Sustainable finance & Banking

Prof. Dhafer SAIDANE

 Dhafer SAIDANE
• Doctor in Economics - HDR (Paris 1 –Sorbonne) and Full Professor at SKEMA
Business School. Director of the MSc “Sustainable Finance & FinTech ” and
coordinator (Belo, Paris, Suzhou, Sophia) of the MSc “Corporate Financial
Management”.
• Former member of the Economic Analysis Council for the Tunisian head of
government.
• Member of the Board of Directors of STB Finance and President of the Risk
Committee.
• President of the African Finance Network http://africanfinance.network/ and is
Director of the International Observatory of Sustainable Finance oifd.net
https://publika.skema.edu/fr/extra/observatoire-internationale-de-la-finance-dur
able/

• Expert with international institutions (CEA, ADB, UNCTAD, AMU, UBM...) and
advisor to the Club of Directors of African Banks and Credit Institutions .
• Published 7 books including "La finance durable", October 2011, Editions de la
Revue Banque - TURGOT Prize awarded by the Minister of Finance in 2012. His
latest book is entitled "African Banks: the great challenges" was published in June
 TOPICS and ASSIGNEMENTS
SESSIONS TOPICS ASSIGNEMENTS/WORKGROUP
1&2 TOPIC 1 - Are our banks ready for the 1. Two simulations EN-ROADS & THE GLOBAL
ecological transition? CALCULATOR
2. WOOCLAP
https://app.wooclap.com/events/RHBNMP/0
2&3 TOPIC 2 - What is the big problem with Application: Risk Calculation
conventional finance? Is finance autistic to
the ecology?

3&4 TOPIC 3 - What is Sustainable Finance? Quiz on TOPICSs 1, 2, 3 / 1 Hour

What is Sustainable bank?

4&5 TOPIC 4 - Green financing & green banking

5&6 TOPIC 5 - The pioneers in sustainable Case Studies

banking: case studies

6&7 TOPIC 6 - Is Islamic finance a sustainable

finance?
8 LAST SESSION: FINAL EXAM MCQ 2 H
 TOPIC 1

Are our banks ready for the ecological transition?

 What are we going to analyze?
In the Topics 1 & 2 - Main skills/competences targeted: critical thinking

• Assess key indicators of ecological issues and the impact of Anthropocene

• Identify the gaps between traditional finance and ecological/climate issues.
• Analyze the link between ecology and finance and the limits of rationality,
Market efficiency and portfolio theory.
• Design the 7 deadly sins of conventional finance
 Terrific Indian prophecy

‘Only after the last tree has been cut down,

Prof. Dhafer SAIDANE

Only after the last river has been poisoned,

Only after the last fish has been caught.

Only then you will learn: money cannot be eaten.’

Sustainable Finance Proverb attributed to the Cree, a Native American tribe from what is
& Banking now Canada:

Marcel Jeucken (2001) Sustainable finance and banking : the

financial sector and the future of the planet -Earthscan
Publications Ltd 8
 Anthropocene: the beginning of the
countdown/BREAKDOWN

• The term Anthropocene means "The Age of Humans“

• In Greek Antropos Human being Kainos New era/age.

• It began when humans influence on geology and ecosystems

became significant on the scale of Earth's history.
Anthropocene: the beginning of the countdown /breakdown
Historical carbon dioxide emissions from global fossil fuel combustion and industrial
processes from 1750 to 2020 (in billion metric tons)
Global historical CO2 emissions from fossil fuels and industry 1750-2020

40

35 34.81
33.34
30
Emissions in billion metric tons

25 25.23
22.75
20 19.49

15 14.9

10 9.39
6
5
3.03 3.51 3.92 4.85
1.95
0 0.01 0.01 0.01 0.02 0.02 0.03 0.04 0.05 0.09 0.12 0.2 0.33 0.53 0.85 1.3
1750 1760 1770 1780 1790 1800 1810 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

