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human rights risks and impacts based on the UNGP-BHR, as well as climate
change risk assessments aligned with the Climate Physical Risk and the
Climate Transition Risk categories of the Task Force on Climate-related
Disclosures. The assessment documentation also requires measures to
minimize, mitigate, compensate, and remedy risks and impacts on affected
communities and the environment. EPFIs are also encouraged to use the
EP4 framework for financial products outside of the scope of the EP4.
Praiseworthy in the EP4 is the EPFIs’ solid and unequivocal commitment to
support the objectives of the Paris Agreement and fulfill the responsibility to
respect human rights in line with the UNGP-BHR.
However, as the window to take decisive climate action becomes smaller, the
Commission joins in encouraging financial institutions to take bolder actions
to fully realize and embrace their unique position to influence and direct the
actions and policies of companies and industries to transition to a low-carbon
economy. They must refrain from injecting capital into activities related to
fossil fuel extraction and conventional fossil fuel-based power generation.
Instead, they should redirect capital to activities that promote GHG emissions
reduction and build infrastructure necessary to address and respond to the
physical impacts of climate change.
Further, financial institutions must endeavor to “enhance finance mobilization
in order to deliver the scale of resources needed to achieve climate plans,
particularly for adaptation;”534 scale-up investments in climate action535
taking into account the vulnerabilities of specific sectors, regions, and
countries; simplify and enhance access to finance;536 and “provide enhanced
and additional support for activities addressing loss and damage associated
with the adverse effects of climate change.”537
534
Glasgow Climate Pact, supra note 480, para. 19.
535
See Glasgow Climate Pact, para. 47.
537
Glasgow Climate Pact, supra note 480, para. 64.
536
See Glasgow Climate Pact, para. 53.
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