Leverage Ratio and Montreal Pledge: Difference between pages

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imported>Doug Williamson
(Remove surplus wording regarding implementation period.)
 
imported>Doug Williamson
(Create page. Source: The Treasurer online June 2019 and Mainstreaming carbon change webpage https://www.mainstreamingclimate.org/montreal-pledge/)
 
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''Bank regulation''
''Environmental investment policy.''  


(LR).
The Montréal Carbon Pledge allows investors (asset owners and investment managers) to formalize their commitment to the goals of the Portfolio Decarbonization Coalition, which mobilises investors to measure, disclose and reduce their portfolio carbon footprints.


A requirement under Basel III regulations for regulated institutions to hold a minimum ratio of capital to absolute balance sheet outstandings (plus certain other items).
Signatories of the pledge formally recognise that “institutional investors ... have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that there are long-term investment risks associated with greenhouse gas emissions, climate change and carbon regulation. In order to better understand, quantify and manage the carbon and climate change related impacts, risks and opportunities in our investments, it is integral to measure our carbon footprint. Therefore, we commit, as a first step, to measure and disclose the carbon footprint of our investments annually with the aim of using this information to develop an engagement strategy and/or identify and set carbon footprint reduction targets."


It is calculated as:


LR = Tier 1 capital / Leverage Ratio Exposure (LRE)
== See also ==
 
* [[Carbon credits]]
 
* [[Carbon footprint]]
The leverage ratio is the long term capital ratio for banks by which their Tier 1 capital should in due course be at least 5% of their assets.
* [[Carbon-neutral]]
 
* [[Carbon tax]]
This will generally be that their shareholders funds will be >=5% of their loans although the definitions may be subject to domestic practices.
* [[Corporate social responsibility]]
* [[CRC Energy Efficiency Scheme]]
* [[Footprint]]
* [[Greenhouse gas]]
* [[Portfolio Decarbonization Coalition]]
* [[Renewables]]


 
[[Category:The_business_context]]
Domestic regulators can set higher ratios and the USA has set higher ratios for eight Systemically Important Financial Institutions (SIFIs) than for non-SIFIs.
[[Category:Investment]]
 
[[Category:Long_term_funding]]
 
[[Category:Ethics]]
'''Leverage Ratio Exposure'''
[[Category:Identify_and_assess_risks]]
 
[[Category:Manage_risks]]
The [[Leverage Ratio Exposure]] (LRE) - for the purposes of calculating the Leverage Ratio - includes certain other risk exposures, in addition to on-balance sheet assets.
[[Category:Risk_reporting]]
 
[[Category:Financial_products_and_markets]]
 
== See also ==
* [[Basel III]]
* [[Countercyclical leverage ratio buffer]]
* [[G-SII ALRB]]
* [[Leverage]]
* [[Leverage Ratio Exposure]]
* [[Liquidity Coverage Ratio]]
*[[LRT]]
* [[Net Stable Funding Ratio]]
* [[Off balance sheet risk]]
*[[Systemically Important Financial Institution]]
*[[Tier 1]]

Revision as of 18:59, 21 July 2019

Environmental investment policy.

The Montréal Carbon Pledge allows investors (asset owners and investment managers) to formalize their commitment to the goals of the Portfolio Decarbonization Coalition, which mobilises investors to measure, disclose and reduce their portfolio carbon footprints.

Signatories of the pledge formally recognise that “institutional investors ... have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that there are long-term investment risks associated with greenhouse gas emissions, climate change and carbon regulation. In order to better understand, quantify and manage the carbon and climate change related impacts, risks and opportunities in our investments, it is integral to measure our carbon footprint. Therefore, we commit, as a first step, to measure and disclose the carbon footprint of our investments annually with the aim of using this information to develop an engagement strategy and/or identify and set carbon footprint reduction targets."


See also