A seat for everyone is necessary at the climate action table. Sustainable Finance will fail in its mission if it continues to confine high-emitting industries to the sidelines.
This research project investigating the topic of transition in detail, more specifically that of brown industries, with the aim of providing definition, assessment methods as well as exploring relevant financing tools.
Our methodology frames a change management model that differentiates brown companies into groups depending on whether they need to transform, shrink or shut down. Using case studies, we examined how the 5 transition levers we identified were actioned by companies across the mining, cement, shipping, power or aviation sectors (e.g. Lafarge Holcim, Maersk, Ørsted Engie, Neste).
We also identified eligibility pre-requisites to be able to draw red-lines and provide structuring guidance for transition finance instruments. We believe that KPI-linked instruments are best suited for transition because of their “skin in the game”, material, holistic and forward-looking features.
In 2019 and 2020, Natixis Green & Sustainable Hub developed an in-house methodology fed by market intelligence, investor survey and dialogue with issuers, SPOs providers and think tanks. This product-oriented methodology aims at accompanying companies in the funding of their transition, or investors in identifying compelling transition opportunities.
- Cédric Merle, Head of Center of Expertise & Innovation
NATURAL CAPITAL FINANCE ROLE IN THE TRANSITION
"Nature-based solutions are gathering momentum and appear to be at a similar stage as renewable energies were 15 years ago.
Capital markets start to discover its unraveling potential and benefits."
THE INSTRUMENTAL ROLE OF INDUSTRY DECARBONIZATION IN IEA'S SUSTAINABLE DEVELOPMENT SCENARIO
"The majority of the overall emissions savings (i.e. process and energy-related) are from the production of cement, iron and steel and petrochemicals; energy-intensive industries that together account for around two-thirds of total industry sector CO2 emissions today."
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Cédric Merle
Head of Center of Expertise & Innovation,
Green & Sustainable Hub, Natixis
Orith Azoulay
Global Head of Green & Sustainable Finance
Managing Director,
Natixis