3 July 2015: At an event hosted by the UN Environment Programme (UNEP) and AXA insurance company, high-level experts called attention to the misalignment between the current financial system and the goal of creating a sustainable, resource-efficient, low-carbon economy. Panelists called for considering environmental risk when determining financial risk and risk pricing, boosting financial education to increase access to financial services and favorably treating long-term investments that limit climate risks.
The event, titled ‘New Rules for New Horizons: Reshaping Finance for Sustainability’ was organized on 3 July 2015 in Paris, France, under the auspices of the UNEP Inquiry into the Design of a Sustainable Financial System.
The Inquiry, having studied 15 countries to date, finds that trillions of dollars must be channelled into green investment annually, and away from polluting, natural resource-intensive investment, to secure an inclusive, sustainable economy. Instead, however, current financial institutions are “increasingly financing environmentally damaging investments and inadequate green investments,” according to the Inquiry.
During their discussions at the event, government and financial experts focused on five areas in need of work to transition to a sustainable, inclusive economic model: regulating and supervising markets to decrease the sense of fragile financial stability arising from unchecked pockets of risks; creating and enforcing standards for reporting and transparency in the finance industry; efficiently boosting public and private long-term investment, as low interest rates have not succeeded in doing so; increasing emerging economies’ access to global capital flows and funding sources; and matching financial regulations, which currently favor short-term, liquid and homogenous investments, with the need for long-term and diverse investments.
The UNEP Inquiry will publish a report reflecting its findings across 60 countries next October. Addressing at the event in a video message, UNEP Executive Director Achim Steiner reminded participants of the importance of the Inquiry in the context of the upcoming Paris Climate Change Conference, saying that “our ability to invest in new, resource efficient technologies and infrastructure will require enormous investments that go beyond public finance.” He added that in this light, UNEP “initiated an inquiry into the design of sustainable financial systems to examine how best to align financial systems to sustainable development needs.” [UNEP Press Release] [UNEP Executive Director Video Message] [AXA Chairman and CEO Video Message] [UNEP Division of Technology, Industry and Economics Director Remarks] [UNEP Inquiry Website]