Sustainability update March 2025

A note on the Trump administration’s tariffs

As you will have seen, the rule book on global trade has been rewritten with the decisive tariffs implemented by the Trump administration. The tariffs were set at levels much higher than expected which has caused significant ripples through equity markets. While the long-term effects of the shift in trade relations is still uncertain, it is important to remain calm and reflect on the underlying business cases of the investments we make. Investing sustainably has seen significant headwinds since early 2022 but the underlying drivers of our investment approach remain unchanged. At Greenbank, we will continue to focus on the systemic risks and issues that matter to our clients and build investment portfolios which aim to generate the long-term financial returns our clients need, without compromising their values.

COP16: Cali Fund launched to boost global biodiversity finance

After negotiations to institute a global biodiversity fund were postponed at the opening session of COP16 in Cali, Colombia, the resumption of the summit in Rome at the end of February saw delegates agree to the establishment of the so-called Cali Fund to protect and preserve biological diversity. The Fund will receive contributions from private companies benefitting commercially from Digital Sequence Information on Genetic Resources (DSI) to develop products and services. DSI includes genetic sequencing data from animals, plants and microorganisms essential to major global industries like agriculture, pharmaceuticals, cosmetics and biotechnology. Industries reliant on biodiversity will now have to contribute a portion of their revenues to ensure its protection.

The fund is significant as it is the first such mechanism that explicitly links the economic value derived from nature and biodiversity with a financial mechanism and requirement to support biodiversity. Contributions will be used to support international biodiversity conservation projects, help developing countries implement and deliver their national biodiversity strategies and action plans (a key objective of the Kunming-Montreal Global Biodiversity Framework), and fund research to improve the application, accessibility and storage of genetic data. At least 50% of the Cali Fund will be dedicated to indigenous peoples and local communities in recognition of their crucial role as custodians for species and genetic diversity.

UK’s national biodiversity strategy and action plan (NBSAP) outlines blueprint for halting and reversing domestic biodiversity loss

Four months after the publication deadline imposed by the Kunming-Montreal Global Biodiversity Framework (GBF), the UK released its updated NBSAP – a national blueprint to implement all 23 of the GBF’s action-oriented biodiversity targets and expand protected areas across all UK territories and jurisdictions by 2030. Key objectives include extending protected status to at least 30% of UK-controlled land and sea, reducing pollution to levels that aren’t harmful to native biodiversity, promoting sustainability in nature-reliant industries and farming, and ensuring the legal and sustainable trade of wild species. Recognising the need to protect over 70,000 species of animals, plants and fungi, the UK’s updated NBSAP outlines ambitious funding plans for nationwide tree planting, peatland restoration and inland waterway conservation. It also commits to supporting increased private sector investment in nature through the development of high-integrity nature markets. 

Recognising the need to protect over 70,000 species of animals, plants and fungi, the UK’s updated NBSAP outlines ambitious funding plans for nationwide tree planting, peatland restoration and inland waterway conservation.

A long history of population expansion and associated land use has resulted in the UK being recognised as one of the world’s most nature-depleted countries. Recent studies by the Wildlife and Countryside Link and Office for Environmental Protection concluded that the UK could fall short of its 2030 target to protect 30% of its land and marine habitats with little evidence of meaningful conservation progress and increasing environmental harm wrought by industry, agriculture and weather extremes. The updated NBSAP incorporates policy measures to encourage companies to regularly monitor and disclose biodiversity-related risks, dependencies and impacts. This includes extended transparency requirements for companies’ supply chains and investment portfolios. Another target aims to eliminate harmful biodiversity subsidies by 2025, with significant reform or full phase-out targeted by 2030. The government aims to contribute to the global goal of cutting annual subsidies by at least $500 billion by 2030 and focus on increasing financial incentives supporting conservation and sustainable resource use. New policy, education and public information frameworks will promote sustainable consumer choices and focus on reducing overall waste generation and overconsumption.

COP30 CEO stresses the importance of year-round climate action over conference talks

Ahead of November’s COP30 climate summit in Brazil, conference CEO and Brazil’s National Secretary for Climate Change, Ana Toni, stated that too much was expected from annual climate talks, urging that countries had to “go beyond the walls of the Paris Agreement” to implement key climate decisions year-round.

In marked contrast to the rhetoric of previous summits, Toni advised a conference at London’s Chatham House that climate summits weren’t “silver bullets” for meaningful climate action because private sector participants and subnational governments could invest in and implement initiatives without waiting for broader talks. She further suggested that sending climate or environment ministers to front country delegations missed the point that many key climate decisions were made in finance, transport, agriculture and energy ministries which weren’t represented during summit discussions.

With global carbon emissions yet to peak and average temperatures rising to more than 1.5°C above pre-industrial levels, many campaigners have questioned the efficacy of international climate summits. Key tasks for the COP30 presidency will include encouraging governments to publish and deliver on more ambitious climate action plans and progressing the development of the “Baku to Belém Roadmap” targeting $1.3 trillion of multi-sourced annual climate finance. 

UK considers linking domestic emissions trading scheme with EU after study reveals significant carbon revenue shortfalls

UK carbon prices surged after the Treasury hinted at the possibility of linking the country’s emissions market to the European Union’s. As part of its remit to “explore all options to improve trade and investment with the EU”, the government is considering a unified emissions agreement which would make permits issued in one system redeemable in the other. After leaving the EU in 2020, the UK established its own carbon market where emissions permits are heavily discounted against the EU’s. Reconnecting with the larger European market could therefore significantly boost prices.

Interest in a linked emissions market comes as the Institute for Energy Economics and Financial Analysis (IEEFA) revealed new research which found that carbon prices under the EU’s emissions trading scheme (ETS) had been trading 50% higher than the UK’s for the past two years, contributing to an estimated £2.9 billion revenue shortfall. Another major factor in lost carbon revenues was the UK’s widespread use of free allowances, issued to prevent the relocation of high-emission operations to countries with weaker climate policies. The IEEFA study found that domestic cement and lime industries had benefitted from 99% cost waivers while refiners and airline operators had also been offered significant reductions.

New research from Institute for Energy Economics and Financial Analysis (IEEFA) revealed the found that carbon prices under the EU’s emissions trading scheme (ETS) had been trading 50% higher than the UK’s for the past two years, contributing to an estimated £2.9 billion revenue shortfall.

The UK is set to phase out free allowances in 2027 when it launches its Carbon Border Adjustment Mechanism (CBAM) to apply UK ETS prices to all eligible imports. Until then, lost revenues may continue to limit the government’s capacity to finance its climate ambitions and support the country’s energy transition.