25 June 2014 | Nairobi Kenya

Against the backdrop of the inaugural United Nations Environment Assembly, the Symposium on Financing a Green Economy was held on 25 June 2014, to discuss the critical importance of financing in enabling the transition to a green and inclusive economy. In particular the focus of the Symposium was on the rules, policies, regulations, and standards necessary to shape the financial system and drive the allocation of capital. Throughout the day, approximately 300 participants listened to and interacted with ministers, public officials, business executives, and experts to share their views and experiences of the policy innovations that have catalysed financial markets, alongside public expenditure, to serve the needs of the long-term health of the real economy. Important in the discussion was the participants` practical ambition in ensuring that the financial system is fit for purpose, aligning private interests more effectively with public goals and policy imperatives. The day also highlighted the potential for collaboration between public and private actors, and of the supportive role that international organizations could play for national policy makers.

Key Insights from the Symposium

The Symposium on Financing a Green Economy examined how private financial capital can be mobilized to deliver long-term sustainable prosperity as a necessary complement to public expenditure. It is important to both channel private finance more effectively towards green and job-creating opportunities, as well as diverting it away from its current focus on natural resource and carbon intensive investments. Scale of the Challenge of Financing the Green Economy: At least USD 6 trillion is required per annum to finance a green and inclusive economy, with more than half of this needed in the developing world. Need for a systemic approach: This represents a small fraction of the total stock of assets in the global financial system, estimated at over USD225 trillion. As a result, policymakers need to focus on the rules that govern the deployment of capital within the global financial system. To date, post-crisis financial reform measures have not focused on the sustainability imperative. A misalignment of signals: Many signals in today’s financial system are not aligned with sustainable development – reflected in prevailing short-termism, perverse incentives, insufficient transparency, ill-defined responsibilities and inadequate flows to key countries and sectors. The result is a continuing misallocation of capital to high carbon and resource intensive assets, with potential risks of stranded assets. Recognising market and policy innovation: Positively, there is a growing body of innovation in market practice and policy measures to integrate environmental and social factors within the financial system, ranging from ‘green bond principles’ to country-level ‘green credit guidelines’ as well as sustainability disclosure requirements on stock exchanges around the world. Championing action: At this moment in time, the global community has a unique opportunity to build on this emerging policy innovation to place sustainable development at the heart of the financial system. A special focus needs to be placed on strengthening the capacities of developing countries to integrate sustainable development into financial policy and regulation.

Documents

Symposium Video

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