UNEP report on design of a sustainable financial system

The final report of the UNEP Inquiry into the Design of a Sustainable Financial System has been published and marks the conclusion of a two-year, global process that has explored how changes in financial system design can bring the environment more effectively into financial decision-making.

The report is available here.

This report marks the conclusion of a two year, global process that has explored how changes in financial system design can bring the environment more effectively into financial decision-making. It has observed policy innovations from developing and developed countries that demonstrate how the financial system can be better aligned with sustainable development and urges systematic action to be taken to shape a sustainable financial system at a national level, complemented by international co-operation.

The Cambridge Institute for Sustainability Leadership and the finance sector leadership groups in the banking (Banking Environment Initiative), insurance (ClimateWise) and investment (Investment Leaders Group) industries, have all been doing work that is relevant to the Inquiry, sometimes contributing directly. For example:

1. The Banking Environment Initiative commissioned a review by a Professor of Law and Finance into how the Basel Capital Accord could accommodate systemic environmental risks if national regulators sought international cooperation
2. ClimateWise has convened three roundtable discussions with the Bank of England's Prudential Regulation Authority (PRA) to help inform the PRA's report to the UK Government on the impacts of climate change on the insurance industry
3. The Investment Leaders Group has supported cutting-edge research into the proportion of risks emanating from shifts in investor sentiment over a one- to five-year timescale in response to action on climate change that might be expected to be 'hedged' – and thus the proportion that can be considered 'systemic'.

At CISL, we have ambitions to considerably step up our multi-disciplinary research capabilities to help inform action on the design of a sustainable financial system. For those that feel they have something to contribute to us realising this ambition, we should be pleased to hear from you.