NA100 benchmark finds companies starting to tackle environmental impact

At this year’s United Nations Biodiversity Conference (COP16), Nature Action 100, a global investor-led engagement initiative to address nature and biodiversity loss, announced the results of its first benchmark assessment of corporate progress toward the initiative’s Investor Expectations for Companies. 

The Nature Action 100 Company Benchmark’s results show that most of the initiative’s 100 companies are in the early stages of addressing their nature-related impacts and dependencies. Much more urgent and ambitious action is needed for companies to mitigate the growing material financial risks their businesses face from nature loss and fulfil the private sector’s role in reaching global biodiversity goals.

The benchmark is a resource to support the private sector in contributing toward the successful implementation of the Biodiversity Plan and its goals. The benchmark indicators represent crucial actions companies can take to protect and restore nature and ecosystems in line with global goals as well as shift financial flows away from economic activities that negatively impact nature. 

The benchmark is designed to support investors, including the initiative’s more than 230 investor participants – representing over $30 trillion in assets under management or advice – in better understanding the material nature-related financial risks and opportunities in their portfolios to protect the long-term economic interests of their clients and beneficiaries. The benchmark assessments will be used to inform investor participants’ engagement and dialogues with companies under the initiative.  

This first assessment found that the majority of companies disclose an ambition. Over two-thirds of companies (68) disclose a commitment to protect nature and two-thirds (46) of those have commitments that extend through company value chains. Few companies disclose robust nature-related assessments, however. Only one company discloses evidence of a comprehensive materiality assessment of nature-related dependencies, impacts, risks, or opportunities.

A significant number of companies disclose nature targets and plans to implement them. Some 47 companies disclose targets to avoid or reduce their impact on nature, and over three-quarters (37) of these companies also disclose strategies for achieving those goals. 

Elsewhere, companies disclose limited progress towards recognising and protecting the rights of indigenous peoples and local communities. Only 31 companies meet at least one of the five benchmark metrics related to respecting and upholding the rights of indigenous peoples and local communities, who play crucial roles in biodiversity conservation, restoration, and stewardship. No company meets all the criteria.  

The release of the first Nature Action 100 Company Benchmark represents a snapshot of corporate action in key sectors to reverse nature and biodiversity loss by 2030. As the material financial risks of nature loss and the economic benefits of restoring nature become clear and new resources to support corporate action emerge, it is anticipated that companies will make more progress in future benchmarks.  

 

Trade finance resilience and low credit risk persist amid global challenges - ICC 

The International Chamber of Commerce (ICC), along with partners Global Credit Data (GCD) and Boston Consulting Group (BCG), has released its 2024 Trade Register Report, reaffirming the resilience of trade finance instruments and the continued low credit risk across products despite ongoing geopolitical and economic challenges.

The 2024 report confirms that trade, supply chain and export finance continue to exhibit low risk, with default rates remaining low across all regions and asset classes overall. When defaults do occur, they are generally idiosyncratic, stemming from well-known commercial, geopolitical or macroeconomic factors. As global trade faces ongoing geopolitical and economic pressures, these financial products continue to serve as vital tools for mitigating risk and maintaining liquidity, supporting the stability of trade flows. 

The ICC Trade Register is a global source on credit risk and broader market dynamics in trade and supply chain finance. Its data set represents nearly a quarter of all global trade finance transactions. This 2024 edition includes extended market insights and data on global trade and trade finance. New features include insights from ICC and BCG’s practitioner survey on key trends and opportunities in trade and supply chain finance as well as a data pack with analysis on credit risk in trade finance, available for member banks or for separate purchase through ICC.  

This year, ICC and GCD demonstrated the value of high-quality, representative data in shaping trade finance regulations through their contributions to emerging regulation on Basel III capital treatment. Krishan Ramadurai, outgoing Chair of the ICC Trade Register Project, encourages more banks to participate in the project and says that more data will only reinforce the point that trade finance is a low default asset class.  

“Despite ongoing headwinds, we are seeing the trade and supply chain finance market continue to evolve rapidly,” commented Ravi Hanspal, Partner at BCG. “Banks are observing that customers are now prioritising leading service and digital capabilities more than ever, driving a step-change in investment by banks in technology to accelerate seamless trade.” 

 

Open banking set for acceleration in the US following new regulation

The US consumer financial watchdog The Consumer Financial Protection Bureau (CFPB) finalised its Personal Financial Data Rights Rule under Section 1033 of the Dodd-Frank Act this week, mandating banks and other financial institutions to allow consumers and third parties digital access to their bank account data

The Transatlantic Index USA, a report released by Open Banking Excellence (OBE), notes that the US open banking market currently stands at $7.08bn with projected growth to $35.79bn by 2031, a more than 5 times medium term growth rate. The report suggests that nine out of ten companies are considering US expansion following the finalisation of the new regulation this week.

Open banking in the US goes back 25 years and has an estimated c.100 million users, but has largely been conducted via ‘screen scraping’. The use of safer and more reliable APIs is now underway, thanks in part to the CFPB’s new rules.

The Transatlantic Index USA is built on both qualitative and quantitative research, including expert interviews conducted by Oxford University.

