With economic recovery topping the United States and global political agenda, a group of CEOs, major investors and bankers together with former United Kingdom Prime Minister Gordon Brown and President of Ireland Mary Robinson called for a far-reaching reform of the global financial system at the UNEP FI Global Roundtable in Washington D.C. late last month.

Global Roundtable opening session

Amid a growing wave of protests highlighting economic concerns in countries from the US to the UK, Japan and Greece, more than 500 senior finance executives and policy-makers from around the world met at the summit to find sustainable solutions to tackle the drivers of market volatility and address the deepening rift between the rich and the poor.

"Clearly the financial world must do its part in creating mechanisms that lead to a more equitable and green economy. The set of proposals put forward during the Global Roundtable are a politically credible and economically sound roadmap to achieve this goal. The outcomes of the Roundtable are indeed very timely, as it offers various solutions to the 99 percent who feel marginalized by the current economic system," said Mary Robinson, the former President of Ireland, at the event. 

Recommendations included the implementation of policies that can mobilize investment at scale by the banking and investment sectors into emerging industries associated with sustainability - including the clean energy sector, renewable energy, green buildings and retrofitting, clean vehicles and fuels.

The summit's participants stressed that with the right incentives in place private finance can play an essential role in spurring a recovery of the US economy and achieve job-creation in sectors ranging from green technology to ecosystem management.

More information and video recordings of the Global Roundtable here. 

The private financial sector has to be a central part of the global strategy to address climate change. Not only do financial institutions possess the skills, expertise and resources required to deal with the problem: if the private sector broadly, and the financial markets in particular, do not become a part of the solution to climate change, they are likely to remain a part of the problem. Yet, these skills, resources and expertise - as well as the policy means to unlock them for good - are seldomly considered and discussed in the international negotiations on climate change, and banks, insurers and investors have remained on the sidelines. 

The members of UNEP Finance Initiative are changing this by bringing their core expertise, in a structured and continuous manner, to the intergovernmental climate process on those specific issues where their focused input is most direly needed:

• Designing a Green Climate Fund which is effective in unlocking private investment for low-carbon and climate-resilient growth in developing countries;
• Mobilising the risk management skills of the insurance industry to address loss and damage from the impacts of climate change;
• Building an effective global funding mechanism for forest-based climate change mitigation. 

More information here. 

Marred by the global economic crisis, the world's largest investors late last month urged governments and international policy makers to take new and meaningful steps in the fight against climate change, cognizant that unabated climate change will lead to economic damage several times the size of current turmoil.

In a joint statement the group of 285 investors representing more than $20 trillion in assets, stressed the urgent need for policy action which stimulates private sector investment into climate change solutions, creates jobs, and is essential for ensuring the long-term sustainability and stability of the world economic system.

Investor support for climate action has nearly doubled since November 2008, when 150 investors with $9 trillion in assets under management first came together to urge government leaders to act on climate change.

The statement is supported by the findings of a report, Investment-grade Climate Change Policy commissioned by the three investor groups and UNEP FI. This report underscores the importance of investment-grade policy which will enable institutional investors to allocate capital towards climate change solutions, including appropriate government incentives to compensate for heightened risk and sufficient scale of technology deployment.

More information here.

Could an abundance of natural wealth be a factor in positively influencing a country's credit rating and the quality of its bonds? Could a resource-guzzling economy be cause for a downgrade? 

Earlier this month, UNEP FI in collaboration with the Global Footprint Network, an international sustainability think tank, and leading financial institutions, launched an endeavor to shine a light on these question with the launch a groundbreaking project to explore the role of natural resource accounting in strengthening risk models for government bonds.

The government bonds project has two aims: it will investigate the linkages between ecological risk and country-level risk in sovereign bonds, and develop a methodology to explore how credit rating agencies, investors and financial information providers can integrate ecological data into their respective models. In particular, the analysis will look at the risks to countries whose populations and/or industries require more resources than is domestically available and which are hence reliant on ecological services from abroad.

