Energy Efficiency (EE) and Sustainable Energy (SE) Investments face a finance gap. To help addressing this gap, the project aims at making the financial products contributing to EE/SE more competitive. In the context of the reforms introduced by the EC on investors’ duties, financial advisors have now an obligation to take into account the environmental objectives of their clients and beneficiaries. Our preliminary findings suggest that 2/3 of end-users have such objectives. Building on these findings and the reform, the project will reveal the demand for environmental products, through surveys in 8 countries (360M citizens). We will then verify that end-users ‘walk the talk’ through behavioral science field experiments. The second part of the project will focus on the offer of “green” products: our lawyers will analyze the compliance of the green marketing claims associated with financial products, and recommend best practices and an evolution of the regulatory framework. To help product manufacturers further improve their practices, we will design and pilot-test an environmental management framework for financial products and help strengthen the draft criteria of the related future EU Eco-label. Finally, to enable the deployment of our solutions across Europe, we will develop a toolkit for both product manufacturers and distributors including an online questionnaire for clients and a database of environmental financial products. The expected impact is to leverage the demand from end-users to push environmental objectives into institutional investors investment strategies, and introduce proper environmental management to ensure that these objectives are translated into additional EE/SE investments in the real economy.

The InvECAT project aims to mobilize voluntary energy efficiency and sustainable energy investment by companies and financial institutions through the development of standardized frameworks and tools and outreach by critical convening and marketing powers (UNEP FI, and Bloomberg). The project will thus enable credible, standardized non-state actor (NSA) energy and climate commitments that directly contribute to the achievement of EU and global energy and climate goals. At its core, InvECAT develops a “toolkit” for energy and climate target setting and monitoring that companies, financial institutions, regulators and policy makers can exploit to support domestic and global energy and climate goals. Policy makers and governments will have access to a framework and standard templates to define NSA pledges and a monitoring platform tracking alignment to such goals. Companies and financial institutions, reached by large corporate and financial sector networks at WRI and WWF will access target-setting tools that track progress toward existing commitments and the ability to set more ambitious ones. The project will further achieve broad market acceptance through the first international standard measuring the finance sector’s contribution to the Paris Agreement. The work done through InvECAT will address all types of energy-climate actions, thus covering both sustainable energy and energy efficiency. It builds on market leading data and tool initiatives (e.g. H2020 SEI Metrics project) and commitment initiatives (Science Based Targets initiative and UNFCCC NAZCA portal), while integrating an expanded focus on energy efficiency. The market uptake of the toolkit by all stakeholders (companies, financial institutions, policy makers, civil society) is supported by the extensive outreach and strong networks that consortium members have developed in over 20+ years of experience.

The challenge we aim to address in this project is the lack of investment in sustainable energy and energy-efficient assets from public and private financial institutions. The core approach of the project is to define what a sustainable asset and a sustainable investment portfolio is, and to develop an assessment framework in order to allow financial institution to measure their ‘performance’ and set progress targets vis-à-vis energy-climate goals. This approach builds on the research done over the past few years by various organizations. The project will develop an assessment framework allowing investors to measure and manage their ‘climate performance’ (i.e. their exposure to sustainable energy and energy efficiency investments). This framework will include a translation of climate-energy investment roadmaps into targets for the finance sector, an assessment methodology for assets (e.g. equity shares in companies), and an assessment methodology for investment portfolios. The project will embed the framework into the standard toolbox used by investors to inform their asset allocation strategy, which will include an upgrade of databases used by investors; the integration of Sustainable Energy Investment performance metrics into portfolio optimisation tools, in order to allow investors to optimize climate and financial performance at the same time; and SEI benchmark indices in order to allow asset owners to integrate climate goals in the mandates of asset managers. The project will lead to several publications and a series of workshops with practitioners on Sustainable Energy Investment Metrics including a study on the risk-adjusted returns of SEI strategies; a study dealing with the implications of SEI metrics for financial policy-makers; and various workshops across Europe involving experts and financial institutions, to discuss methodological options, train practitioners on the assessment frameworks, and get feedbacks from road tests.

The transition to a low-carbon economy creates financial risk and opportunities. A key barrier for investors in responding to this risk relates to the shortcomings of the current landscape of asset valuation and credit risk models in capturing this financial risk and opportunity. The objective of the project is to develop an Energy Transition (ET) risk and opportunity assessment framework. The objectives of this framework are to help investors and policy makers understand the materiality of energy transition risk and opportunity, help investors assess this materiality for bond and equity portfolios, and engage with investors & policy makers on responding to these risks in order to mobilize capital for sustainable energy investment. The activities focus on seven key industries. The core focus is on building bottom-up databases, Energy transition risk and opportunity scenarios net margin impact models. These outputs will then feed into newly developed equity valuation (developed by Kepler-Cheuvreux) and credit risk models (developed by S&P Capital IQ). The project enables investors and analysts to implement these models into their investment decision-making, either through the assessment framework or directly equity and bond indices developed in the course of the project.

The EU Member States should step up their climate change adaptation efforts alongside their intensifying mitigation efforts. Next to and in conjunction with physical and organizational measures, that directly reduce climate change risks, insurance and related risk sharing solutions have an important role to play. Innovative insurance solutions and risk sharing are crucially needed to incentivize adaptation efforts, in terms of both volume and effectiveness, while also directly contributing to building more resilient societies. The PIISA project aims to develop and deploy a range of insurance innovations that incite households and firms to adapt proactively and sufficiently for their own sake and their neighborhood’s sake. PIISA also incites public authorities to set up adaptation and create adaptation promoting conditions. PIISA co-develops climate resilient insurance portfolios and develops solutions for sharing losses and climate risk data. The PIISA project matches scientifically underpinned new insurance concepts with hands-on demonstration of their operability, effectiveness, and acceptability. Extensive user involvement, contextual sensitization, affordability and viability are key features of the new products. The choice of new product developments and sectoral applications will be based on a careful analysis of the adaptation and insurances gaps and their interactions, as well as on deepening product-market feasibility analyses. PIISA focal sectors are agriculture, forest sector, and cities and citizens’ well-being, involving a host of climate enhanced hazards such as floods, droughts, forest fires, biotic risks, and various types of storms. The consortium counts 12 partners from 5 countries. PIISA involves 3 insurance companies who will actively participate in the insurance pilots conducted in 8 countries, also using their vast multi-million customer base.