unep inquiry presentation november 2015

The Financial System We Need

Aligning the financial system with sustainable

developmentPRESENTER

November 2015"UNEP's Inquiry has for the first time compiled and analyzed inspiring

initiatives from across the world that seek to better align the financial system with sustainable development. "

Achim Steiner, UN Under-Secretary-General & Executive Director, UNEP

© UNEP INQUIRY NOVEMBER 2015

UNEP CONVENES FINANCIAL COMMUNITY IMF/WORLD BANK ANNUAL MEETINGS

Lima, 8th October 2015

Mark Carney, Governor, Bank of England Atiur Rahman, Governor, Bangladesh Bank

Yi Gang, Deputy Governor, People`s Bank of China

“Green finance cannot be a niche”

“Developing economy central banks have been trying to address the risks of instabilities and imbalances at sources, by promoting sustainable financing”

“China will advance green finance during its presidency of the G20 in 2016”

SLIIDE 2


Annual global investmentAll needs to be green and resilient

US$16

trillion

Annual investment needed for sustainable development goals e.g. in infrastructure, energy, agriculture

US$5-7trillion

US$7 trillion

Annual environmental externalities – need to be costed into decision making

US$6 trillion

Reduction in fossil fuel and power investment need (2015-2030)

FINANCING CHALLENGES (ILLUSTRATIVE)TOO MUCH OF THIS

NOT ENOUGH OF THIS

“Finance overwhelms the real economy. The lessons of the global financial crisis have not been assimilated, and we are learning all too slowly the lessons of environmental deterioration.”

Pope Francis

Advance policy options to improve the financial system’s alignment with sustainable development

MANDATE AND PROBLEM STATEMENT

SLIIDE 3

© UNEP INQUIRY NOVEMBER 2015[Source Inquiry, 2015]

Financial development

ImpactEconomic

Social

Environment

Home country

Global

Low financial development a

limiting factor on economic growth

& social development


supports growth & social

development but erodes local environment

Financial development detracts from

growth & social welfare, drives

global environmental

damage

Developed Developing Emerging

A VIEW ON THE PROBLEM: MISALIGNMENT

SLIIDE 4


Rachel Kyte

Group Vice President, World Bank

DavidPitt-

Watson

Co-Chair UNEPFI

Atiur Rahman

Governor, Central Bank of

Bangladesh

Murilo Portugal

President, Brazilian Bankers

Federation

Neeraj Sahaj

Former President, S&P Rating Services

Rick Samans

Managing Director

WEF

Maria Kiwanuka

Minister of Finance,

Government of Uganda

Andrew Sheng

Distinguished Fellow,

Fung Global Institute

Naina Kidwai

Group General Manager &

Country Head, HSBC India

Lord Adair Turner

Former Chair, Financial Services

Authority, UK

Jean-Pierre Landau

Former Deputy Governor, Banque de

France

John Lipsky

Former Deputy Managing

Director, IMF

Anne Stausboll

CEO, CalPERS

Nicky Newton-

KingChief

Executive, Johannesburg

Stock Exchange

Bruno Oberle

State Secretary & Director of Swiss Federal Office for the Environment

ADVISORY COUNCIL

Kathy Bardswick

CEO, The Cooperators,

Canada

WISE COUNSEL

SLIIDE 5


Finance can be aligned to

sustainability….

…innovations have been tested ….

… and now need to be developed into a systemic approach.

Naina Kidwai, Chairman, HSBC India, Director, HSBC Asia Pacific

The Advisory Council sees the Inquiry’s global report not as the end of a process, but as alaunch pad for the continued analysis and action….

"Too often the financial system & sustainable development have been tackled in separate silos. The Inquiry has shown for the first time how to systematically connect the dots”

“The Inquiry has uncovered a new generation of policy innovations that aim to ensure the financial system serves the needs of inclusive, environmentally-sustainable, economic development”

“Reforming the financial system remains unfinished business - we have stabilized the system, but have a long way to go in meeting the needs of sustainable development”

Rachel Kyte, VP & Special Climate Envoy, World Bank Group

John Lipsky, former first Deputy Managing Director of the IMF

INSIGHTS FOR ACTION

SLIIDE 6

Kenya Bankers AssociationCentral BankIFC

ChinaPeople’s Bank of ChinaDevelopment Research Centre, IISD

South AfricaBankers AssociationGlobal Green Growth InstituteJohannesburg Stock Exchange

BrazilBankers FederationFundação Getulio Vargas

Bangladesh Bangladesh Bank, Council on Economic Policies

US CalPERS,

SAIS

ColombiaMinistry of FinanceIFC

Indonesia Financial Services Authority (OJK)IFC, ASRIA

IndiaFICCI, NIPFP

Switzerland Federal Office of Environment, SwissRe

Netherlands Ministry of Environment Utrecht Sustainable Finance Lab

France 2 Degrees Initiative, France Strategie, I4CE

Canada The Cooperators, CIGI

[Source Inquiry, 2015]

UK Bank of England,CISL, Oxford University

FOCUS ON PRACTICE


BUILDING KNOWLEDGE NETWORKS

SLIIDE 8


PARTNERING FOR CHANGE

The People’s Bank of China (PBC) has co-convened with the Inquiry a Green Finance Task Force to draw up proposals for a green financial system.

The Federation of Indian Chambers of Commerce and Industry (FICCI) has catalysed a high-level dialogue between the industry, government and regulators.