Paul Clements-Hunt, head of UNEP FI said: "The global financial crisis has taught us more than anything that some of the core risks that affect the value of debt securities and derivatives can simply run ahead of our ability to understand them. This is why we must deepen our understanding of the risks posed by climate change, water scarcity and the overuse of natural resources for securities. We should not be caught off-guard again. This project is one of the first that tries to quantitatively and systematically consider the linkages between the use of natural resources and its impact on a country's core economic indicators that in turn influence the quality of its bonds."

The sustainable finance agenda will receive a major push in Colombia this coming December with the creation of a unique body within the Colombian Banking Association tasked with addressing sustainability issues.

The Sustainability Committee, prompted by a tripartite dialogue between UNEP FI, Colombian banking association Asobancaria and Colombian authorities, will be a first in Colombia. It is modeled on similar initiatives that have successfully created comparable platforms in Brazil, South Africa and a handful of other countries in recent years.

The body will be constituted of representatives from a kaleidoscope of Colombian banks - including Bancolombia, Bancoldex and Helm Bank.

It will endeavor to catalyze the mainstreaming of environmental and social aspects of risk analysis across the country, green services and products opportunities, and eco-efficiency through high-level discussions and information-sharing activities.

To kick-start this ambitious program of work, the Colombian Banking Association will host an environmental social risk analysis introductory workshop in Bogota on 2 December.

Confirmed participants include risk, credit and sustainability managers from banks countrywide as well as delegates from the Colombian presidency, the Environment Ministry and regulators from the country's financial supervisory body.

The Sustainability Committee stems from the recent signing of an agreement between the Colombian Banking Association and UNEP FI.

More information: la [at] unepfi.org

UNEP FI is to address heads of Latin American banks during the XLV edition of the Latin American Federation of Banks (FELABAN) Annual Assembly slated to take place in Miami, USA.

The FELABAN Assembly, organized in cooperation with the Florida International Bankers Association, attracts over 2,000 bankers from more than 50 countries who wish to meet and do business with their international counterparts from Latin America, United States, Canada, Europe and Asia.

The meeting's high point is the Governing Council, at which presidents of national banking associations and CEOs of the region's major banks take stock of latest trends and challenges their industry faces - including the preliminary results of a far-reaching UNEP FI-led survey on sustainability in Latin America.

UNEP FI member banks, including BBVA Group and Bancolombia, will also share their experiences in a discussion panel taking place on 14 November.  

In a landmark agreement between UNEP FI and FELABAN signed earlier this year, the two organisations agreed to vie to step up efforts towards the implementation of sustainability in Latin America in the years to come.

More information here.    

"Major investors seek new carbon emissions treaty"

in The Associated Press 

"Investors make fresh appeal on climate policy"

in The Financial Times 

"Investors predict carbon tax benefits"

in The Sydney Morning Herald 

"UNEP summit ends with plea for far-reaching financial reform"

in E&E News (registration required)

"Abberley recommends German bonds for European investors" 

in Bloomberg Television  

"Financiers search for sustainable future" 

More information here. 

"Clearly the financial world must do its part in creating mechanisms that lead to a more equitable and green economy. The set of proposals put forward during the Global Roundtable are a politically credible and economically sound roadmap to achieve this goal. The outcomes of the Roundtable are indeed very timely, as it offers various solutions to the 99 percent who feel marginalized by the current economic system,"

- Mary Robinson -

"The global financial crisis has taught us more than anything that some of the core risks that affect the value of debt securities and derivatives can simply run ahead of our ability to understand them. This is why we must deepen our understanding of the risks posed by climate change, water scarcity and the overuse of natural resources for securities. We should not be caught off-guard again. This project is one of the first that tries to quantitatively and systematically consider the linkages between the use of natural resources and its impact on a country's core economic indicators that in turn influence the quality of its bonds".

- Paul Clements-Hunt -  

UNEP FI head