Description: The carbon dioxide emissions released by global fossil fuel combustion and industrial processes have seen a dramatic rise since the birth of the industrial revolution. Carbon dioxide (CO2) emissions began to rise more steeply from the 1950s, and by
2000 had reached 25.23 billion metric tons of CO2. Emissions soared 32 percent between 2000 and 2010, and in 2020 totaled 34.81 billion metric tons. That year the outbreak of COVID-19 caused emissions to plummet five percent. Read more
Note(s): Worldwide; 1750 to 2020; * Original data have been converted from million metric tons of carbon to units of carbon dioxide by multiplying by 3.664. The values have been rounded. Read more
Source(s): Expert(s) (Friedlingstein, et al.); Global Carbon Project
Annual carbon dioxide (CO₂) emissions worldwide from 1940 to 2021 (in billion
metric tons)
Annual global emissions of carbon dioxide 1940-2021

CO₂ emissions worldwide

40 Average annual growth rate 3%

35

30
Emissions in billion metric tons

25

20

15

10

0
40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 15 18 21
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20

Description: Global carbon dioxide emissions from fossil fuels and industry increased 5.3 percent in 2021 to reach a record high of 37.12 billion metric tons (GtCO₂). The two biggest contributors to global emissions that year were China and the United States, who
produced 11.47 and 5.01 GtCO₂, respectively. Since 1990, global CO₂ emissions have increased by more than 60 percent. Read more
Note(s): Worldwide; 1940 to 2021; *Projection Original data have been converted from million metric tons of carbon to units of carbon dioxide by multiplying by 3.664. The values have been rounded. Read more
Source(s): Expert(s) (Friedlingstein et al. (2022)); Global Carbon Project
Increase in global greenhouse gas in 2020 relative to 1750*, by gas
Global increase in abundance of key greenhouse gases 1750-2020

262%
Increase in greenhouse gas abundance

149%

123%

Methane Carbon dioxide Nitrous oxide

Description: Since the industrial revolution began, the atmospheric abundance of key greenhouse gases have increased substantially. As of 2020, the globally averaged atmospheric abundance of carbon dioxide (CO2) had increased by 149 percent, relative to 1750.
Meanwhile, the abundance of methane (CH4) has shot up by more than 260 percent. Read more
Note(s): Worldwide
Source(s): World Meteorological Organization
Carbon dioxide emissions from energy worldwide from 1965 to 2021, by region (in
million metric tons of carbon dioxide)
Global carbon dioxide emissions from energy 1965-2021, by region

Asia Pacific North America Europe Middle East

Commonwealth of Independent States Africa South & Central America

40,000

35,000
Emissions in million metric tons of CO₂

30,000

25,000

20,000

15,000

10,000

5,000

0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Description: The Asia-Pacific region produced 17.74 billion metric tons of carbon dioxide emissions in 2021. This was more than the combined total emissions of all other regions that year. China alone accounted for nearly 60 percent of Asia-Pacific CO₂ emissions,
and 31 percent of the global total. The second most polluting region in 2021 was North America, where 5.6 billion metric tons of CO₂ were emitted. Emissions in Europe, North America and the Asia-Pacific region increased by around five percent in [...] Read more
Note(s): Worldwide; 1965 to 2021
Source(s): BP
Distribution of carbon dioxide emissions worldwide in 2021, by select country
Largest global emitters of carbon dioxide 2021, by country

0% 5% 10% 15% 20% 25% 30% 35%

Share of CO₂ emissions
China 30.9%

United States 13.5%

India 7.3%

Russia 4.7%

Japan 2.9%

Iran 2%

Germany 1.8%

Saudi Arabia 1.8%

Indonesia 1.7%

South Korea 1.7%

Canada 1.5%

Brazil 1.3%

Turkey 1.2%

South Africa 1.2%

Mexico 1.1%

Description: China was the biggest emitter of carbon dioxide (CO₂) emissions in 2021, accounting for nearly 31 percent of the global emissions. The world's top five largest polluters were responsible for roughly 60 percent of global CO ₂ emissions in 2021.
Read more
Note(s): Worldwide; 2021; Based on territorial emissions from combustion and industrial processes
Source(s): Expert(s) (Friedlingstein et al. (2022), Andrew and Peters (2022).); Global Carbon Project; Statista
Global Climate targets
Annual anomalies in global land and ocean surface temperature from 1880 to
2022, based on temperature departure (in degrees Celsius)
Global land and ocean temperature anomalies 1880-2022