The Swiss Federal Office for the Environment launched a national consultation with the Swiss Sustainable Finance Initiative.

The Bank of England worked with the Inquiry on the international dimension of its prudential review of insurance and climate change.

SLIIDE 9


CO-DESIGNING ROADMAPS

Three quarters of the members of China’s Green Finance Task Force were from the private sector. Members included representatives of : Shenzhen Stock Exchange, China Securities, China Minsheng Bank, ICBC, China Banking Regulatory Commission, People’s Bank of China.

In the Netherlands the Dutch Banking Code was developed by the Dutch Banking Association (NVB) and has been integrated in regulation.

South Africa’s Financial Sector Charter was developed through a multilateral social dialogue forum which brought together Government, Business, Labour and Community constituencies.

The Federation of Indian Chambers of Commerce and Industry (FICCI) catalysed a high-level dialogue between the industry, government and regulators. Members of the advisory committee included Shakti Foundation, Kiran Energy, TERI, SunEdison, Yes Bank,, WWF, IFC, HSBC

SLIIDE 10


Food and agriculture

Water and sanitation

Energy

Small and medium enterprises

LINKS TO SUSTAINABLE DEVELOPMENT GOALSAreas of high capital investment need

Green infrastructure

Climate change

Ecosystems and biodiversity

SLIIDE 11


CONSULTATIVE PROCESS

UN SYSTEM• DESA• ILO• REGIONAL COMMISSIONS• SE4ALL• Secretary General’s Office• UNCTAD• UNITAR• UNOHRLSS (SIDS)• UNDP

EXTERNAL FINANCIAL INSTITUTIONS• Bank of International Settlements• Central Banks and Ministries of Finance• Financial Stability Board• IMF• OECD• World Bank Group

UNEPRegional officesDTIEUNEP FIGGKPEconomics & Trade Branch

BILATERAL AND INTERGOVERNMENTAL PROCESSES Financing for DevelopmentCOP/Climate ChangeSDGsRegional groups

SLIIDE 12


INQUIRY RESEARCH PORTALPOST LAUNCH COMMUNITY

Global Report (English + 6 languages)

Policy Summary

Other reports Country research Working papers

54 publications/research pieces published

15 more by end of 2015

www.unepinquiry.org

SLIIDE 13


FINDINGS: ‘a quiet revolution’ - 100+ measures globally

Enhancing market practice

Harnessing the public balance sheet

Directing finance through policy

Transforming culture

Upgrading governance

Measures in practiceDiverse starting points Levers for action

Air pollution

Infrastructure investment

Financial inclusion, greening industry

Integration in prudential banking regulation

New investor reporting requirements on climate

Coordinated roadmap led by regulator

Financial sector compactIncentives for clean energy bonds

Climate change

Post-crisis rebuilding of trust in finance

SLIIDE 14


A FRAMEWORK FOR ACTION

“The sustainable finance programme is not only intended to increase financing but also to improve the resilience and competitiveness of financial institutions” Muliaman D. Hadad, Chairman, Indonesia Financial Services Authority (OJK) Board

SLIIDE 15


TAKING A SYSTEMATIC APPROACH: acting nationally

Deepening access to finance

Reducing local environmental impacts

Mobilising capital for clean infrastructure

Strengthening resilience of the financial system

Improving market efficiency and transparency

‘DEVELOPING COUNTRY’

NATIONAL COMPACTS &

PLANSStrengthening financial culture

Driving the low-carbon transition

Supporting long-term needs of real economy

Strengthening resilience of the financial system

Improving market efficiency and transparency

‘DEVELOPED COUNTRY’

Build coalitio

n

Diagnostic &

metrics

Assess options

Design pathway

Implement and learn

SLIIDE 16


OPPORTUNITIES FOR INTERNATIONAL COOPERATION

Sharing experience, such as the Sustainable Banking Network of developing country regulators

Building new tools, for example, environmental stress testing of critical threats

Developing common principles, for example, for the growing green bond market

Drawing up practical guidance to enable insurance regulators to address threats of natural hazards and climate change

Strengthening the policy architecture, for example, work on green finance during China’s G20 in 2016

SLIIDE 17


VISION OF SUCESS



Impact Economic

Social

Environment

Create enabling financial

foundations for development

Develop alignment to

social progress, green industries and safeguards

Invest in assets that improve

social and environmental

outcomes

Developed Developing Emerging

SLIIDE 18

COMPETITIVENESS OF FINANCIAL CENTRES

CURRENT ASSESSMENT DOES NOT TAKE SUSTAINABILTY FACTORS INTO ACCOUNT

[Source: Y/ZEN GFCI 18]

THE FUTURE? RACE TO DEVELOP AS LEADING GREEN FINANCE HUB

Global Financial Centre Index is based on business environment, financial sector development, infrastructure, human capital and reputation.

Exploring how sustainability as a factor in future competitiveness


Mahenau Agha, Head of Outreach [email protected] Simon Zadek, Co-Director [email protected] Robins, Co-Director [email protected] General contact [email protected]

www.unepinquiry.orgwww.unep.org/inquiry/

@fininquiry

Your name here Your email address, twitter etc…

mailto:[email protected]




http://www.unepinquiry.org/

http://www.unep.org/inquiry/

unep inquiry presentation november 2015

Economy & Finance