Banks may face additional capital requirements for concentrated lending to high-emitting sectors and flood-prone regions under approaches outlined by the Network for Greening the Financial System. The UK adopted international sustainability reporting standards while preserving companies’ discretion to explain missing disclosures.

Project structuring and tenant demand supported new lending opportunities. Bank Negara Malaysia highlighted barriers to financing small clean-energy projects, DBS and ING backed a London office refurbishment, and Crédit Agricole brought forestry development and investment into a dedicated natural capital business.

Read more on the week's key developments:

1. NGFS brings climate concentration and insurance coverage into prudential assessment

Banks with concentrated lending to high-emitting sectors or flood-prone regions face the prospect of additional capital requirements under approaches discussed by the Network for Greening the Financial System (NGFS), a network of central banks and financial supervisors. Its updated guide, launched on 21 September, considers buffers for exposures vulnerable to simultaneous losses from an abrupt transition or severe climate event. It also discusses adjusted loan-to-value limits and down-payment requirements for certain green assets. These macroprudential tools remain exploratory rather than binding standards.

The guide brings insurance coverage into credit underwriting. It says banks should identify which assets are insured, against which hazards and to what extent, and assess the losses they would bear without insurance or government support. It also discusses future insurability at loan origination. A property insured today could become harder or more expensive to insure during a long mortgage term, leaving the borrower to absorb more damage and the bank exposed through both repayment capacity and collateral value.

2. FCA drops proposed mandatory climate disclosures in final sustainability rules

The UK is moving towards internationally aligned sustainability reporting while preserving companies’ discretion to explain missing disclosures. The Financial Conduct Authority’s final rules, published on 30 September, adopt comply-or-explain treatment across the UK Sustainability Reporting Standards, replacing its proposal to make most climate disclosures mandatory. The standards endorse those of the International Sustainability Standards Board. The rules apply to accounting periods beginning on or after 1 January 2027, with first reporting in 2028. Transitional relief covers Scope 3 emissions for one year and non-climate disclosures for two years.

The FCA cited reporting readiness, proportionality and UK competitiveness despite support for mandatory climate disclosure from many investors. Explaining an omission does not remove an issuer’s existing obligation to report principal risks, including climate risks where relevant. The regulator also declined to require transition plans, instead requiring relevant issuers to disclose whether they have published one and where, or explain its absence.

3. Bank Negara Malaysia targets structuring barriers in energy-transition finance

Small clean-energy projects can struggle to secure bank financing even when the technology works, because unfamiliar revenue models and structuring costs undermine their commercial appeal. Bank Negara Malaysia governor Abdul Rasheed Ghaffour identified this constraint on 29 September at the Joint Committee on Climate Change’s Journey to Zero conference. “In many cases, the constraint is intermediation,” he said. The central bank is exploring how regulation and supervision can support energy-transition financing, including “‘room to play’ for financial institutions to take higher risks”, with those risks appropriately understood, priced and managed.

His example was a Sabah town using diesel-generated electricity near a palm oil mill whose methane could fuel a biogas generator. More than 120 mills across the state offer scope to replicate a successful project. Aggregation could spread the initial technical assessment and structuring costs across a larger financing pipeline. The governor called for earlier lender engagement to shape projects, identify funding gaps and structure risk-sharing solutions.

4. DBS and ING provide GBP 1.016 billion loan for London office refurbishment

DBS and ING announced on 30 September that they had equally underwritten a GBP 1.016 billion ($1.35 billion) development loan to refurbish One Spitalfields in the City of London. The project is being delivered for institutional investors advised by J.P. Morgan Asset Management. DBS acted as global coordinator, and both banks served as green loan coordinators. Jane Street has agreed terms to occupy 465,000 square feet, roughly two-thirds of the development’s planned office space.

The project will retain the building’s structural frame while targeting an Energy Performance Certificate A rating and BREEAM Outstanding certification. The financing case combines an existing asset and institutional sponsor with visibility over a large share of future occupancy. Tenant demand therefore supports the investment in environmental upgrades, rather than leaving lenders to underwrite sustainability targets alone.

5. Crédit Agricole combines forestry development with institutional investment

Crédit Agricole is extending its natural capital activities into project development and management alongside financing and investment. Its new Capital Naturel division will initially focus on forests, supported by exclusive negotiations to acquire a majority stake in EcoTree, a developer and operator of nature-based solutions. Amundi’s accompanying Arbora Nova fund aims to mobilise EUR 200 million ($227 million) over time. The group plans to expand the division into water and biodiversity from 2027.

