US Country Report

Policy Lever: Harnessing Public Balance Sheets

Goverments are using their public balance sheets to provide fiscal incentives, risk guarantees or public investment in ways that improve the risk adjusted returns of green investment and seek to 'crowd-in' private investors.  Incentivizing sustainable finance through the use of the public balance sheet has been a feature in every country reviewed by the Inquiry.

Examples

Steps that can be taken to develop new green investment incentives, or to align existing incentives to sustainable development include: 
  • Target fiscal support: Establishing and optimising fiscal incentives to mobilize private capital for green investment.
  • Review fiscal incentives: Reviewing the alignment of existing fiscal incentives for savings, investment, lending and insurance with sustainability.
  • Sustainability mandates of public financial institutions: Strengthening sustainability as part of the mission and operation of development finance institutions and sovereign wealth funds.
  • Establish new green institutions: Launching new green investment banks and funds.
  • Blended finance instruments: Developing and using financial instruments designed to share risks and overcome barriers to private investment (such as through risk underwriting & results based financing).
  • Central banks refinancing operations: Extending refinancing operations to include green assets.
  • Central bank asset purchase programmes: Incorporating sustainability factors into asset purchase programmes.
  • Public procurement criteria: Introducing sustainable development performance into procurement of financial services by the public sector.

 Impacts

These measures are widely adopted and can be effective, but the scale of new funding available is limited. Nevertheless the financial system is already the recipient of, and conduit for, significant public financial support, which has the potential to be aligned to sustainable development.      

Inquiry Publications

  • US Country Report

    Date: 11-Feb-2016

    While US financial institutions have at times enjoyed a reputation of being something of a laggard on sustainability issues versus their European counterparts, significant changes and innovations are under way which are beginning to drive meaningful change. Record levels of awareness on sustainability issues in the US, including from millennials, are accelerating activities such as: Increased levels of

  • Financing the Future

    Date: 06-Feb-2017

    Italy’s Ministry of Environment, Land and Sea, in partnership with UN Environment, launched the National Dialogue on Sustainable Finance in February 2016 to identify practical market and policy options to mobilize Italy’s financial system for sustainable development and climate action. The conclusions of the paper are: Italy faces a strategic opportunity to harness its 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

  • India Country Report

    Date: 29-Apr-2016

    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

  • 4th Update Report: The Coming Financial Climate

    Date: 07-May-2015

    This is the 4th Update Report of the UNEP Inquiry, it is focused on the challenge of financing the low-carbon transition. Many approaches and instruments will be needed to deliver the financing needed. Public finance, funded by tax revenues and international transfers, will provide part of the solution.  However such finance will be inadequate. Private

  • The Role of Policy-Driven Institutions

    Date: 24-Aug-2015

    A variety of interventions can be used to develop national financial systems and provide local access to affordable, long-term finance. This paper considers four key categories of actions: voluntary action; priority sector lending; regulatory or financial incentives as well as direct lending by policy-driven financial institutions. It particularly focuses on the role of policy-driven institutions such

  • 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

  • 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

  • Scaling up Green Bond Market for Sustainable Development

    Date: 09-Dec-2015

    This guide argues that with the right support in place USD 1 trillion of green bonds could be issued a year by 2020 – providing a significant contribution to closing the investment gap for climate-friendly infrastructure in both developed economies and emerging markets. It argues for several sets of policy actions to support and enable the green

  • Central Banks Can and Should Do Their Part in Funding Sustainability

    Date: 10-Jun-2014

    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

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