1.2

1.0

0.86
0.8
Temperature in degrees Celsius

0.6

0.4

0.2

0.0

-0.2

-0.4

-0.6
1880 1886 1892 1898 1904 1910 1916 1922 1928 1934 1940 1946 1952 1958 1964 1970 1976 1982 1988 1994 2000 2006 2012 2018

Description: Temperature anomalies represent the difference from an average or baseline temperature. Positive anomalies show that the observed temperature was warmer than the baseline, whereas a negative anomaly indicates that the observed temperature
was lower than baseline. Since the 1980s, annual temperature departure from the 20th century has been consistently positive. In 2022, the land and ocean surface temperature anomaly stood at 0.91 degrees Celsius. Temperature [...] Read more
Note(s): Worldwide; 1880 to 2022
Source(s): National Oceanic and Atmospheric Administration
Change in average temperature by decade worldwide from 1910 to 2019, by region
(in degrees Celsius)*
Global regional temperature change by decade 1910-2019

Asia Africa North America Europe South America Oceania

1.5
Temperature change in degrees Celsius

1.0

0.5

0.0

-0.5

-1.0
1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s**

Description: Temperatures have risen in the last 100 years around the world. In the 1910s, North America had an average temperature some 0.54 degrees Celsius lower than average temperatures between 1910 and 2000. In the most recent decade, this region
experienced temperatures 1.19 degrees Celsius over the average. Read more
Note(s): Worldwide; 1910s to 2010s; * Average temperature difference relative to a 1910-2000 average. ** Figure for 2010 refers to an average between 2010 and at the latest September 2019 (exact month was not listed). Read more
Source(s): National Oceanic and Atmospheric Administration; Time
Weather catastrophe economic losses globally from 2007 to 2021 (in billion U.S.
dollars) 2017 includes HURRICANE
- HARVEY $95 bi
Global economic losses from weather catastrophes 2007-2021
- IRMA $81 bi
- MARIA $70 bi
600

519
500
Economic loss in billion U.S. dollars

400

329
310
291 295 295 286
300
249 260
242
216
200 185 177
164 169

100

0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Description: Weather catastrophes caused economic losses of 329 billion U.S. dollars worldwide in 2021. Sudden cataclysmic disasters cause devastation on impact. Some weather and climate-related extreme events are storms, floods, heat waves, cold waves,
droughts, and forest fires. Climate-related hazards pose risks to human health and can lead to substantial economic losses. Read more
Note(s): Worldwide; 2007 to 2021
Source(s): Aon
New investment in renewable energy worldwide from 2004 to 2022 (in billion U.S.
dollars)
Worldwide investment in renewable energy 2004-2022 Reminder: Global Energy Investment in 2022 is
$1900 bi which represents 26% of Total Energy
600
Investment

495
500
Investment in billion U.S. dollars

423
400
363

315 319
301
300 285 285
266 262
241
213 211
200
155 152
120
100 79
50
32

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Description: In 2022, the total new investment in renewable energy amounted to approximately 495 billion U.S. dollars worldwide. This was a 17 percent increase from the previous year. Read more
Note(s): Worldwide; 2004 to 2022
Source(s): BloombergNEF
New investments in renewable energy worldwide in 2019, by region (in billion U.S.
dollars)
Global renewable energy investments 2019, by region

