The only motto of the financial system roadmap is to provide a set of guidelines that can be utilized by both public and private financial stakeholders.
This will not only transform and improve the entire sustainable financial system but will also accelerate the financing.
The roadmap will bring doors of opportunities and policy cohesiveness across many governing bodies:
- Central banks
- Financial regulators
- Ministries
- Private financial participants
- Finance coming from overseas
The motive behind the roadmap is to accomplish the following:
- It aims to reach a feasible financial system that takes sustainability objectives into consideration and utilizes them in operations.
- The financial system should include full expenditures of both positive and overhead external sustainability expenditures.
- This will not only create a reorientation of the existing flow of resources but will also drive it towards more inclusive and sustainable actions.
The following highlights a brief idea of what the roadmap for the sustainable financial system actually talks about:
As for the current practices, the roadmap pinpoints the following:
1. As we already know, by the end of 2015, a financial amount was contributed to the green economy, which was 17% of the total corporate loan. Sustainable transport was the largest category and main focus here.
2. As of October 2017, the UN and other governing bodies took nearly 300 regulatory and policy measures to accelerate green and sustainable finance. This was actioned over 60 countries.
Since 2010, the growth in measures has averaged 20% year on year, with an impressive increase of around 30% noticed from July 2016.
3. Roughly 30% of the policy and regulatory measures on sustainable finance are disclosure-centric. These measures were actioned by public authorities.
4. The green bond issuance, which was seen in 2015, doubled in 2016, reaching a whooping amount of 80 billion USD. This was indeed the biggest improvement noticed from 2014 to 2015, which was approximately a sevenfold increase.
This actually contributed to half of the corporate insurance in the year 2016.
From the country work perspective, we have:
1. During the initial six months of the Ant forest program, nearly 200 million people joined to contribute to its success.
This created a commendable outcome, eliminating about 150,000 tons of carbon emissions and resulted in the planting of 1 million trees in the Chinese desert.
2. In 2017, the World Bank lent a hand to Malaysia in issuing the first Sharia-compliant Green Bond.
3. The French Energy Transition Laws Article 173 talks about the needs of more than 800 institutional investors and entities.
This was needed to disclose data and information on the risk management associated with climate change consequences.
They also asked that if a consequence takes place, these entities should take them into account and exercise an environmental footprint via their investment policy.
4. OJK officials, OJK supervisors, and 1000-2000 team members of financial services institutions will be getting training on environmental analysis by the financial services authority of Indonesia (OJK 2015 and 2019)
As for the international initiatives, we have:
1. Over 60 stock exchanges are now being included in the sustainable stock exchange initiative. It represents 70% of the listing equity market.
It also comes up with a whopping amount of 30,000 companies that have a market capitalization of over 55 trillion USD.
2. The sustainable banking network, which was launched in 2012, attained a critical mass in 2016. It presented 85% of the bank’s assets across the new emerging markets, reaching nearly 34 member countries.
3. A whopping amount of over 70 trillion USD is managed by the signatories to the principles for responsible investment.
The amount was 70 times the value of Apple in resources under management.
4. The Montreal pledge, which was launched in 2014, reached nearly over 10 trillion USD in resources and assets under management.
It had over 120 investors who were committed to the project and confirmed publicly that their investment portfolios would include a carbon footprint. The investors reassured it on an annual basis.
5. The principle of positive impact finance was supported by 19 global investors and Banks. It was launched in 2017, reaching a total of 6.6 trillion, which was 1200 times the budget of the UN in resources and assets.
What are the future views of the roadmap?
1. The clients in the financial institutions and emerging markets revealed that 61% of them are actively working on green projects and for the financing of climate-related SDGs.
It came as a report on the 2016 survey of the International Finance Corporation (IFC).
2. It also revealed that 9% of them are also interested in contributing to the project.
A visible increase was seen in 2017, and both the numbers increased to 70 and 12%, respectively.
3. As we know, 21 developing countries represent almost half of global greenhouse gas GHG emissions. These countries have nationally determined contributions (NDCs).
The policies coming from these developing countries represent an investment opportunity of 22.6 trillion USD from 2016 to 2030, with a significant portion allocated for green buildings.
4. Renewable energy is the new hero as per the roadmap. By the year 2040, the GDP of the UK’s worth of global investments is expected to reach 7.4 trillion USD.
This will be almost 3 times the GDP of the UK.