“The Transatlantic Index clearly shows a gigantic market opportunity,” said Helen Child, Founder and CEO of Open Banking Excellence (OBE). “When the UK’s expertise in open banking, having created the blueprint, is combined with the super-sized US market scale, the effect is transformative. It marks the positive shift of the inflection point that the industry has been working towards.”

“Open banking in the United States stands at a critical juncture,” added Pinar Ozcan, Professor of Entrepreneurship and Innovation at Oxford University. “Despite substantial market-driven advancements, the impending shift to a more regulated landscape promises both advantages and obstacles. The decentralised nature of US financial regulation, with its intricate interplay of state and federal laws, coupled with a fragmented market structure composed of numerous smaller banks and credit unions, can complicate efforts to establish a cohesive and uniform open banking environment.”

 

HSBC and Ant International complete HKD cross-bank blockchain test transactions

HSBC and Ant International have announced the successful completion of HKD-denominated cross-bank test transactions under the Hong Kong Monetary Authority’s (HKMA) Ensemble Sandbox. This is the first use case to achieve successful HKD cross-bank test transactions under the Sandbox’s Liquidity Management theme.

Project Ensemble is the HKMA’s wholesale central bank digital currency (wCBDC) project aimed at fostering the development of tokenisation in Hong Kong. Under the sandbox, companies can research and test tokenisation use cases including the settlement of tokenised monies and tokenised real-world assets, amongst others. As a participant in the sandbox, Ant International has developed two use cases using its Whale platform, including this collaboration with HSBC.

Ant International and HSBC’s use case integrates HSBC’s and Hang Seng Bank’s networks with Ant International’s Whale platform to support real-time cross-bank transfers with 24/7 availability, greater cost efficiency and reduced working capital. The Whale platform is Ant International’s next-generation treasury management solution that uses blockchain technology, advanced encryption and artificial intelligence to improve the efficiency and transparency of fund movements.

“We are pleased to see the initial results of our collaboration with HSBC, and the potential it has for enabling real-time cross-bank transactions for businesses,” commented Kelvin Li, Head of Platform Tech at Ant International. “Together with leading banks such as HSBC, we will continue to expand the scalable adoption of our Whale platform through industry-leading collaborations under Project Ensemble, so we can better support businesses’ cross-border and global treasury needs.”

 

ClearBank and Visa to partner for issuance and money movement solutions

ClearBank and Visa have announced their intention to collaborate for issuance and money movement solutions, enabling clients to process both local and cross-border transactions.

By using ClearBank’s cloud-native banking infrastructure, Visa could soon benefit from its real-time payment processing, enhanced transaction visibility and a streamlined reconciliation process when processing transactions in the UK and Europe.

The announcement follows ClearBank’s recent expansion into Europe, having secured a Credit Institution Licence from the European Central Bank, under the supervision of De Nederlandsche Bank. This means the company can now bring its business model to Europe, providing clearing and embedded banking services across the region.

Beyond the initial service rollout, the partnership also has plans to launch Visa Direct, the money movement solution that includes real-time cross-border payments to cards, accounts and wallets in over 190 countries, in-country local collections and multi-currency money management.

Furthermore, ClearBank is looking to issue Visa cards to customers in the UK, expanding its existing offering.

 

BBVA Asset Management launches tokenised fund through the CNMV sandbox

BBVA Asset Management (AM) has launched a pilot project that is capable of applying blockchain technology to asset management. It has registered a short-term fixed-income ‘tokenised’ investment fund through the regulatory sandbox of the Spanish National Securities Market Commission (CNMV).

The regulatory sandbox is a mechanism allowing for controlled and limited testing, under the supervision of the competent authorities (CNMV, Bank of Spain and the Directorate General of Insurance and Pension Funds), to analyse the viability of new business models or the use of new technologies in the provision of financial services.

BBVA Token Renta Fija Corto Plazo is an investment fund whose units will be registered and stored in a ‘private blockchain’ network, more precisely, the Allfunds Blockchain network. BBVA Asset Management acts as fund manager and promoter, relying solely on the network, smart contracts and nodes raised in the Allfunds Blockchain network to process orders.

For the unit holder, investing in the fund will be the same as it would be for a more traditional fund, except that subscription and redemption orders will be managed and recorded via blockchain, without this affecting the investor experience.

As a pilot project, this fund is not open for trading, but is only available to employees of the fund manager, thus allowing BBVA AM to explore the use of blockchain technology for asset management purposes.

 

MUFG reveals liquidity trading portal leveraging BNY platform

MUFG Bank has announced the launch of MUFG CashFolio, a liquidity trading portal leveraging LiquidityDirect from The Bank of New York Mellon Corporation (BNY). 

Developed as an extension of MUFG's liquidity services, the portal is an online tool that is designed to give institutional clients greater access to shorter term investments through the vast money market mutual fund (MMF) industry, which hit a record of $6.51 trillion in assets this July.

MUFG CashFolio is an all-inclusive investment portal that aims to help clients improve cash management and diversify risk exposure through an integrated platform. The portal offers MMF trade execution, settlement into an MUFG account, a full fund library, in-depth fund research capabilities, compliance tools, and sweep function. The portal also includes social responsibility investing through its ESG Data Analytics module to help clients align with their ESG values.