Sustainable Finance

At the forthcoming G7 Ministerials this week and next, Germany should push for stronger joint efforts to exit international fossil fuel financing. Considering the latest IPCC findings and the urgent need to stop investment in coal, oil and gas, the financial activities of public finance institutions (PFIs) play an important role to achieve the goals of the Paris Agreement. This paper analyses the alignment of German and Korean PFIs’ climate and sector strategies with the Paris Agreement and makes recommendations on how their strategies can align with a 1.5°C goal.

The leading industrialised countries have a particular responsibility to address the climate crisis – but they failed to meet their former commitments. The German G7 presidency now offers the opportunity to take important steps towards a new paradigm for climate finance. Against that backdrop, this policy brief formulates five key asks to the G7 governments.

Just weeks after the new coalition government took office, Germany took over the Presidency of the G7. The G7 Presidency provides the new federal government an opportunity to demonstrate the importance it attaches to international climate policy and ambitious climate protection. The coalition agreement lays out the government’s course. This briefing paper identifies issues on which the new federal government is already sending strong signals, as well as opportunities and gaps.

Last April, the European Commission published a new draft of the Corporate Sustainability Reporting Directive (CSRD), which is intended to provide companies with clarity on what and how they need to report and reduce administrative burden. The goal is to remove barriers and to leverage financing the transformation to climate neutrality. This briefing paper provides a brief overview of the ongoing processes around the CSRD and the standard-setting and then takes a first summarizing look at the new European corporate reporting standards.

Due diligence affects all companies, as it enables to properly assess relevant risks and impacts. While investors and customers show growing awareness of companies' impacts along the value chain, many companies still provide limited detail. In the sixth article of our briefing series “Full Disclosure” we examine how corporate due diligence legislation relates to sustainable finance and what questions a legislative proposal needs to answer to avoid greenwashing and support comparable due diligence.

No company can afford to ignore the financial risks of climate change. This also applies to small and medium-sized enterprises. To reduce these financial risks for companies and investors, it is crucial to be transparent. In the fifth article of our briefing series “Full Disclosure” we examine how small and medium-sized enterprises can benefit from forward-looking reporting requirements.