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ClientEarth Communications

19th October 2021

Climate finance

What is Climate Finance?

The term ‘Climate Finance’ was banded around a lot at COP26 in November, but what does that actually mean?

Climate finance is financing that supports action to cut greenhouse gas emissions and build a more climate-safe future.

We need to stop money flowing into industries that contribute to climate change

ClientEarth’s Climate Finance team works in four main ways to make this happen:

1. Encouraging companies to report climate risks

Investors need companies to disclose their exposure to climate risks in order to make informed decisions about where to direct funds in support of climate goals. They also need to know how businesses plan to adapt to a low-carbon world. We work with regulators to ensure companies are properly reporting on these risks and implementing actions to change.

2. Ensuring pension funds are managing climate-related risks

Investing people’s pensions in fossil fuels presents a future risk to their savings as we move to cleaner energy. We are working to ensure pension schemes manage climate risks on behalf of their fund holders and invest people’s savings in a way that promotes climate action.

3. Highlighting the role of the banking and insurance sectors

Banks and insurers play a crucial role in addressing climate change. We are pressuring them to align their financing with the goals of the Paris Agreement and to cut ties with new fossil fuel projects.

4. Advocating for climate considerations to be integrated in regulations and law

We engage with lawmakers, financial regulators and industry bodies to push for climate risks to be considered in industry guidance and laws – and ensure industries have a plan for a sustainable future to drive accountability and transparency across the entire financial sector.

What has ClientEarth achieved in the world of Climate Finance?

We’ve helped shake up the financial industry’s approach to climate risk. Our lawyers exposed the widespread failure of pension schemes to consider and manage climate risks, helping to influence new laws in the UK clarifying their duties to do so.

We’ve reported major UK corporates, including Just Eat, Carnival Cruises and EasyJet, to regulators over their failures to address climate change risks – and turned up the heat on those regulators to improve enforcement of climate risk reporting  failures.

After we pressured the European Investment Bank to align its funding with the Paris Agreement, they announced a 2021 cut-off date for funding fossil fuel projects.

Climate Finance is a driving force for climate action. That’s why we’re continuing to bring landmark cases against major companies that set new precedents; why we’re pressuring regulators to properly enforce existing climate rules and why we’re working to create new laws that help secure a brighter, healthier future.