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

  • 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

  • China Green Finance Task Force Report: Green Banking System

    Date: 02-Apr-2015

    This paper sets out the case for establishing a green banking system in China. It recommends the establishment of a system of green banks empowered to fully leverage their expertise, scale, and risk management to manage green loans and investments. A China Ecological Development Bank should be established in which the government does not have to have a

  • 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 Green Finance Task Force Report: Green Investor Networks

    Date: 02-Apr-2015

    This paper set out the case for financial institutes and associations in China to establish  a green investor network, to monitor investees’ performance of their environmental obligations, foster green investment capabilities, and hold educational programs. Internationally, green investor networks such as the UNEP Finance Initiative and the UN Principles for Responsible Investment have played a

  • China Green Finance Task Force Report: Lender Liability

    Date: 02-Apr-2015

    In the event of a project causing environmental damage, in many countries its commercial lenders can also face legal liabilities. This forces lenders to take environmental impact into consideration in making investment and financing decisions. This paper makes the case for establishing environmental legal liabilities for commercial banks in China and highlights steps to take to implement this: Revise

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