IDEAS home Printed from https://ideas.repec.org/a/bla/glopol/v14y2023i5p716-729.html
   My bibliography  Save this article

Net zero portfolio targets for development finance institutions: Challenges and solutions

Author

Listed:
  • Sam Fankhauser
  • Sugandha Srivastav
  • Ingrid Sundvor
  • Stephanie Hirmer
  • Gireesh Shrimali

Abstract

Development finance needs to be better aligned with climate change objectives, and many experts see net zero portfolio targets as a powerful way to achieve this. This paper explores the operational implications of net zero portfolio targets for development finance institutions (DFIs). We set out an agenda to move development finance towards net zero goals in a way that acknowledges development concerns. These include (1) setting context‐specific emissions pathways with granular bottom‐up data and emphasising climate‐development win‐wins; (2) dealing with inertia and lumpiness in the portfolio through ‘when’ flexibility (multiyear carbon budgets) and ‘where’ flexibility (sharing of carbon space); (3) encouraging transition projects through future‐emissions accounting and transition credits; (4) managing climate‐development and other trade‐offs with an internal carbon price and ESG standards; and (5) accounting for emissions after project‐end with monitoring and legal provisions.

Suggested Citation

  • Sam Fankhauser & Sugandha Srivastav & Ingrid Sundvor & Stephanie Hirmer & Gireesh Shrimali, 2023. "Net zero portfolio targets for development finance institutions: Challenges and solutions," Global Policy, London School of Economics and Political Science, vol. 14(5), pages 716-729, November.
    • Handle: RePEc:bla:glopol:v:14:y:2023:i:5:p:716-729
    DOI: 10.1111/1758-5899.13286
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1758-5899.13286
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1758-5899.13286?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lucas Kruitwagen & Kaveh Madani & Ben Caldecott & Mark H. W. Workman, 2017. "Game theory and corporate governance: conditions for effective stewardship of companies exposed to climate change risks," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 7(1), pages 14-36, January.
    2. Måns Nilsson & Dave Griggs & Martin Visbeck, 2016. "Policy: Map the interactions between Sustainable Development Goals," Nature, Nature, vol. 534(7607), pages 320-322, June.
    3. S. Rekker & M. C. Ives & B. Wade & L. Webb & C. Greig, 2022. "Measuring corporate Paris Compliance using a strict science-based approach," Nature Communications, Nature, vol. 13(1), pages 1-11, December.
    4. Frederick van der Ploeg & Armon Rezai, 2020. "Stranded Assets in the Transition to a Carbon-Free Economy," Annual Review of Resource Economics, Annual Reviews, vol. 12(1), pages 281-298, October.
    5. Alina Averchenkova & Sam Fankhauser & Jared J. Finnegan, 2021. "The impact of strategic climate legislation: evidence from expert interviews on the UK Climate Change Act," Climate Policy, Taylor & Francis Journals, vol. 21(2), pages 251-263, February.
    6. Sam Fankhauser & Stephen M. Smith & Myles Allen & Kaya Axelsson & Thomas Hale & Cameron Hepburn & J. Michael Kendall & Radhika Khosla & Javier Lezaun & Eli Mitchell-Larson & Michael Obersteiner & Lava, 2022. "The meaning of net zero and how to get it right," Nature Climate Change, Nature, vol. 12(1), pages 15-21, January.
    7. Howard Covington & James Thornton & Cameron Hepburn, 2016. "Global warming: Shareholders must vote for climate-change mitigation," Nature, Nature, vol. 530(7589), pages 156-156, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gregory Trencher & Sascha Nick & Jordan Carlson & Matthew Johnson, 2024. "Demand for low-quality offsets by major companies undermines climate integrity of the voluntary carbon market," Nature Communications, Nature, vol. 15(1), pages 1-15, December.
    2. Tianyi Qiu & Yu Shi & Josep Peñuelas & Ji Liu & Qingliang Cui & Jordi Sardans & Feng Zhou & Longlong Xia & Weiming Yan & Shuling Zhao & Shushi Peng & Jinshi Jian & Qinsi He & Wenju Zhang & Min Huang &, 2024. "Optimizing cover crop practices as a sustainable solution for global agroecosystem services," Nature Communications, Nature, vol. 15(1), pages 1-14, December.
