Roundup: South Korea needs to ramp up its transition efforts, says central bank

South Korea’s central bank says the country needs to ramp up its green transition efforts, while the Net Zero Banking Alliance plans to ask member banks to ditch climate commitments. In addition, the ISSB is considering biodiversity reporting approaches. All this and more in this week’s roundup.

South Korea’s central bank outlines need for faster transition

South Korea needs to quickly reform its green finance policy if it is to accelerate its decarbonisation efforts. Research from the Bank of Korea (BoK) found that the country’s emission reduction efforts are slower than other developed nations and has fallen below the G7 nations.

Other developed nations are transitioning away from carbon-intensive practices, while South Korea still has a long way to go. The BoK recommended that South Korea increase its domestic efforts to encourage green finance, such as transition-focused finance.

ISSB considers biodiversity reporting approaches

The International Sustainability Standard Board (ISSB) is considering using various reporting frameworks to approach its own rulemaking on biodiversity, ecosystems and ecosystem services (Bees), IPE reported.

Various reporting frameworks – such as the Task Force on Nature-related Financial Disclosures, IFRS S1 and the Sustainability Accounting Standards Board all have similarities – which means the ISSB could build on them, a staff member told the board.

ISSB research staff have also found differences, some with “greater specificity”, between the board’s literature and Bees-related disclosure standards. The next phase is to further assess the differences.

Bank climate alliance to vote on ditching 1.5ºC pledge

The Net Zero Banking Alliance will ask members to vote on ditching a pledge to align their assets with the Paris Agreement of limiting global warming to 1.5ºC in an effort to save the voluntary group after an exodus of US-banks in December.

Instead, the new proposal would require members to commit to keeping their activities aligned with a less ambitious goal to keep warming below 2ºC. Voting is expected later in the month.

The group was launched by then UN envoy Mark Carney and created to lower emissions through financing but has faced pressure from Republicans in the US. European banks have also threatened to pull out unless it softens its rules, as financial institutions around the world have started to backtrack on their net-zero commitments.

AI is reshaping nature finance, says UNEP FI

AI and technology are reshaping nature finance, the UN Environment Programme Finance Initiative (UNEP FI) said. The advance of AI is making nature-based solutions more accessible, transparent,and scalable.

According to the initiative, there is a push to solve data challenges, while technology can help manage nature-related risk. Insurance is also likely to play an increasing role in the nature transition by identifying and addressing nature-related issues. The public finance of de-risking will also continue to grow, the UNEP FI predicted.

Meanwhile, Cop30 is likely to integrate nature into decarbonisation plans, Moody’s Ratings said, with biodiverse nations in focus at the conference in Brazil later this year. Land use trade-offs could also become important, especially as use for the transition away from fossil fuels and biodiversity preservation comes into play.

US federal job cuts could jeopardise insurers’ climate risk data

A plethora of job firings at US science agencies could threaten key climate data that insurers use to manage risks and determine pricing for consumers, the FT reported.

The Reinsurance Association of America is lobbying to preserve data collection at the National Oceanic and Atmospheric Administration, which is planning to cut 1,000 staff. The agency oversees the National Weather Service and monitors real-time storm data used to forecast potential life-threatening storms.

Insurers have also raised concerns about cuts to other US federal agencies tasked with tracking hurricanes and hailstorms, and monitoring drought conditions which can raise wildfire alarms.

If the data is not preserved, insurers would need to collect modeling data from private satellite operators, a cost that would likely be passed onto consumers.

Research notes

Some recent research on climate and the economy that are worth reading:

Planetary financial policy and the riskification of nature
Authors Jens van ‘t Klooster and Klaudia Prodani look at how risk models from the 1990s turn nature into financial risk and how recent regulatory strategies go beyond a risk-based approach.

How Climate-Transition Risks May Impact Lending Practices
MSCI researchers Anja Luszuweit and Guilherme de Melo Silva found that the default risk of lenders in the Asia-Pacific region could double due to transition risks, while banks in Europe and the Americas saw a smaller default increase.

Banks’ Climate Commitments: A Silver Lining for Climate Action or Just Hot Air?
Author Mischa Aeshclimann explores the efforts of net-zero implementation at banks and the likelihood that they can meet reduction targets. Examining Swiss mortgage portfolios, the findings show that while banks have measures to achieve net zero, they often fail due to fears of market disadvantage.

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