The UNEP FI Leadership Council convened its third annual meeting in December 2023, bringing together CEOs, presidents, and board chairs of banks and insurers in its governance bodies to focus on aligning global economies with sustainable development goals. The high-level group was formed in 2021 to provide vision and strategic direction to UNEP FI and boost action from the financial community to support a sustainable, resilient and inclusive economy. This year, the leaders addressed areas such as reforms in the International Financial Architecture (IFA) and science-based policy engagement to align economies with sustainability objectives.
Inger Andersen, UNEP Executive Director, urged finance leaders to elevate the implementation of ambitious voluntary frameworks for financial institutions to address climate change, nature loss and pollution. The Council called on UNEP FI to prioritise critical initiatives, including increasing access to science-based information, helping to harmonise sustainable finance standards, and fostering public-private dialogue to increase financing for the Sustainable Development Goals.
“As finance sector leaders, you have the power to set a high ambition in the industry and translate that into the transformation needed.” – Inger Andersen, Executive Director, UNEP
Reforming the IFA, harnessing the work of MDBs, and engaging policymakers
The Council raised concerns about the inadequacy of the existing IFA in addressing sustainable development priorities. The group acknowledged the necessity of reforms to economies that reflect the realities of the world today, and that will align the private sector with sustainable development goals. Special guest at this year’s meeting was Makhtar Diop, Managing Director of the IFC, who focused on the role of multilateral development banks in leveraging private finance for the SDGs and climate action.
Diop highlighted that international finance institutions are ramping up efforts to mobilise resources and influence the regulatory framework to scale up private sector investment in the transition to clean energy in emerging and developing economies.
Harmonised disclosure frameworks, taxonomies and standards were identified as essential to prevent greenwashing. CEOs outlined how financial institutions can strengthen responsible engagement to encourage science-based policy and regulation for sustainable economies and ensure internal sustainability activities and advocacy are aligned and informed by the science of climate change. There was a call for high ambition at the climate conference in 2024 (COP29) with initiatives to accelerate climate finance in developing countries to drive investment in climate mitigation and adaptation and urgent reform for sustainable finance to more effectively mobilise finance for impact on the real world.
The Council stressed the need for governments to act with speed on policies such as carbon pricing to drive sector decarbonisation pathways, a critical lynchpin to achieve net-zero targets. CEOs called for economic incentives and regulatory frameworks to support the transition to sustainable economies, stating that transformation must make financial sense for companies, investors, and citizens.
“The transformation required to decarbonise the world will only happen if it makes economic sense… Much more can be done to direct policy recommendations to bite the bullet that carbon emission must have a price.”
UNEP FI’s role in promoting coherent sustainable finance policy
The Council recommended that UNEP FI engage with regional policymakers and promote pragmatic, harmonized, interoperable and coherent sustainable finance policy and taxonomies across jurisdictions. CEOs proposed that UNEP FI support financial institutions on sectoral transition planning to implement climate targets and develop climate and nature risk management.
Recognising progress and the need to pick up the pace
The meeting concluded with an acknowledgement of significant progress, but UNEP FI and the Council concurred that more needs to be done, calling for a faster pace of change. Andersen highlighted that regulators and the broader finance industry must fully grasp the trajectory towards a 2.9 to 3-degree world and echoed the call for policy and regulatory settings to accelerate a system-wide transition to a sustainable economy.