A new UN Environment Report shows an upward trend in investments for sustainable development.
The G20 and other nations have made great strides in the past year to mobilize billions of dollars of public and private capital needed to realize sustainable development and climate action, according to a new UN Environment Policy survey released today.
A study of the United Nations Conference on Trade and Development conducted after 2015 showed that the investment required to achieve sustainable development in developing countries has been short, with an annual gap of US $ 2.5 billion.
However, the UN Environment Program’s Progress Report on Green Finance, a contribution to the G-20 Green Finance Study Group, found dozens of encouraging policies and financial product developments that show that the public and private sectors are seeking really change this trend.
“The world is committed to creating a better future for people and the planet, but we will not be able to achieve our aspiration for sustainability without the global financial system using its capital to fuel the transformation,” said the UN Executive Director Environment, Erik Solheim.
“This new UN Environment Policy research shows encouraging progress in this regard. We are seeing how smart investments move towards green finance, with a record number of new measures and ambitious plans for environmentally focused financial hubs,” he explained.
Report Highlights
Green funding of magnitude will be critical to achieving the G20 goal of ensuring balanced and sustained growth. The establishment of the study group during the Chinese presidency of the G20 last year showed that the leaders of these 20 countries understand this, a commitment that was reinforced by the recent decision of Germany to continue the work during its presidency of the organism, this year .
The Green Finance Synthesis Report, adopted at the G20 Leaders Summit in Hangzhou in September 2016, set out seven options to accelerate the mobilization of green finance.
Over the last year, all G-20 members and the international community have made significant progress in these areas, in an increasingly systemic national action, increased international cooperation and increased market leadership.
Since June 2016, more green finance measures have been introduced compared to any other period since 2000. The trends and actions taken have led to an increase in green financing flows, especially in the issuance of bonds which grew nearly 100% to US $ 81 billion in 2016.
Some examples of country-specific actions are:
India: The Securities and Exchange Board of India issued disclosure requirements for the issuance and listing of green debt securities
Germany: The federal state of Hesse announced its intention to make the city of Frankfurt a green financial center.
China: In June 2017, the State Council announced five pilot areas for green finance.
France: In January 2017, France issued a historic 22-year sovereign bond of EUR 7 billion, in order to promote best market practices and support the development of the green bond market.
South Africa: The Johannesburg Stock Exchange (JSE) is developing requirements for green bonds in line with international best practices.
Brazil: At the end of March 2017, the Central Bank issued guidelines on integrated risk management, including environmental risk.
United States: The California State Insurance Commissioner launched in January 2017 the Carbon Initiative’s online database on Climate Risks, which provides information on the high carbon investments of large insurance companies.
These changes in the rules of the game have helped drive the reallocation of resources in the financial and capital markets. A comprehensive review that looks beyond green finance indicates that globally sustainable assets are up 25% from 2014 to 2016.
Since then, positive feedback has emerged: the increase in green bond issuance in the primary market has improved the liquidity of the secondary market, which has allowed new funds to be opened and operate within existing liquidity and credit solvency constraints. In the first quarter of 2017, four new green bond funds were launched.
According to the report, progress made at the national, international and financial and capital markets shows that the financial system is changing to align with the imperatives of sustainable development of the 21st century.
“The challenge now is to rapidly increase capital flows to investments that support