Investment in billion U.S. dollars

0 10 20 30 40 50 60 70 80 90 100

China 90.1

United States 59

Europe 58.4

Asia and Oceania (excluding China and India) 48.2

Middle East and Africa 15.4

Americas (excluding U.S. and Brazil) 12.8

India 11.2

Brazil 6.8

Description: In 2019, the largest regional investments into renewable energy came from China and the United States. China alone invested 90.2 billion U.S. dollars, while the U.S. contributed 59 billion to sustainable energy technologies. Investment in the United
States was also significant on a global scale. Read more
Note(s): Worldwide; 2019
Source(s): Bloomberg; FS-UNEP Collaborating Centre; UNEP
Renewable energy consumption worldwide from 2000 to 2021 (in exajoules)
Total Energy Consumption 176 431 Twh (Terrawatt-Hours)
6,2% of Total
Global renewable energy consumption 2000-2021 However 1 Twh = 0,0036 Exajoules
Energy
Then, Total Energy Consumption = 635,15 Exajoules
45
39.91
40
34.8
35
31.74
Consumption in exajoules

30 28.53
25.36
25
22.09
19.95
20 17.63
15.81
15 13.82
12.14
9.7
10
7.16 8.24
4.37 5.03 5.94
3.87
5 2.64 2.75 3.1 3.37
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Description: Global consumption of renewable energy has increased significantly over the last two decades. Consumption levels nearly reached 40 exajoules in 2021. Despite its rapid growth, renewable energy consumption still remains far below that of coal,
natural gas, oil and other energy technologies. About half of the final renewable energy consumption worldwide is derived from modern bioenergy sources, however, solar photovoltaics has dominated capacity growth in recent years. Read more
Note(s): Worldwide; 2000 to 2021
Source(s): BP
 EN-ROADS: a « magic » climate simulator!
En-ROADS is a global climate simulator
• Allows users to explore the impact of dozens of policies, such a:
- transportation electrification,
- carbon pricing,
- agricultural practices
• Affects hundreds of factors such as
- energy prices,
ENJOY YOUR SIMULATIONS !
- temperature,
https://en-roads.climateinteractive.org/scenario.html?v=23.2.1&p39=64
- air quality
- sea level rise.
 The Global The Global Calculator is a model of the world's energy, land and food systems to
2050.
Calculator
DASHBOARD It allows you to explore the world's options for tackling climate change and see how
they all add up.

With the Calculator, you can find out whether everyone can have a good lifestyle
while also tackling climate change.

ENJOY YOUR SIMULATIONS !

http://tool.globalcalculator.org/globcalc.html?levers=22444e2ss3besss1ssssssssssssssss222sssssss11111sr2211
111111/dashboard/en

24
 WORKGROUP EXPERIENCE

Compose 2 groups: Good and Bad cityzens

Group 1: use an exemplary way to reduce Global Warming

Group 2: use a bad way increasing the GW

Two tools applications

• EN-ROADS

• THE GLOBAL CALCULATOR

“Only by changing finance, we will
be able to finance change.”

Peter BLOM, Former CEO - Triodos Bank

Roma Club, Juillet 2010.
 Some data to situate Sustainable Finance in 2021
To keep in mind…”Russian Dolls”

1. Global GDP = $100 trillions (197 countries in the world)

2. Global finance = $ 486 trillion (Banks, all Financial institutions and Financial Markets)
3. Global Assets Under Management = $98 trillion
4. Global Sustainable Assets Under Management = $35 trillion
5. Global Sustainable Assets Under Management of Sustainable Funds = $4 trillion
6. Global Thematic bonds : traditional fixed income assets (climate change, health, food, education, access to
financial services and target specific Sustainable Development Goals) = $1,5 trillion
7. Global Green Bonds = $0,5 trillion (Amount Issued in 2021) see: https://www.climatebonds.net/market/data/
As a reminder
Total assets : Bnpp $3 trillion; SG $1,6 trillion; HSBC $3 trillion, Chase $4 trillion, BoA $3 trillion, Citi $3 trillion…
For the record…
Value of sustainable assets under management (AUM) and total assets under management worldwide from
2016 to 2020 (in billion U.S. dollars)
Value of sustainable AUM and total AUM worldwide 2016-2020 The AUM from sustainable investments was small in
comparison to total assets under management in 2020
but has grown by over 50 percent between 2016 and
Sustainable investments Total 2020 and reached a value of around 35.3 trillion U.S.
120,000 dollars in 2020. Total assets under management globally
reached around 98.4 trillion U.S. dollars that year.
98,416
Assets under management in billion U.S. dollars

