Banking

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

  • 3rd Update Report: Pathways to Scale

    Date: 07-Jan-2015

    This is the 3rd Update Report of the UNEP Inquiry, it is focused on the challenge of financing the low-carbon transition. It explores how innovative ideas and practices can be made more effective, adopted more widely, and taken to scale—and as a result move the trillions that are required. Scaling-up proven but limited innovations, is a common

  • Lenders and Investors Environmental Liability

    Date: 19-Apr-2016

    This working paper presents an overview of Lender Environmental Liability (LEL) and Investor Environmental Liability (IEL) regimes and issues. Environmental harm and degradation is often irreparable. Therefore, our assumption is that precaution is the main objective of any international and domestic environmental legal regime. The paper explores the conditions under which LEL/IEL can be effective

  • Indonesia Country Report

    Date: 30-Apr-2015

    Placing Indonesia’s economy onto a green and sustainable development pathway, as envisaged in the National Long Term Development Plan, will require a large mobilization of investment. Estimates of the annual investment needed are in the order of US$300‐530 billion, with a large portion of this investment needed in critical infrastructure, as well as environmentally sensitive

  • Experience and Lessons from South Africa: An Initial Review

    Date: 17-Jun-2016

    This paper provides an outline of South Africa’s financial sector, the environmental and social issues it faces, the response of government and financial regulators and the extent to which has resulted in measurable sustainable investment flows. In South Africa environmental, social and governance (ESG) considerations appear on the agenda of strategic discussions and are part of the

  • 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

  • Greening the Banking System

    Date: 05-Sep-2016

    This paper takes stock of G20 experience with green banking, focusing on market practice. It assesses the evolving green banking agenda, focusing on mainstreaming and mobilization, drivers of progress, and key barriers. It concludes with a set of options for consideration by the G20. This input paper has been prepared by the authors as a

  • Brazil Country Report

    Date: 06-Apr-2015

    As a contribution to the UNEP Inquiry the Brazilian Bankers Federation FEBRABAN established a partnership with the Center for Sustainability Studies at Getulio Vargas Foundation (GVCes) to develop three studies on the practice and potential for green finance in Brazil. The first looks at the legislation, regulation, and public policies aimed at socio-environmental themes related to the financial

  • On the Role of Central Banks in Enhancing Green Finance

    Date: 20-Feb-2017

    The paper examines the role of central banks in ‘greening’ financial systems. Given the enormous investments needed to bring about a green transformation, the financial sector will have to play a central role in allocating resources towards a sustainable and green economy – and stop financing activities that harm the environment. Against this backdrop, the

  • 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

  • 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

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