens. This will be the first CHOGM event since 2018, owing to the postponement of the June 2020 meeting in response to the COVID-19 pandemic.

Meanwhile Germany has taken over G7 Presidency for 2022 and will be hosting the G7 summit from 26th to 28th June in Schloss Elmau, Bavaria. This annual event brings the heads of state and government of G7 countries together to discuss key issues relating to global economic stability. The G7 countries are comprised of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States of America. The goal of this year’s programme, as set by the German G7 Presidency, is “progress towards an equitable world”.

Looking further ahead, the UN Climate Change Conference 2022 (COP27) will take place in Sharm el-Sheikh, Egypt from 7th to 18th November – whilst the G20 Summit will be held in Bali from 15th to 16th November, under the Presidency of Indonesia. The SMI looks forward to the progress and commitments that will be outlined at these events, which demonstrate the power of collaboration in driving critical change.

summer

Change in Leadership

The SMI would like to welcome Lesley White to the Secretariat as the new Chief Operating Officer, effective from 1st April 2022.

Lesley joins the SMI Community from Bank of America and brings with her over 30 years of experience in banking, managing teams across Asia Pacific, Latin America, Europe, Middle East and Africa.

Prior to joining the SMI, Lesley was the Head of Global Commercial Banking International. In this role, Lesley provided a single point of management across the full spectrum of solutions the bank provides to the subsidiaries of its U.S. headquartered Commercial Banking clients. In addition, she helped coordinate the teams in treasury solutions, credit products and client coverage to best serve the needs of the bank’s middle market clients globally. 

Lesley serves as co-chair of Bank of America’s EMEA Women’s Leadership Council and is the Executive Sponsor for the Parent and Carers Network.  Additionally, she is a Co-Chair of the Power-of-10 Operating Committee, which connects women and leaders and provides mentor and growth opportunities for participants.

Please join us in wishing Lesley success in her new role and thanking Patty Clement for her contribution in the Chief Operating Officer role over the last 2 years.

Patty's leadership drove the growth of the Secretariat from 3 to 16 full time secondees and 7 volunteers, the creation of 16 Task Forces, convening of over 30 roundtables across 300+ CEOs, engagement with more than 30 countries, and the launch of a number of SMI projects such as the Terra Carta, the Terra Carta Seal, the Design Lab, RE:TV, and hosting the first Terra Carta Action Summit.

The SMI Secondment Programme

The work of the SMI is made possible through the generous support of some of the world’s leading organisations who recognise the benefits of being part of HRH’s ‘Coalition of the Willing’. The SMI Secretariat is made up of a team of staff provided and paid for by corporate partners via a secondment programme .  Corporate secondments to the SMI provide the opportunity for individual career development, engagement across our international and professional network of partners, and allows individuals to return to their organisations with insights and experience gained from a truly cross-industry public and private global effort.

This year we have been able to fill a number of new roles within the organisation, owing to the increase in number of corporate partners providing secondees to the team. These include a Chief Financial Officer, a Communications Director, an Events Manager and an NCIA Manager.

We continue to seek support for the remaining vacant positions in our country engagement team, operations, industry, reporting, research and communications teams.

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Please note secondments are not SMI funded, and prospective secondees must be supported by their employer. Businesses interested in more information should email the SMI at info@sustainable-markets.org.

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