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COP28 begins with focus on climate finance – Industry roundup: 30 November

Climate finance to top the agenda at COP28 talks

The 2023 United Nations Climate Change Conference, aka COP28, gets underway today, with the United Arab Emirates (UAE) capital of Dubai hosting this year’s summit that is scheduled to continue until 12 December but could be extended.

World leaders will attend a two-day session known as the world climate action summit on 1 and 2 December, then leave their high-ranking officials to continue with the substance of the negotiations. The talks will focus on financial compensation for damage caused by climate change, particularly in emerging nations that have felt much of the impact.

This year’s meeting could be marked by an acknowledgement for the first time that addressing climate change will mean ending the use of fossil fuels. Many countries and civil society groups have lobbied for language on “phasing out” fossil fuels in any agreement at COP28., while others want less blunt language to “phase down” fossil fuels, or to limit the scope of the statement in other ways.

Ahead of the first day of talks, António Guterres, the UN secretary general, said that this year’s  talks should aim for a complete “phase-out” of fossil fuels, insisting of the 1.5C climate goal: “It is not dead, it’s alive.”

With the UAE, COP28’s host nation, a major oil producer some question its support for ambitious action on fossil fuels. The country has even planned to use the summit to discuss fossil fuel deals, according to documents obtained by the non-profit investigative Centre for Climate Reporting.

Reports suggest that momentum is building for an agreement at the summit in Dubai to triple renewable energy capacity and double the rate of energy efficiency gains by 2030.

Climate finance – the money provided to less wealthy countries from public and private sources, to help them cut emissions and cope with the impacts of extreme weather – will also be a major topic of discussion. Back in 2009 at COP15 in Copenhagen a pledge was made that these countries would receive US$100 billion annually by 2020.

Although the target was missed, the Organisation for Economic Co-operation and Development (OECD) recently suggested that it was probably met in 2022, and is even more likely to be reached this year, although some developing countries are unhappy at the way the data has been presented.

Another much anticipated speech will be the address by US Special Presidential Envoy John Kerry, who will unveil a first-of-its-kind global strategy to commercialise nuclear fusion energy.

“Fusion energy is no longer just a science experiment,” Kerry said earlier this week when he previewed the plan. “Benefitting from decades of investment from the Department of Energy’s world-leading Fusion Energy Sciences programs, it is now also an emerging climate solution.

“I will have much more to say on the United States’ vision for international partnerships for an inclusive fusion energy future at COP28, during an event on December 5.”


China factory activity contracts further

China’s factory activity has contracted for a second successive month, while non-manufacturing activity touched a further new low for the year, signalling that the world’s second-largest economy is still struggling and may require additional policy support.

The official manufacturing purchasing managers’ index (PMI) unexpectedly fell slightly to 49.4 in November from 49.5 last month, according to data from the National Bureau of Statistics (NBS) –  slightly worse than the median forecast for 49.7 in a Reuters poll. China’s official manufacturing PMI also came in below forecast last month.

The official non-manufacturing managers’ index dipped to 50.2 in November from 50.6 in October, according to the same NBS release. This was the weakest reading since December 2022, when China lifted anti- Covid 19 lockdown restrictions. A PMI reading above 50 indicates expansion in activity, while a reading below that level points to a contraction.

“Survey results show that more than 60% of manufacturing companies reported insufficient market demand. Insufficient market demand is still the primary difficulty affecting the current recovery and development of the manufacturing industry,” commented Zhao Qinghe, a senior statistician at the Service Industry Survey Center of the NBS.

While three of the five sub-indexes for the manufacturing PMI declined in November from a month ago, there was more encouraging data in the sub-indexes for the manufacturing PMI. High tech and equipment manufacturing both recorded expansions.

NBS also reported that business confidence is improving, with the expectation index for production and operating activities in manufacturing standing at 55.8 even as the sub-indexes for new orders and production slipped slightly.

In the non-manufacturing sectors, weakness in the service industries outweighed strength in construction. In particular, the business activity index of industries such as real estate, leasing, and business services stayed below 50, pointing to further contraction.

While China’s Q3 economic growth figures last month were stronger than expected at 4.9% versus 4.6%, economic data has been uneven, pointing to the fragility in its vast economy as Beijing renews efforts at deleveraging the country’s once-bloated real estate sector.


