As world leaders gather in Madrid to drive climate action, figures released by the UN Environment Programme (UNEP) show that the number of policy and regulatory measures backing green finance has more than doubled since 2015.
The measures database from UNEP and the Green Growth Knowledge Partnership (GGKP) shows that there are now at least 391 national and sub-national policy and regulatory measures on green finance in place globally – this is a 106 per cent increase since 2015. The green finance movement is only accelerating, the database finds, with a record 79 new measures were implemented or announced in 2019.
“Many transformative plans are being put in place to create zero-carbon, biodiversity-friendly societies and economies,” said UNEP Executive Director Inger Andersen. “These plans need the full and unequivocal backing of the global financial system. So while it is encouraging to see the acceleration of green financing, the financial system and those who regulate it, need to urgently step up and drive huge cuts in greenhouse gas emissions.”
Released on the sidelines of the UN Climate Change Conference (COP 25) in Madrid during a meeting of the Coalition of Ministers of Finance for Climate Action, the figures from the database demonstrate progress in certain key areas.
Reporting and disclosure is a focal point for policy and regulatory action – comprising roughly 25 per cent of all measures implemented. An increasing number of measures are targeting multiple asset classes, with policy frameworks tackling systemic issues like climate risk across banking, investment and insurance. Just over two-thirds of measures are being implemented in developed economies.
“These measures help clarify the responsibilities of financial institutions with respect to environmental factors within capital markets,” said Benjamin Simmons, head of the GGKP. “This includes strengthening flows of information relating to environmental factors within the financial system, such as requirements for public disclosure of climate-related risks to investment portfolios.”
The database includes measures to promote the allocation of capital to green sectors, such as fiscal incentives for investments in green assets, and the introduction of frameworks to support product development (e.g. green bonds), as well as measures to strengthen environmental risk management practices within institutions. It is the most comprehensive resource of policy and regulatory information relating to environmental aspects of green finance.
“Policy and regulatory action is a critical driver of the transition to green and sustainable finance. With this database, we are able to map the ways in which policymakers and regulators are influencing market practice,” said UNEP’s Jeremy McDaniels, who developed the database. “This type of analysis can help public authorities learn from others’ experiences, raise ambition and strengthen understanding of how their actions are leading to positive changes.”
The GGKP is an initiative led by the Global Green Growth Institute (GGGI), The Organisation for Economic Co-operation and Development (OECD), United Nations Industrial Development Organization (UNIDO), UNEP and the World Bank.