    3. Nina Wormbs & Maria Wolrath Söderberg, 2021. "Knowledge, Fear, and Conscience: Reasons to Stop Flying Because of Climate Change," Urban Planning, Cogitatio Press, vol. 6(2), pages 314-324.
    4. Frank Biermann & Thomas Hickmann & Carole-Anne Sénit & Marianne Beisheim & Steven Bernstein & Pamela Chasek & Leonie Grob & Rakhyun E. Kim & Louis J. Kotzé & Måns Nilsson & Andrea Ordóñez Llanos & Chu, 2022. "Scientific evidence on the political impact of the Sustainable Development Goals," Nature Sustainability, Nature, vol. 5(9), pages 795-800, September.
    5. van de Water, Antoinette & Henley, Michelle & Bates, Lucy & Slotow, Rob, 2022. "The value of elephants: A pluralist approach," Ecosystem Services, Elsevier, vol. 58(C).
    6. Srivardhini K. Jha & E. Richard Gold & Laurette Dubé, 2021. "Modular Interorganizational Network Governance: A Conceptual Framework for Addressing Complex Social Problems," Sustainability, MDPI, vol. 13(18), pages 1-21, September.
    7. Maryna Henrysson & Ranjula Bali Swain & Ashok Swain & Francesco Fuso Nerini, 2024. "Sustainable Development Goals and wellbeing for resilient societies: shocks and recovery," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.
    8. Henrik Skaug Sætra, 2021. "AI in Context and the Sustainable Development Goals: Factoring in the Unsustainability of the Sociotechnical System," Sustainability, MDPI, vol. 13(4), pages 1-19, February.
    9. Mireille Chiroleu-Assouline & Mouez Fodha, 2023. "Debt, tax and environmental policy [Dette, taxe et politique environnementale]," Post-Print halshs-04181981, HAL.
    10. Govindan, Kannan, 2023. "How digitalization transforms the traditional circular economy to a smart circular economy for achieving SDGs and net zero," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    11. Mercy Berman DeMenno, 2023. "Environmental sustainability and financial stability: can macroprudential stress testing measure and mitigate climate-related systemic financial risk?," Journal of Banking Regulation, Palgrave Macmillan, vol. 24(4), pages 445-473, December.
    12. Gyula Dörgő & Viktor Sebestyén & János Abonyi, 2018. "Evaluating the Interconnectedness of the Sustainable Development Goals Based on the Causality Analysis of Sustainability Indicators," Sustainability, MDPI, vol. 10(10), pages 1-26, October.
    13. Joyeeta Gupta & Louis Lebel, 0. "Access and allocation in earth system governance: lessons learnt in the context of the Sustainable Development Goals," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 0, pages 1-18.
    14. Lena I. Fuldauer & Scott Thacker & Robyn A. Haggis & Francesco Fuso-Nerini & Robert J. Nicholls & Jim W. Hall, 2022. "Targeting climate adaptation to safeguard and advance the Sustainable Development Goals," Nature Communications, Nature, vol. 13(1), pages 1-15, December.
    15. Guillermo M. Cejudo & Philipp Trein, 2023. "Pathways to policy integration: a subsystem approach," Policy Sciences, Springer;Society of Policy Sciences, vol. 56(1), pages 9-27, March.
    16. Hasret Sahin & A. A. Solomon & Arman Aghahosseini & Christian Breyer, 2024. "Systemwide energy return on investment in a sustainable transition towards net zero power systems," Nature Communications, Nature, vol. 15(1), pages 1-15, December.
    17. Sara Trucco & Maria Chiara Demartini & Valentina Beretta, 2021. "The reporting of sustainable development goals: is the integrated approach the missing link?," SN Business & Economics, Springer, vol. 1(2), pages 1-13, February.
    18. Anton Pichler, 2024. "Transition dynamics of electricity asset-owning firms," Papers 2412.11597, arXiv.org.
    19. Prashamsa Thapa & Brijesh Mainali & Shobhakar Dhakal, 2023. "Focus on Climate Action: What Level of Synergy and Trade-Off Is There between SDG 13; Climate Action and Other SDGs in Nepal?," Energies, MDPI, vol. 16(1), pages 1-32, January.
    20. Lucia de Strasser, 2017. "Calling for Nexus Thinking in Africa’s Energy Planning," ESP: Energy Scenarios and Policy 263161, Fondazione Eni Enrico Mattei (FEEM).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:glopol:v:14:y:2023:i:5:p:716-729. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.