100,000
91,828

81,948
80,000

60,000

40,000 35,301
30,683
22,872
20,000

0
2016 2018 2020

Note(s): Worldwide; 2016 to 2020; Regions included are Australia, Canada, Europe, Japan, New Zealand and the United States
Further information regarding this statistic can be found on page 8.
2 Source(s): Global Sustainable Investment Alliance; ID 948492
Value of green bonds issued worldwide from 2014 to 2021 (in billion U.S. dollars)
Value of green bonds issued worldwide 2014-2021

600

508.8
500
Green bonds issued in billion U.S. dollars

400

298.2
300 269.3

200 172.5
159.5

100 84.5

37 46.1

0
2014 2015 2016 2017 2018 2019 2020 2021

Note(s): Worldwide; 2014 to 2021

Further information regarding this statistic can be found on page 8.
2 Source(s): Climate Bonds Initiative; ID 1289406
Number of green bonds issued worldwide in 2021, by sector
Number of green bonds worlwide 2021, by sector

Number of bonds
0 100 200 300 400 500 600

Energy 483

Buildings 475

Transport 220

Waste 112

Water 96

Land Use 80

ICT 23

Industry 22

Note(s): Worldwide; 2021

Further information regarding this statistic can be found on page 8.
2 Source(s): Climate Bonds Initiative; ID 762281
 More « Hard Law »

Number of sustainable finance policy regulations introduced worldwide

2010-2021
250
226

200 193
179
155
150 135
117
107
100 95 90
81 82
75
67 61 67
56 56
48
50 41
28 32 34
21 25

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

G20 members Other selected economies

Comparison of the environmental, social and governance (ESG) scores of the 15
largest banks by market capitalization worldwide in 2021, by ESG score provider
ESG scores of the world's largest banks 2021, by provider
Standardized ESG score out of 100 (higher is better)

Sustainalytics S&P Global (RobecoSAM) MSCI

0 10 20 30 40 50 60 70 80 90
JPMorgan Chase (U.S.)

China Merchants Bank (China)

Wells Fargo (U.S.)

China Construction Bank (China)

Toronto-Dominion Bank (Canada)

Citigroup (U.S.)

Commonwealth Bank of Australia

(Australia)

Description: In 2021, the environmental, social, and governance (ESG) scores of the largest banks worldwide varied markedly across different score providers. JPMorgan Chase, the largest bank globally in terms of market capitalization, showed a wide range of
scores: when standardized to a score out of 100, the highest score was given by MSCI, at 64.3, and the lowest by S&P Global (previously RobecoSAM), at 37, while the score from Sustainalytics had a value of 44. With only one green bond issued as [...] Read more
Note(s): Worldwide; October 27, 2021
Source(s): Statista; Various sources (MSCI; Sustainalytics; S&P Global)
 Number of members of the Net-Zero Banking Alliance worldwide as of December
2021, by region
Number of Net-Zero Banking Alliance members worldwide 2021, by region

REMINDER: There are 44,000 banks and credit unions around the world
60 only 97 are members the Alliance
52
50
Net Zero Banking Alliance is a program launched in April 2021 under the United
40
Nations Environment Program Finance Initiative (UNEP-FI). It targets
Number of members

accelerating the implementation of decarbonization strategies via the financial

30 sector.

20
16 15
11
10

0
Europe North America Asia Pacific Latina America & Caribbean Africa & Middle East

4 Description: As of December 2021, the Net-Zero Banking Alliance counted a total of 98 members worldwide. Most of the signatory banks were located in Europe (52), while 16 members were located in North America. Read more
Note(s): Worldwide; 2021
Source(s): UNEP
The main issue : Our finance is without ethics = unsustainable

The main critiques of mainstream neoclassical financial theory is

that it has failed to incorporate into its corpus notions of altruism,
morality, and ethics.
 Application

WOOCLAP
https://app.wooclap.com/events/RHBNMP/0