Climate action


Taking climate action
How to align our portfolio with a 1.5˚C pathway?

Climate change is real and requires urgent action. It will affect us all and developing countries even more. 

A strong commitment

Since we adopted our 2050 vision (already in 2013), tackling climate change has been central to our strategy. Climate Action (SDG13) is also one of the three sustainable development goals that we have committed ourselves to, alongside Reduced Inequalities (SDG10) and ensuring Decent Work and Economic Growth (SDG8).  Equally important, we made a pledge in our  Sustainability Policy  to contribute to limiting the global temperature rise to well below 2.0-degrees or, preferably, 1.5-degrees Celsius.

Delivering on our climate ambition 

Since 2015 we have a Green Label in place that steers our investments towards reducing greenhouse gas emissions, increasing resource efficiency, preserving and growing natural capital, and supporting climate adaptation. Over 80% of our energy portfolio is in renewables but we also recognize the importance of financing negative emissions (e.g. via forestry). Furthermore, we are leveraging new opportunities for climate mitigation through blending structures  like Climate Investor One and ElectriFI.

As we are working towards a portfolio that is aligned with a 1.5-degrees pathway, the first question we aksed ourselves was: What is FMO’s fair share of the global carbon budget? To answer this question our first technical paper presents a methodology for a financial institution to derive its own emissions reduction pathway in line with the Paris Agreement.

Once we knew which benchmark to compare ourselves against the second question we had was: How to assess GHG emissions from the full portfolio? Here the second paper outlines an accounting approach to measure absolute emissions (i.e. both generated and sequestered). 

A global challenge you don’t solve alone

We have shared our research and thinking with the outside world more broadly. We hope not only to collect some new insights but also to inspire other investors and financial institutions to adopt an emission reduction pathway in line with the science of the Paris Agreement.

Both papers ( 1 Deriving a 1.5-degrees pathway for a financial institution | 2 Absolute GHG accounting approach for financed emissions ) are the start of FMO’s Paris journey through which we intend to advance our ability to measure absolute emissions and climate impact. Throughout our journey we actively engage with peers and important stakeholders. We are also a strong advocate of harmonizing accounting approaches. We will take a collaborative approach to further build and refine our GHG accounting methodology while we gain practical experience through our implementation efforts.

The papers are disclosed to spark discussion and inspire action.