10 May 2021, London—Today, public and private finance leaders released a draft Framework for Sustainable Finance Integrity (the “Framework”). The Framework recognizes that the financial system stands at a critical moment, with an accelerating pace of sustainability and net-zero pronouncements by a range of actors. While welcome, this rapid proliferation has exposed missing links: how to 1) understand and ensure the integrity and accountability of the many individual pledges and sectoral initiatives, 2) coordinate across siloes of public and private financial actors to ensure coherence and impact on net zero and sustainability, and 3) focus on sustainability and social justice beyond climate mitigation to address the many inequalities and vulnerabilities the COVID-19 crisis has highlighted?
The draft framework attempts to address these missing links by contributing to a clear pathway to financial system integrity and materiality that will help smooth the financial sector’s move to sustainability and net zero and reinforce the multiplier effect these actions will have on achievements in the real economy. The document has been developed based on a rigorous, technical evaluation of existing initiatives and critical actions identified by civil society.
The draft framework suggests minimum benchmarks for meaningful sustainable finance commitments and identifies leadership benchmarks to highlight best practices in sustainable finance across the major sectors of the global financial system. These benchmarks recognize that there is value in having as many financial actors as possible move towards sustainable, net zero operations, but at the same time, that continual strengthening and improvement is imperative to reach critical global goals this decade. As such, the document suggests a credible approach that academia, think tanks, and civil society can use to analyze and monitor progress on sustainability, and hold providers of finance to account.
The Framework was developed based on a rigorous, technical evaluation of existing initiatives and critical actions identified by civil society. This is not a new standalone initiative or reporting requirement for institutions, and, to maintain independence, endorsement will not be sought. It was refined and guided by an Advisory Council of leading personnel and organizations from each segment of the financial ecosystem, including insurers, commercial banks, development banks, asset managers, NGOs, and government representatives across Asia, Africa, Europe and the Americas. The Advisory Council is co-chaired by Rachel Kyte, Dean of The Fletcher School, and Laurence Tubiana, CEO of the European Climate Foundation.
Upon the public release of the draft framework, Kyte noted: “We are seeing tremendous momentum for net zero target setting and sustainability measures in the lead-up to COP26, but what’s missing is integrity. The Framework for Sustainable Finance Integrity allows us to objectively assess commitments, providing meaningful guardrails for credible target setting, implementation, and transparency.”
Tubiana said: “There has been significant progress on announcing targets that attempt to transition the financial system towards a net zero, sustainable future. But it’s not clear that the sum total adds up to the future we need. This draft framework is unique in that it helps us define and measure progress across the full suite of public and private financial actors.”
Upon the public release of the draft Framework, members of the Advisory Council voiced support and calls to take them on across institutions and existing coalitions.
“Too often social justice issues are not centered within climate commitments despite their clear links. I applaud this effort because it calls on leaders in sustainable finance to center the fair and just transition within their climate targets.” – Sharan Burrow, General Secretary of the International Trade Union Confederation:
“More than five years after the signing of the Paris Agreement, it’s clear that financial institutions must be held to rigorous, science-based targets and implementation of these targets. This framework is unique in creating benchmarks for accountability.” – Ben Caldecott, Director, Oxford Sustainable Finance Programme at the University of Oxford
“We look forward to embedding this new framework into coalitions for public development banks like the International Development Finance Club. This work will be important to ensure that our local and institutional leadership extends to create the global momentum needed for sustainable development and social justice.” – Patrick Dlamini, CEO and MD, Development Bank of Southern Africa
“Sustainable finance is not a theoretical topic for the Philippines, but a reality we must get right, and with urgency. In pursuing Sustainable Finance, we should not veer away from the established rules of conventional finance but should instead utilise them to push real and actionable investments to countries most vulnerable to Climate Change. This requires global cooperation and leadership. We will demonstrate the needed cooperation and leadership by introducing this new framework to our country’s financial plans.” – Secretary Carlos Dominguez, Philippines Ministry of Finance
“HSBC is committed to becoming a net zero emissions bank. We are also committed to providing guidance and leadership in this space that can ensure greater coordination, accountability, and integrity in sustainable finance.” – Daniel Klier, Global Head of Sustainable Finance, HSBC
“The COVID-19 crisis has highlighted the critical importance of protecting nature for human health and our economies. Transitioning the full financial sector toward sustainability is an urgent priority that will not be achieved without coordination and ambitious leadership. This framework has the potential to raise the bar across the whole sector, and we look forward to seeing it taken up by existing coalitions and movements.” – Margaret Kuhlow, Finance Practice Leader, WWF International
“Finance ministries and national development banks take heed: this framework provides a playbook for building back better from the COVID crisis.” – Joaquim Levy, Director of Banco Safra SA (previous Brazil Minister of Finance, World Bank CFO, and President BNDES)
“While there have been many attempts at creating principles, standards, or taxonomies for sustainable finance, what is missing is a framework to bring these all together into an overarching vision. Far from ‘yet another empty announcement,’ this new framework sets the bar for leadership.” – Hu Min, Executive Vice President of the Beijing Institute of Finance and Sustainability
“Implementation and accountability are cornerstones of the Sustainable Development Goals, including climate action. Agreeing on appropriate benchmarks and best implementation practices will help institutions support all goals and ensure that all efforts are mutually reinforcing.” – Mahmoud Mohieldin, UN Special Envoy on Financing the 2030 Agenda for Sustainable Development
“There has been incredible momentum recently in terms of new net zero targets by financial system actors with the aim of transitioning the system toward sustainability and social justice. But questions remain: What will be the transition pathways to reach net zero? Will there be accountability for achieving these targets? How to distinguish between greenwashing and true leadership? These are the questions that both advocates and leadership are asking, and which this new framework helps us to answer.” – Helen Mountford, Vice President for Climate and Economics, World Resources Institute
“If vaccination is not global, covering both rich and poor countries, we could have a slower recovery with fiscal and debt stress. The Framework for Sustainable Finance Integrity offers guidelines for much needed international coordination around the actions we can take now to build a more inclusive, sustainable world with less risk of future green swan events.” – Luiz Pereira da Silva, Deputy General Manager, Bank for International Settlements
“Corporate responsibility is fundamental to Allianz’ business, which is why we became a founding member of the Net-Zero Asset Owner Alliance. With this initiative, many large asset owners have joined to start immediate work on significant GHG reduction already by 2025, driving the short-term change urgently needed to achieve Paris 2015 pledges.” – Günther Thallinger, Member of the Board of Management, Allianz SE and Chair of the UN-convened Net-Zero Asset Owner Alliance
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