This document summarizes a presentation given by Jan Willem van Gelder of Profundo, a research company that analyzes the consistency of finance and investments with climate objectives. The presentation outlines Profundo's approach, including focusing on large companies, assigning finance to specific assets, assessing climate impacts, and addressing challenges around different financing forms and limited transparency. Methodological challenges discussed include assigning proportions of general loans and investments to fossil fuel, renewable, and other assets.

1. Jan Willem van Gelder
OECD Workshop - Paris, 28 October 2019
Tracking the consistency of finance and
investments with climate objectives
Research approach and lessons learned

2. • Not-for-profit research company
• We aim to make a practical contribution to a
sustainable world and social justice
• 20 staff based in Amsterdam
• Working for NGOs, governments and investors
2 OECD Workshop, Paris, 28 October 2019
Introduction Profundo

3. 3
Financial institutions and climate change
Source: IPCC

4. 4
Recent energy sector projects
Coalbanks.org
focuses on bank loans
to coal mining and
coal-fired power
Still Undermining our Future?
analysed banks and insurance
companies in Netherlands,
France and Sweden, both in
fossil fuels and renewables.
Loans, shares and bonds.
Case studies on fossil fuel
finance & investments in
France, Switzerland,
Japan, SE Asia
Financial intermediaries
of French development
banks financing fossil
fuels
Unfriendcoal.com focuses
on insurance companies’
investments in coal shares
and bonds

5. 5
Recent agriculture sector projects
Forestsandfinance.org analyses
banks and investors financing
palm oil, rubber, logging and
pulp & paper in SE Asia. Loans,
shares and bonds.
Chainreactionresearch.com
analyses banks and investors
financing palm oil in SE Asia and
soy and beef in South America.
Loans, shares and bonds.
Financial flows to
deforestation-risk
commodities in
the Amazon, the
Congo Basin and
PNG
Shares and
bonds of the
world’s biggest
asset manager
Chinese banks financing
soy companies
Forest500.org:
identifying 150 most
important investors in
350 biggest companies
in forest-risk supply
chains

6. • Published by Europe Beyond Coal
• Analysis of the investors and creditors
of Europe’s 8 largest coal power
utilities
6
Fool’s Gold

7. Financial ties of ‘Exposed Eight’ to European coal power utilities
7
Fool’s Gold

8. 1. Large number of companies
• Focus on companies covering significant % of a market
2. Assigning finance and investments to assets
• Segment adjusters
3. Assessing the climate impact of certain assets
• Climate consistency
4. Different forms of financing
• Common denominator
5. Limited transparency
• Of companies
• Of financial institutions
8
Methodological challenges

9. 9
2. Assigning finance to assets
Bank A
Bank B
Bank C
Energy
company
Coal
assets
Other
fossil assets
Renewable
assets
Estimating contributions of
banks in the syndicate (loan
or underwriting) by using
their share of fees or their
roles in the syndicate
Bank A
Bank B
Bank C
General loans, underwriting
and investments: distributing
over assets with Segment
Adjusters based on capex and
capacity data
€€
€€
€€
€€
€€
€€
€€
€€
€€
For project finance
or other earmarked
loans no Segment
Adjusters needed

10. • Indicators for climate intensity of assets
• CO2-equivalents
• Hectares of deforestation
• We regularly apply PCAF methodology:
• Developed by Dutch FIs to assess carbon footprints of
bank and investor portfolios
• Carbon footprint of ABP
• Carbon footprint of French banks
• Consistency with climate goals in many sectors more
difficult:
• Depends on best practice / best achievable practice
• Science Based Indicators initiative
10
3. Climate intensity of assets

11. • Common denominator needed:
• Percentage of enterprise value
• Example calculation
• Challenges in comparing different forms of loans:
• Different maturities and refinancing
• Underwriting of share and bond issuances
• Revolving credits
11
4. Different forms of financing
Loan or investment
Enterprise value
Segment
adjuster: capex
for fossil fuel
assets in €
Carbon footprint
of loan or
investment in CO2
Climate
intensity of
assets in
CO2/€

12. • Corporate publications and company registers:
• Segmentation not standardized or doesn’t include capex
• Segmentation not detailed enough on asset level
• Disclosure by financial institutions:
• Public banks and some pension funds publish full portfolio
• Commercial banks and insurance companies usually don’t
• Banks hide behind client confidentiality
• Commercial databases offer some extra data:
• Bloomberg, Refinitiv (ex Thomson Reuters), IJGlobal,
TradeFinanceAnalytics
• Strong at: syndicated loans, share and bond issuances, project
finance, shareholdings of asset managers
• Weak at: shareholdings other investors, bondholdings,
bilateral bank loans, inconsistencies
12
5. Limited transparency

13. 13
Thank you!
Check our website www.profundo.nl to see more projects
and reports:
Or contact:
Jan Willem van Gelder
E-mail: jw.vangelder@profundo.nl