The Experience of Governance Innovations in South Africa

Asset Pools : Banking

With an aggregate balance sheet of US$135 trillion, banks hold over 45% of global financial assets and sit at the heart of the financial system, particularly in developing countries. Banks have a critical role in allocating credit to households and enterprises, and originating loans that can be bundled into products for long-term holders of assets. Policy packages that could be taken to align banking to sustainability are:
  • Extend risk-based governance: A number of regulators have introduced requirements for banks to take environmental and social factors into account risk management and due diligence. A second stage would be to develop sustainability stress tests.
  • Improve access to sustainable lending: A range of instruments can be deployed, including priority lending requirements, below-market rate finance via interest-rate subsidies and central bank refinancing operations and variations in capital requirements for certain classes of lending.
  • Align banking culture and structure: This cluster takes policy making beyond adjustments to risks and returns to look at underlying skills, values and market composition the sector.

Inquiry Publications

  • The Experience of Governance Innovations in South Africa

    Date: 17-Jun-2016

    This paper explores whether the extent to which Regulation 28, CRISA and JSE Integrated Reporting Standards (referred to as governance policy innovations) have influenced the level of investment that integrates Environmental, Social and Governance (ESG) in its decision making process. It finds that while governance innovations have increased actors’ awareness about interrelationship between ESG factors and financial performance it

  • Aligning the Financial System with Sustainable Development in the United States of America

    Date: 01-Feb-2016

    The US financial system is undoubtedly among the largest, most innovative and most sophisticated in the world. It is also clear that this is both a benefit and an impediment to non-governmental investment in sustainability and inclusiveness. To date, the actual investment in infrastructure and sustainability does not meet current needs, especially those related to maintaining

  • Exploring Financial Policy and Regulatory Barriers to Private Climate Finance in South-East Asia

    Date: 06-Sep-2015

    This report is based on primary research carried out through interviews with finance industry practitioners, government officials, financial market regulators, and civil society actors in Indonesia, Phillipines and Viet Nam, as well as desk research on Malaysia and Cambodia. The objective was to identify and analyze existing and potential policy or regulatory barriers within the financial markets

  • China Report: The Risks and Opportunities of Stranded Assets

    Date: 06-Oct-2015

    The rise and fall of different technologies, products and businesses are central to rising productivity in healthy, well-functioning markets. This process can result in “stranded assets”—assets that have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities. Stranded assets are therefore a regular and necessary feature of dynamic economic systems, a phenomenon inherent

  • Values Based Banking

    Date: 21-Aug-2015

    Values based banking is a diverse movement drawing in community banks, ethical, green and socially oriented banks and including cooperatives, credit unions, privately owned banks, B Corporations and public companies that is purposively oriented towards the development of a sustainable economy. The paper identifies four values that need to be at the heart of a

  • China Report: Lessons from the Development of Green Finance in China

    Date: 06-Oct-2015

    With the initial progress of China’s green finance market, some lessons are emerging that are useful both for the further development of the green finance system and for other emerging market countries embarking on green finance development.  Strategic political commitment has been the key driver for China’s development of green finance, but translating this into

  • Banking & Sustainability: Time for Convergence

    Date: 01-Sep-2015

    In 2014, the UNEP Finance Initiative (UNEP FI) and the University of Cambridge Institute for Sustainability Leadership (CISL) commissioned a study entitled Stability and Sustainability in Banking Reform – Are Environmental Risks Missing in Basel III?, in recognition of the growing number of banking regulators around the world that have started to act on environmental

  • A Review of International Financial Standards as They Relate to Sustainable Development

    Date: 22-Feb-2017

    The report, a companion to the second edition of “The Financial System We Need”, examines how the international financial standards currently relate to the goals of sustainable development and explores opportunities for better alignment as a way to promote greater stability, resilience and fairness to the financial system. The key messages are: Financial standards have

  • Financial Risk and the Transition to a Low Carbon Economy

    Date: 06-Jul-2015

    Climate change  creates two types of potential risks for financial institutions: Physical changes – both through gradual change and extreme weather events which are likely to alter the supply and demand dynamic of many industries and lead to physical damages to assets. The transition to a low carbon economy will alter the financial viability of a part of

  • Effects of Financial System Size and Structure on the Real Economy

    Date: 07-Nov-2015

    This paper provides an overview of the findings in the empirical economics and finance literature on the effects that various financial system characteristics have on real economic outcomes. Although the empirical evidence on various relationships is mixed, there appears to be relatively robust empirical evidence that: financial deepening promotes economic development only up to a

Further Readings

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