Davos - The United Nations Environment Programme (UNEP) launched an Inquiry today into policy options for guiding the global financial system to invest in the transition to a green economy.
In the wake of the global financial crisis, there is growing recognition that the financial system must be not only sound and stable, but also sustainable in the way it enables the transition to a low-carbon, green economy.
The Inquiry, extending over 18 months to mid-2015, aims to engage, inform and guide policy makers, financial market actors and other stakeholders concerned with the health of the financial system and its potential for shaping the future economy.
In addressing its core aim, it will map current best practice, draw together principles and frameworks, catalyze new thinking, and ultimately lay out a series of options for advancing a sustainable financial system.
It will also engage with global financial experts and commission-relevant research, as well as contribute to related initiatives across the UN system and elsewhere.
As leading financial institutions increasingly appreciate the imperative of climate change, resource scarcity and other environmental challenges, the current financial 'rules of the game' may not be well suited to accelerate this transition.
World Economic Forum estimates suggest that globally, investment in infrastructure of an estimated US$6 trillion annually to 2030 is needed to deliver a low-carbon economy. Of this, nearly US$1 trillion is over and above the business-as-usual trajectory.
Such evidence shows that when investments are targeted towards greening key economic sectors, they can produce multiple benefits for the economy, environment and society.
In launching the Inquiry, Achim Steiner, UNEP Executive Director and Under-Secretary General of the United Nations, said: "UNEP is working to advance a rapid transition towards an inclusive, green economy. The Inquiry will catalyze actions to enable the financial system to support the transition, building on policy innovations and countries' best practices".
The Inquiry extends UNEP's ground-breaking work on the green economy, and draws on the commitment and wealth of practical expertise of the 200 financial institutional members of the UNEP Finance Initiative (UNEPFI).
David Pitt-Watson, Co-Chair of UNEPFI, said: "The world's financial institutions are there to finance a growing, sustainable economy, but the evidence suggests that, today, the industry performs that task poorly. The Inquiry will support the urgent need to reshape a practical and agreed agenda of reform that ensures that the finance industry fulfills its purpose."
An Advisory Council has been established to guide the Inquiry, comprising financial regulators, senior executives from leading financial institutions and international organizations and financial market and sustainability experts, currently including:
Naina Kidwai, Group General Manager and Country Head, HSBC India
Rachel Kyte, Group Vice President of the World Bank
David Pitt-Watson, co-Chair of UNEP Finance Initiative
Atiur Rahman, Governor of the Central Bank of Bangladesh
Murilo Portugal, President of the Brazilian Bankers Federation
Neeraj Sahai, President of S&P Rating Services
Rick Samans, Managing Director of the World Economic Forum
Mallam Sanusi, Governor of the Central Bank of Nigeria
Andrew Sheng, President of Fung Global Institute.
Lord Adair Turner, Senior Fellow of the Institute of New Economic Thinking, ex-Chair of the Financial Services Authority
Naina Kidwai, Chair of HSBC India, said: "The Inquiry offers the financial world a timely opportunity to engage on critical issues and examine how we can best respond to pressing challenges such as water stress, energy efficiency and indeed climate change. I look forward to moving this important agenda forward."
"The Inquiry provides a vehicle for taking a strategic look at how the financial system can play its part in mobilizing capital for a low-carbon, resilient economy", added Rachel Kyte, Group Vice President, World Bank Group.
Two Co-Directors and a Head of Strategic Outreach have been appointed to lead the Inquiry from its Geneva base:
Nick Robins, currently head of HSBC`s Center for Excellence in Climate Change
Simon Zadek, ex-Chief Executive of AccountAbility and Senior Fellow of the Global Green Growth Institute and the International Institute for Sustainable Development Mahenau Agha will serve as UNEP Advisor. The first Advisory Council meeting is scheduled to be held in April 2014.
For more information, please visit: http://www.unep.org/greeneconomy/financialinquiry/