Know The Difference
Renewable Energy Investments
These investments can be made through Green Bonds and regular bonds. Green bonds, specifically, are used to fund projects having a positive impact on the environment and climate change. The World bank issued the first bonds of this kind in 2009. They “enable capital-raising and investment for new and existing projects with environmental benefits. The Green Bond Principles (GBP) seek to support issuers in financing environmentally sound and sustainable projects that foster a net-zero emissions economy and protect the environment.”
Fossil Fuel Investments
They are the opposite of green bonds. Investments in this sector sponsor and facilitate the expansion of oil, coal, gas, petroleum, which are all known to have very severe effects on the climate.
The analysis should ideally tackle one aspect, either renewable energy or fossil fuel finance + their impact (i.e. from green bonds: renewable energy generated and CO2 emissions avoided yearly; from fossil fuel: CO2 emissions generated, non-renewable energy generated, amount of coal, gas, etc. produced)
Ideally, the introduction should try to capture:
“In 2019, fossil fuels, including coal, oil, and natural gas, represented 84.3% of the global primary energy use (173.3 Bn MWh)1.”
“In 2019, the global renewable energy investment was USD282.2 billion (Bn)1. Renewable energy helps to reduce CO2 emissions, thereby minimizing the effects of climate change2. That same year, about 184,000MW of clean energy was generated worldwide11.”
“The global energy system needs a fast transition towards renewable sources of energy to meet the Paris Agreement's goal of limiting the average global temperature increase below 2°C6.”
“While coal is responsible for 0.3°C of temperature change in every 1°C global temperature change, oil accounts for one-third of the world's emissions while natural gas accounts for one-fifth of world emissions4.”
“Furthermore, by 2050, renewables can cut global CO2 emissions from the energy sector by 70%3; hence the necessity for renewable energy generation is crucial.”
“The financial institutions have an immense responsibility to support the rapid pace of energy transformation by investing in renewable energy projects7;p14. The UNEP works with over 230 financial institutions to implement measures against climate change2;p2.”
Note: all the above depends on data availability and retrievability.
The core analysis should capture the company’s impact in relation to the broader issue by providing the following information:
How much money did the company provide through funding, investment, loans, underwriting, and/or credit? (2018-onward amounts, even aggregated).
Both equity and debt financing can be considered as an investment. The amount invested is considered to be relevant as long as the sum is over USD or EUR 100 million. Similarly, a 5% holding for equity investment is considered relevant.
What main company(s)/projects received the funds? You may discuss the companies’ activities that received the largest sums or that have a large stake owned by the financial institution.
Cover their fossil fuel production capacity & CO2 emissions stemming from their productions.
Are those companies among the top recognized polluters/ leading banks in green energy financing? Do they have a relevant market share? (if relevant and applicable)
What was the ultimate impact stemming from these financial investments in either green energies or fossil fuels on the environment?
Try to be as specific as you can.
No matter what the company’s activities are, you may go back to the Logical Model if needed.
To help readers assess the impact scale and value, you should contextualise the impact. For instance:
How extensive is the bank’s funding compared to the industry it is part of? (Learn more about comparisons here.)
If evaluating the impact on the environment, from the fossil fuel’s perspective: what is the amount of emissions generated? On the green energy side: how much green energy was generated? How much emissions were avoided? From which projects?
Also, ask yourselves the following questions:
1/ The breadth of the impact
Is the impact local, national, or global?
How much CO2 is released or avoided?
2/ The depth of the impact
Is the environment deeply affected, or does the issue just marginally impact it?
Are the changes brought by the issue profoundly changing society or the planet?
3/ The persistence of the impact
Find more about evaluating the scale of the impact in Step 5: Assess scale and value.