Asset Pools : Banking
- 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.
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
In this paper Andrew Sheng argues that central banks, when purchasing financial assets, should consider selecting assets that will promote sustainability, including climate change mitigation and adaptation. Social impact investing he argues is consistent with a central bank’s mandate to maintain price stability. They could incentivize bankers and asset managers to invest in, or lend to, climate mitigation activities and low-emission
This briefing summarises the discussions held during a roundtable for market and policy leaders in Washington, D.C. on 20 April 2017. The goal of the event was to explore pathways to scale and speed up green finance and to harness its benefits for long-term sustainable growth and competitiveness. The key messages are: Green finance made
The paper focuses on the role of banking diversity on access to finance for SMEs in the green economy. It demonstrates the relationship between the green economy and SMEs, and argues that access to finance is not just a function of broader macroeconomic factors but also the structure of the banking system. Specifically, it demonstrates
An India Advisory Council of the UNEP India Inquiry was convened by the Federation of Indian Chambers of Commerce and Industry (FICCI). This report highlights key proposals emerging from their discussions for aligning the Indian financial system with sustainability. In the Indian context, they call for development of a more robust and resilient ‘sustainability-oriented market framework’ focused
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
This paper seeks to assess how the international banking community is building sustainability into corporate strategies; how effectively these strategies are being implemented; how sustainability is being embedded into key business processes and decisions; and how sustainability principles are reflected in reporting. It presents an assessment of the sustainability performance of banks using a range of
Financial institutions today are unable to measure their exposure to climate change. There are equally no approaches to inform on the alignment of their investment strategies with national or international environmental goals. This report outlines international developments in measuring and managing climate related risk in instituional investment and banking. It outlines implications for regulators in
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
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