Deutsche Bank expects meagre economic growth in 2024

In a more downbeat assessment of world economic growth prospects for 2024, Deutsche Bank analysts are predicting contraction in North America and Europe over the next 12 months.

“In our World Outlook for 2024, we outline how we’ve had a fairly consistent macro narrative over the past two to three years and we continue to see this as a classic policy led boom bust cycle that will culminate in a US recession,” write the bank’s senior analysts, Jim Reid, Head of Global Economics and Thematic Research and David Folkerts-Landau, Group Chief Economist Global Head of Research,

“Ultimately, the impact of rapid rate hikes are yet to take effect in full, and quantitative tightening (QT) is still continuing in the background. That will make early 2024 a challenging environment, and we expect a mild US recession in H1 2024. Meanwhile in the Euro Area, we think that a mild recession has already begun that will stretch into the start of 2024.”

The International Monetary Fund (IMF) has already forecast that global economic growth will dip from 3.5% in 2022 to 3.0% this year and 2.9% in 2024, marked by a sharp slowdown in advanced economies.

The Washington-based institution sees US GDP growth, which has remained surprisingly resilient in the face of over 500 basis points of interest rate hikes since March 2022, to remain among the strongest developed market performers at 2.1% this year and 1.5% next year.

The US economy’s resilience has encouraged a growing consensus that the US Federal Reserve will achieve its target of a “soft landing,” slowing inflation without tipping the economy into recession.

But in Deutsche Bank’s 2024 outlook report, Reid and Folkerts-Landau write that monetary policy operates with lags that are “highly uncertain in their timing and impact. “With the lagged impact of rate hikes taking effect, we can already see clear signs of data softening. In the US, the most recent jobs report showed the highest unemployment rate since January 2022, credit card delinquencies are at 12-year highs, and high yield defaults are comfortably off the lows.

“At the outer edges of the economy there is obvious stress that is likely to spread in 2024 with rates at these levels. In the Euro Area, Q3 saw a -0.1% decline in GDP, with the economy in a period of stagnation since Autumn 2022 that will likely extend to mid-Summer 2024.” Both analysts suggest that Canada will have the highest GDP growth among the G7 in 2024, but that rate will be no more than 0.8%.

“Although that is still positive and the profile improves through the year, it means the major economies will be more vulnerable to a shock as they work through the lag of this most aggressive hiking cycle for at least four decades,” Reid and Folkerts-Landau said, noting that potential “macro accidents” would be more likely in the aftermath of such rapid tightening.

“We had 10-15 years of zero/negative rates, plus an increase in global central bank balance sheets from around US$5 to US$30 trillion at the recent peak, and it was only a couple of years ago that most expected ultra-loose policy for much of this decade. So it’s easy to see how bad levered investments could have been made that would be vulnerable to this higher rate regime.”


Eurozone corporate lending dips as recession looms: ECB

Bank lending to businesses across the eurozone fell in October for the first time since 2015, according to data from the European Central Bank (ECB), as economic growth faltered across the region.

Bank lending to businesses contracted by 0.3% last month from a year earlier after a 0.2% expansion in September, with the stock of outstanding loans on a steady decline since February.

Lending growth to households, meanwhile, slowed to 0.6% from 0.8%, the lowest pace since early 2015, when the 20-nation currency bloc was just beginning to recover from its debt crisis.

The eurozone economy has struggled this year and is thought to now be in a recession, as the so-far resilient job market and services sectors start to soften and manufacturing remains in recession, due largely to ECB rate hikes.

The weak lending figures are, in part, by design as the has ECB lifted interest rates the most in its quarter-century existence to try to restrict demand enough to arrest resurgent inflation.

But some fear the ECB has raised rates too far in the past 18 months, and lending is becoming so restrictive that it could deepen the recession or slow its recovery.

The M3 measure of money supply, seen in the past as a good indicator of future economic expansion, contracted at a smaller pace of minus 1.0%, compared with minus 1.2%, not far from expectations for a 0.9% drop.


Cost of climate change on grocery bills assessed

The impact of climate change and the resultant increase in food prices has been assessed in a British study, which estimates that since the end of 2021 climate factors have added £17 billion (US$21.5 billion) to the UK food bill and cost the average UK household an additional £605 a year.

The study was carried out by researchers from Bournemouth, Exeter and Sheffield universities. Professor Wyn Morgan, one of the report’s authors, said: “It is clear from the evidence that climate change is an increasingly prominent feature amongst the drivers of food price inflation.

