The World Bank’s private-sector arm has introduced new climate change conditions for its investments in commercial banks to encourage the lenders to wind down support for coal projects in Africa and Asia.
The International Finance Corp (IFC), which owns equity stakes in many large commercial banks in emerging markets, hopes the restrictions would trigger other investors to exit the coal sector.
“I think this is an important milestone. If we look historically, our environmental policies and procedures have been adopted by both other development finance institutions and the market in general,” said Peter Cashion, head of climate finance in the IFC’s Financial Institutions Group.
Under the new rules, in effect since July last year, but published on Thursday last week, the IFC would no longer make equity investments in financial institutions that do not have a plan to phase out support for coal.
It would also use various conditions attached to its existing and new equity investments to ensure that the banks involved reduce their exposure to coal to zero by 2030.
The IFC exerts considerable influence over commercial banks in emerging markets, which often turn to the Washington-based lender for both access to capital and the kind of governance expertise that helps them build credibility among investors. Apart from the IFC being a major investor in its own right, its standards are widely adopted by the private sector.
Climate change campaigners welcomed the move, saying it sent a clear message to the commercial banking and insurance sectors that public finances would no longer be made available for institutions backing coal projects.
“We expect an avalanche of different institutions to adopt a similar approach, it will have a huge impact,” said Nezir Sinani, codirector of Recourse, a Netherlands-based nonprofit organization that has been lobbying the IFC.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
VERTICAL INTEGRATION: The US fabless company’s acquisition of the data center manufacturer would not affect market competition, the Fair Trade Commission said The Fair Trade Commission has approved Advanced Micro Devices Inc’s (AMD) bid to fully acquire ZT International Group Inc for US$4.9 billion, saying it would not hamper market competition. As AMD is a fabless company that designs central processing units (CPUs) used in consumer electronics and servers, while ZT is a data center manufacturer, the vertical integration would not affect market competition, the commission said in a statement yesterday. ZT counts hyperscalers such as Microsoft Corp, Amazon.com Inc and Google among its major clients and plays a minor role in deciding the specifications of data centers, given the strong bargaining power of
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
RSS