1st Update Report: Invitation and Background

Reimagining the Financial System

Can we imagine a financial system that serves the long term needs of a healthy real economy, an economy that provides decent, productive and rewarding livelihoods for all, and ensures that the natural environment on which we all depend remains intact, and so able to support the needs of this and future generations? Individual measures taken one by one are unlikely to add up to transformative change. However, change in complex, adaptive systems such as finance can be triggered by the development of new behavioural norms anchored in a renewed sense of purpose. The impacts of such measures can be more than the sum of their parts. While the Inquiry has investigated individual emerging innovations in the rules that govern the financial systems of the world it has also considered how such measures can trigger broader, system-level shifts. There is an historic window of opportunity to develop a sustainable financial system.  Four specific factors make the current moment one where change is possible to better align the financial system with the needs of sustainable development:
  1. Post-financial crisis: policy and regulatory responses to the crisis demonstrated the will and capacity of governing institutions to act in unconventional ways, at scale and in a concerted fashion, when faced with serious, systemic challenges.Yet  “unfinished business” remains, including: continued fragility; inefficient, unproductive and ultra-abundant liquidity; reduced access to global capital for developing economies; and the need for financial regulations and vehicles which enable long-term lending and investment.
  2. Emerging leadership: the growing importance and influence of emerging economies in international financial affairs places the nexus between financial market development and national development priorities more centrally in the policy debate. This opens the door to a greater diversity of approaches than has become the norm across much of the developed world.
  3. Technology disruption: new business models that employ innovative information technologies are challenging incumbent practices across the world of financial intermediaries. This drives diversity and competition into concentrated, relatively homogenous markets, which in turn empowers citizens, builds new financing channels and creates new opportunities (and challenges) for governing institutions.
  4. Public awareness: the recognition that we urgently need to transition to a less natural-resource intensive,low polluting and climate-resilient economy, places environmental and social issues increasingly at the heart of economic policymaking.It is increasingly acknowledged that the financial system can be an enabler of, or barrier to, the transition to sustainable development.

Inquiry Publications

  • Aligning_the_Financial_System_with_Sustainable_Development_1_An_Invitation

    1st Update Report: Invitation and Background

    Date: 07-Jun-2014

    This is the Inquiry’s first update report. It outlines the starting points and questions for the Inquiry. Key questions include: Tomorrow’s Financial System – What are the emerging dynamics in the financial system and the real economy which could be important for progress towards or away from a sustainable financial system?How do existing financial rules

  • Aligning_the_Financial_System_with_Sustainable_Development_4_The_Coming_Financial_Climate

    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 Financial System We Need

    The Financial System We Need: Aligning the Financial System with Sustainable Development

    Date: 08-Oct-2015

      Download the full report: [AR] [CH] [EN] [ES] [FR] [PT] [RU] Download the policy summary: [AR] [CH] [EN] [ES] [FR] [PT] [RU] This first edition of “The Financial System We Need” argues that there is now a historic opportunity to shape a financial system that can more effectively finance the development of an inclusive, green economy. This opportunity is based on a growing trend

  • How_Paris_Became_the_Capital_of_Climate_Finance

    How Paris Became the Capital of Climate Finance

    Date: 18-Apr-2016

    This working paper traces the evolution of the ‘networked solution’ to finance that came together at the COP21 in Paris, linking the formal negotiations with a broader set of actions by financial regulators, by financial institutions and also by civil society. It explores the creative dynamic between France’s efforts to stimulate action within its own

  • Towards_a_Theory_of_Sustainable_Finance

    Towards a Theory of Sustainable Finance

    Date: 07-Oct-2015

      The paper is normative rather than descriptive. It does not review how the financial system currently functions, but rather how it ought to function in the future. It draws upon concepts, theories and arguments from the literature in both theoretical economics and normative philosophy. Its goal is to identify a new direction for finance which the

  • Aligning_the_Financial_System_with_Sustainable_Development_2_Insights_from_Practice

    2nd Update Report: Insights from Practice

    Date: 07-Oct-2014

    This is the second update report by the UNEP Inquiry, it highlights early lessons from the Inquiry’s ongoing work in more than a dozen countries. What is clear from inital engagement is that even with strong real economy policies to correct market failures and deploy public capital, some interventions in the financial system will be

  • Human_Rights_and_Sustainable_Finance

    Human Rights and Sustainable Finance: Exploring the Relationship

    Date: 03-Feb-2016

    Designing and building a sustainable financial system requires a broad focus on what sustainability requires in all its aspects and how finance can help deliver on that important objective. This task includes not only delivering financing for sustainable environmental outcomes and addressing climate change, but it also includes attention to the needs of a sustainable

  • Aligning_the_Financial_System_with_Sustainable_Development_3_Pathways_to_Scale

    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

  • Imagining_a_Sustainable_Financial_System

    Imagining a Sustainable Financial System

    Date: 07-Dec-2014

    Imagining a sustainable financial system allows us to move beyond conventional wisdoms. This paper sets out that a sustainable financial system would be one that serves the long term needs of a healthy real economy, an economy that provides decent, productive and rewarding livelihoods for all, and ensures that the natural environment on which we all

  • the_financial_system_we_need_from_momentum_to_transformation

    The Financial System We Need: From Momentum to Transformation

    Date: 29-Sep-2016

    Download the policy summary: [AR] [CH] [EN] [ES] [FR] [PT] [RU] Our follow-up annual report reveals a doubling in policy actions over the past five years to align the global financial system with sustainable development. Policy and regulatory measures by finance ministries, central banks and financial regulators to promote sustainable finance have risen to 217 and now exist

Further Reading

  • The Future Of Financial Services How Disruptive Innovations Are Reshaping The Way Financial Services Are Structured, Provisioned And Consumed

    World Economic Forum (2015). Geneva: WEF.

  • Beyond the Financial Crisis

    Wilkinson, A. The Oxford Scenarios. Institute for Science, Innovation and Society. Said Business School.

  • The Shifts And The Shocks: What We’ve Learned—and Have Still To Learn—from The Financial Crisis

    Wolf, M. (2014)

  • The Future of Finance

    Wooley, P. (Ed.) (2010). London: LSE.

  • Redesigning Finance: Pathways to a Resilient Future

    Fullerton, J., Humphreys, J., Kelly, M. and White, A. (2012). Summary of proceedings of August 9, 2012, San Fransisco invitational gathering. Boston: Tellus Institue.

  • The Challenges Ahead: The State Of The Financial Services Industry

    Oliver Wyman (2014).2014. NY: Oliver Wyman.

  • Rethinking The Financial Network

    Haldane, A. (2009). London: Bank of England.

  • The Future of the Global Financial System: A Near-Term Outlook and Long-Term Scenarios

    World Economic Forum (2010).

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