“In 2022, energy costs dominated the headlines and these fed through to a high headline rate of inflation for food. And yet, as energy costs have fallen back, climate change has emerged as a bigger driver of inflation for food over the last two years. Assuming average food price inflation of 15% for 2023, our results would suggest that climate change alone will account for a third of price increases this year.

“Given we expect climate impacts to get worse, it is likely that climate change will continue to fuel a cost-of-living crisis for the foreseeable future. With an El Niño event now confirmed, 2024 may have even worse in store for hard-pressed shoppers.”

Sir Alok Sharma, who was president in 2021 of the COP26 climate conference in Glasgow, said: “The negative impacts of a changing world climate are here and now and are putting real upwards pressure on the cost of living.

"From staples like wheat and rice to fruits like bananas and oranges, our food supplies are global and it is therefore imperative that the UK continues to show leadership in its efforts to tackle the climate crisis, so that we bring other nations with us and help cut the risks to our food security.”


BlackRock outlines path to US$4 trillion investment boom

As COP28 gets underway BlackRock, the world’s largest asset manager, has published findings on the impact of major reforms to multilateral development banks (MDBs).

Researchers at the BlackRock Investment Institute (BII) estimate that a reform of public financial institutions could free up as much as US$4 trillion in additional decarbonisation investment by 2050 to help emerging markets tackle the fallout of climate change.

In a newly published paper, the team laid out how it thinks a reform of multilateral development banks (MDBs) such as the World Bank might allow them to make better use of the capital at their disposal. Doing so would play a key role in filling the so-called climate financing gap in the emerging markets, although transition-related investment in emerging markets “will likely be notably lower than what they need across a range of scenarios.”

According to BII, closing the gap would “require significant public sector reforms and private sector innovation, resulting in greater "blending" of public and private capital – or blended capital.”

“We think public funding has been ineffective in mobilizing private capital at scale – and that’s where the multilateral development banks (MDBs) and public financial institutions can play a key role,” BlackRock’s researchers noted.

If reforms are successful, low-carbon investments in emerging markets could rise by US$200 billion a year – or $4 trillion overall – above BlackRock’s base view of a major increase in investment between 2030 and 2050.

But if reform efforts prove less durable or effective than in the base case, BlackRock expects investment levels reduced by about US$50 billion a year, along with lower economic growth, lower energy demand, and a more divergent global transition.

With the exception of China, emerging markets have seen very little growth in low-carbon transition investment in recent years, with spending focused on the US, Europe, and China, BlackRock notes, citing International Energy Authority (IEA) data that annual clean energy investment in emerging markets has flatlined since at least 2015 at around US$250 billion per year.

The capital shortfall for the energy transition in emerging markets will likely persist, according to BlackRock.

“We think transition investment needs across emerging markets are enormous – and not close to being met. Based on today’s investment trends, this shortfall will likely persist no matter how quickly or slowly the transition accelerates.”


UK regulator crackdown on sustainability greenwash

Asset managers in the UK will be banned from using vague references to “sustainability” to market their funds, under new anti-greenwashing rules that could lead to a significant shake-up of the US$250 billion sector.

Regulator the Financial Conduct Authority (FCA) said its guidelines released ahead of COP28, aimed to ensure that products marketed as helping either people or the planet were “clear, fair and not misleading”.

From December 2024, asset managers who market their funds as sustainable will have to choose one of four specific fund labels and demonstrate that they apply to at least 70% of their assets.

Funds that use these labels or that make any sustainability-related claims in marketing will have to publish a two-page summary for retail clients of their evidence-based stewardship strategy and “theory of change”, based on an independently assessed standard such as a greenhouse gas target or alignment with the EU’s taxonomy, or dictionary, of green activities.

This approach could in future be extended to portfolio managers, overseas funds, pension products and financial advisers, the FCA said.

In addition, from next May, all FCA-authorised companies will be subject to anti-greenwashing rules building on a requirement that the marketing of financial products and services should be correct, clear, complete and fair. A financial institution should not, for example, place an image of a rainforest at the top of its website if only some of its savings products are invested in a way that creates positive change for the planet, the FCA said. 