The fund will finance planting on land that has been bare for at least ten years and replanting on severely degraded plots. These criteria direct investment towards additional restoration activity rather than ownership of existing forests alone. The proposed EcoTree acquisition would bring operating expertise into the group, linking the sourcing and execution of projects with its investment capabilities.

6. Development banks distinguish project mobilisation from institutional fundraising

Development banks are separating private investment in supported projects from capital raised through their own balance sheets, making the two forms of financing more explicit in joint reporting. Thirty multilateral development banks and development finance institutions endorsed revised methodologies on 1 October, including the World Bank, Asian Development Bank, African Development Bank and European Bank for Reconstruction and Development. The package updates the joint mobilisation methodology for the first time since 2018 and introduces a separate measure of institution-level private fundraising.

Buying a development bank’s bond will therefore be measured differently from participating in financing for a borrower supported by its guarantee. The revision also expands guidance on guarantees, securitisation, risk transfers and foreign-exchange hedging, alongside attribution rules intended to reduce double counting. This gives greater recognition to structures through which commercial banks and investors participate beyond individual co-financed loans. A further methodology for investment catalysed indirectly by development-bank activities remains under development.

7. SMBC and Climate Bonds Initiative strengthen assessment of adaptation finance

Sumitomo Mitsui Banking Corporation (SMBC) and SMBC Nikko Securities signed a memorandum of understanding with Climate Bonds Initiative on 25 September to develop adaptation and resilience finance in Japan and internationally. The cooperation covers assessment approaches, impact measurement and reporting. Climate Bonds Initiative also confirmed that selected adaptation and resilience categories in SMBC’s sustainable finance framework align with its sector criteria and resilience taxonomy.

The underlying framework was published in March, so the new development is the external assessment of eligible adaptation categories. Unlike emissions-reduction projects, resilience investments require an assessment of how expenditure reduces vulnerability to particular hazards. The cooperation covers assessment approaches, impact measurement and reporting, combining SMBC’s corporate lending relationships with SMBC Nikko’s securities capabilities.

8. Shanghai Clearing House shifts climate bond allocation towards issuer characteristics

Shanghai Clearing House’s new climate-change bond indices allocate weight according to issuers’ emissions intensity and climate actions, broadening the approach beyond selecting bonds with green labels. Launched with MSCI on 28 September, the series comprises a core index, a benchmark and six sub-indices differentiated by features including maturity and credit rating. As of 1 September, the core index contained 2,401 bonds and had portfolio carbon intensity more than 19% below its benchmark.

The reported carbon-intensity difference comes from changing portfolio composition rather than a measured decline in issuers’ emissions. That distinction separates allocation to lower-intensity companies from financing reductions at higher-emitting ones. The maturity and rating sub-indices also allow institutions to compare climate allocations within more closely matched bond categories, reducing the influence of duration and credit-quality differences when assessing the resulting portfolios.

9. Urgewald records opposing coal-financing trends in the UK and Malaysia

Banks’ reductions in coal financing remain uneven across markets. Urgewald’s study released on 30 September found that annual financing by UK banks rose 17% between 2022 and 2025, principally driven by Barclays and HSBC. Malaysian financing fell 88%, from $747 million to $92 million, following restrictions adopted by CIMB, Maybank, AmBank and RHB between 2020 and 2022. The dataset tracked $467 billion in lending and underwriting from 744 commercial banks over the four years.

The study covers lending and securities underwriting, adjusted for the coal share of financed companies’ businesses. Financing activity can therefore increase without a corresponding rise in outstanding loan exposure, because underwritten securities may be sold to investors. Urgewald excludes transactions flagged as purely green in its source databases, while sustainability-linked financing may remain included. HSBC and Barclays disputed the findings’ implications, citing their coal restrictions and transition policies. The competing measures describe different aspects of banks’ relationships with coal-related businesses.

10. COP31 selects five countries for BRIDGE climate-finance initiative

The COP31 presidency selected Ethiopia, Fiji, Indonesia, Pakistan and Uzbekistan on 24 September to pilot the Climate Implementation Bridge (BRIDGE), its initiative with the United Nations Development Programme to turn national climate and development priorities into finance-ready project portfolios. The programme will identify investment bottlenecks and prepare projects for existing sources of public and private finance.

Participating countries will establish teams led by finance and sector ministries, linking project preparation to national planning and budgeting. BRIDGE will bring financiers into project design and assemble portfolios for submission to their approval processes, with partners contributing preparation support, guarantees and blended finance. Screening is scheduled for October, followed by partner commitments at COP31 in November, with first financial closes targeted for 2027–2028.