Stockholm (NordSIP) – According to new research released from the UN Environment Programme (UNEP) (July 14), the G-20 together with other nations have made considerable progress in the past year alone in terms of mobilizing the necessary trillions of dollars of public and private capital to make sustainable development and climate action a reality.
The Green Finance Progress Report, a contribution of the G-20’s Green Finance Study Group (GFSG) to the UN Environment Inquiry into the Design of a Sustainable Financial System, has found dozens of encouraging policies and financial product developments indicating the seriousness of both the public and private sectors in overturning lagging trends. Such were last indicated in a UN Conference on Trade and Development research stemming from 2015, which showed a shortfall of US$ 2.5 trillion per annum in the investment required to promote sustainable development in developing countries, with nearly ten times this amount required globally from mainly private sources.
“The world has committed to creating a better future for people and planet. But we will not be able to achieve our sustainable vision without the global financial system using its capital to fuel the transformation,” said Erik Solheim, head of UN environment in a press release. “This new research… a contribution to the G-20 GFSG, shows encouraging progress in this regard. From a record number of new green finance measures to ambitious plans for green finance hubs, we are seeing the smart money move to green financing.”
Among the highlights from the report:
- The establishment of the GFSG during China’s G20 Presidency in 2016 showed broad understanding that green financing at scale will be critical to achieve the G-20’s goal of securing balanced and sustained growth;
- Considerable progress has been made on the seven options identified by the GFSG to accelerate the mobilization of green finance in the G20 Green Finance Synthesis Report adopted at the Hangzhou summit last year;
- More measures related to green finance have been introduced since June 2016 than during any other one-year period since 2000;
- These trends and measures have resulted in increased flows of green finance, most notably the issuance of green bonds, which has grown roughly 100% to US$ 81 billion in 2016;
- Changes to financial rules have helped drive the reallocation of capital in financial and capital markets, with a comprehensive review to assess sustainable finance indicating that global sustainably managed AUM has increased by 25% since 2014;
- Encouraging positive feedback loops are emerging, with increases in green bond primary market issuance improving secondary market liquidity, allowing new funds to open and operate within existing liquidity and credit-worthiness constraints, with four new green bond funds launched in Q1 2017 alone;
- Progress nationally, internationally and in financial and capital markets shows that the financial system is reshaping itself to align with 21st century sustainable development imperatives.
“The challenge now is to rapidly increase capital flows to investments that will support our sustainable development objectives and create commercially viable green businesses for decades to come,” said Solheim. “The G-20 and others have set the wheels in motion. Now is the time to press hard on the accelerator.”
For a list of country-specific action, see here.
Read The Green Finance Progress Report (2017) here.