There are currently US$242 billion of funds in the UK marketed as “sustainable”, according to data provider Morningstar Direct, compared with US$290 billion in the US and nearly US$2 trillion in the rest of Europe. Until now, the asset management industry has largely been given a free hand to apply this label and to use green marketing terms to attract retail investors with little oversight from regulators. chooses Standard Chartered as MENA banking partner

London-based payments service provider (PSP), formerly Opus Payments has partnered with Standard Chartered as their cash management bank to bring improved operational and performance to’s merchants in the region.

“The partnership leverages technology to seamlessly integrate payment systems and deliver an infrastructure that will power as it enters its next phase of growth across the Middle East,” a release added,

“This partnership marks a sustained investment by to streamline the operational complexity in the region and bring increased performance and flexibility that benefit our merchants,” said Wolfgang Bardorf, Group Treasurer of “As the first global payments provider to be granted an acquiring license in the UAE, we are pleased to partner with a trusted financial organisation such as Standard Chartered.”

The release added: “This integration will deliver an unrivalled client experience, bringing comprehensive multi-currency coverage, extended funding cut-off times, advanced liquidity management within a complex account structure, foreign exchange execution, transparent pricing models, and automated settlements integrated with clearing schemes.

“The dynamic collaboration deploys a sophisticated framework, combining multiple currency accounts and proprietary treasury funding with extended funding times and cross-border direct debits. Moreover, it grants access to direct clearing via Standard Chartered’s network, facilitating faster high-value payments by leveraging the bank’s regional market access.”


HSBC names leader for embedded finance fintech

HSBC has named Vinay Mendonca as chief executive officer (CEO) of its joint venture with business-to-business (B2B) trade platform Tradeshift.

First announced in August, the as-yet-unnamed business is 75%-owned by HSBC and 25%-owned by Tradeshift. The bank says that once officially launched in H1 2024, the new j-v will develop and commercialise technology that will be used by HSBC to embed its transaction banking solutions into Tradeshift and other fast-growing e-commerce and marketplace venues, the bank says.

Mendonca joined HSBC since 2006, holding product, transformation and strategy leadership roles in India, Hong Kong and the UK. He is currently chief growth officer for HSBC’s global trade and receivables finance (GTRF) division, a role that he took on last year.

“I am delighted to be leading this exciting fintech venture, which reflects HSBC’s vision to help businesses grow as they increasingly operate across e-commerce platforms,” said Mendonca. “The joint venture’s technology will embed HSBC solutions into such venues so that customers can access financing when and where they need it.”

Mendonca will continue with his current responsibilities at the bank until a successor is appointed. Joining him in the C-suite of the new company is Shehan Silva, who will take on the chief operations officer position. Silva brings more than 25 years of experience across commercial banking, payments and FX and is currently HSBC’s head of digital solutions for global trade and receivables finance.

The board of the new business will be chaired by Barry O’Byrne, HSBC’s CEO of global commercial banking.


Surecomp names CargoX as new partner on RIVO platform

Trade finance software provider Surecomp announced that CargoX, the blockchain-based platform for electronic trade documents is joining RIVO, the trade finance platform that it launched 18 months ago.

“This partnership enhances Surecomp’s ecosystem, providing customers with centralised access to a range of top-tier electronic trade document solutions to enhance their digital trade finance operations,” a release added.

Operating its own independent Blockchain Document Transfer (BDT) platform, CargoX is used by 117,000 businesses daily for encrypting and transferring electronic trade documents across the globe. 

Since its inception in 2018, the BDT platform, typically used by shipping, logistics and government entities “has sent in excess of 5.5 million documents. Its rapid expansion is attributed to ease of use, akin to email or e-banking, military-grade encryption and real-time transfer times.

“By expediting the digital exchange of documents such as bills of lading, customers are benefiting from substantial time and cost savings with optimal security.

Peter Kern, VP Sales at CargoX, commented: “Our partnership with Surecomp is instrumental in facilitating significant progress in the industry’s efforts to become more secure, efficient, and sustainable. Our customers and now customers of RIVO, know they are using the most secure trade document transfer service, and in doing so are promoting trust and transparency in global trade.”

Enno-Burghard Weitzel, Surecomp’s SVP of Strategy, Digitisation and Business Development, added: “A digital hub enabling the trade finance process to be seamlessly processed in one place, the value of RIVO is in providing centralized access to functionality for every step. The transfer of electronic trade documents is absolutely fundamental, which is why we are delighted to welcome CargoX as another key industry provider in this space.”

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