13 November 2017: A report from UN Environment and the World Bank Group finds that sustainable finance requires a strong commitment from business owners and managers to make sustainability considerations a primary component in strategy. It also highlights the relevance of incorporating sustainability targets into businesses’ key performance indicators (KPIs) to ensure accountability.

The report titled, ‘The ‘Roadmap for a Sustainable Financial System,’ is authored by the UN Environment Inquiry into the Design of a Sustainable Financial System and the World Bank Group, and was launched during the Bonn Climate Change Conference (UNFCCC COP 23), on 13 November 2017. The report seeks to bring policy cohesiveness across ministries, central banks, financial regulators and private financial sector participants. It proposes an integrated approach that can be used by all financial sector stakeholders, both public and private, to accelerate the transformation toward a sustainable financial system.

The report is structured in five chapters that consider: the roadmap’s context and scope; market-driven transformation; nationally driven initiatives toward sustainable finance; international coordination and sustainable finance; and next steps. It also contains annexes that provide a short review of sustainable finance and related concepts, as well as national case studies.

The proposed roadmap identifies initiatives that will be undertaken in the short term (by the end of 2018) and medium term (within the next 24 to 36 months) on: products, information and technology; business models, capabilities, and incentives; national public policy actions; national roadmaps; and global coordination principles. As per the report, some of these initiatives will be coordinated by UN Environment and the World Bank Group, while others will be led by relevant international, regional and national institutions. Also, a continuing consultation process will take place over the next 24 months to leverage ongoing initiatives and to support the design and implementation of new ones.

The report indicates that the transition toward a sustainable financial system is already taking place through the interaction of market-based, national and international initiatives. At the same time, it notes, the process of market transformation needs to be accelerated to meet global sustainability demands, and will require enhanced coordination with national and international initiatives to facilitate the process of financial institutions transitioning toward sustainable finance and additional regulatory prodding.

National sustainable finance roadmaps have been launched in many countries over the past year, but are not joined up or focused in a strategic way.

The report also states that national sustainable finance roadmaps have been launched in many countries over the past year, including Argentina, China, Indonesia, Italy, Mongolia, Morocco, Nigeria, Singapore, and South Africa. However, these are often “not joined up or focused in a strategic way.”

The publication reports that public authorities (including governments, central banks, regulators, supervisors, and other bodies) are taking legislative, policy, regulatory and supervisory steps to achieve a range of objectives linking sustainability and the financial system. Such steps include policy frameworks and standards that promote the issuance of green financial products (green bonds, securities), and voluntary guidance, labeling schemes or mandatory requirements that promote transparency and efficiency.

On international coordination, the report notes that meaningful global action requires global principles to guide concerted international, national and market-driven progress toward a sustainable financial system, and outlines key considerations for developing those principles. It also stresses the need for a performance framework to measure progress, that could be based on effectiveness, efficiency and resilience. [Publication: Roadmap for a Sustainable Financial System] [World Bank-UN Environment Press Release]