A New Global Financial Model

The IMF UNEP Lima meetings

The IMF  Lima meetings

Lima, 8 October 2015 – A new UNEP report released at the International Monetary Fund (IMF)/World Bank Annual Meetings shows how to harness the assets of the world’s financial system for sustainability – the key findings are that:

  • A “quiet revolution” is underway as financial policymakers and regulators take steps to integrate sustainable development considerations into financial systems to make them fit for the 21st century.
  • Momentum is building and is largely driven by developing and emerging nations including Bangladesh, Brazil, China, Kenya, and Peru, with developed country champions including France and the UK.
  • Amplifying these experiences through national and international action could channel private capital to finance the transition to an inclusive, green economy and support the realization of the Sustainable Development Goals.

The UNEP Inquiry into the Design of a Sustainable Financial System was established in January 2014 with a mandate to advance policy options that would improve the effectiveness of the financial system in supporting sustainable development.

Supported by a high-level Advisory Council of financial leaders, the Inquiry has looked in-depth at practice in more than 15 countries as well as across key segments of the financial system, such as banking, bond and equity markets, institutional investment, insurance as well as monetary policy.

To reach its findings, the Inquiry has worked with central banks, environment ministries, international financial institutions as well as major banks, stock exchanges, pension funds and insurance companies.

The Inquiry has identified five types of measures that are being introduced by financial rule-makers:

– Enhancing market practice through better disclosure, clearer responsibilities and improved product criteria.
– Harnessing the public balance sheet, through fiscal incentives, public financial institutions and central bank action
– Directing finance through policy measures, such as priority sector lending, legal requirements and liability regimes
– Transforming financial culture, through capacity building, reformed incentives and market structure
– Upgrading system governance, through guiding principles, regulatory mandates and performance measurement.

In total, the Inquiry found over 100 measures that are already in place, including:

China, a portfolio of 14 distinct recommendations to advance China`s green financial system, covering information, legal, institutional and fiscal measures
France, new disclosure requirements on climate change have been introduced for institutional investors as part of the country’s energy transition legislation
Kenya, has advanced financial inclusion through scaling of mobile based payment services, which is now also supporting green financing
Peru, new due diligence requirements have been introduced for banks to help reduce social and environmental externalities.
USA, emphasizes fiscal measures to accelerate green finance, and had made significant advances in disclosure and investor action.

The Inquiry`s report presents a Framework for Action that includes a toolbox of nearly 40 different measures, a set of five policy packages across banking, bond and equity markets, institutional investors and insurance, and a prioritized set of 10 next steps to promote international financial cooperation

Categories: Economic Indicators

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