Collaboration has upskilled thousands of financial sector stakeholders
Climate change and the degradation of ecosystems impact stakeholders in different ways. Financial regulators need to monitor implications for systemic and institution-specific risks. Central banks may be observing inflationary impacts. Banks are looking for new product opportunities. Investors, facing both the possibility of stranded assets and new sector opportunities, are looking at ways to measure and track their investment flows. Ultimately, the imperative to tackle climate change and achieve sustainable development goals more broadly, requires financial systems that support this transition. Such sustainable finance systems can only come about through a collective effort, bringing together the expertise and mandates of different stakeholders across countries, and combining incentives and regulations.
The Sustainable Banking and Finance Network (SBFN), a global community of 100 public and private financial sector actors from 72 countries, and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH have been working together closely since 2022 to embed sustainability in financial systems in emerging markets and developing economies (EMDEs). Highlights of the collaboration include the ‘Introduction to Sustainable Finance Taxonomies’ e-learning, explaining core concepts with detailed case studies and reaching over 16,000 participants, and the SBFN ‘Toolkit on Sustainable Finance Taxonomies‘, providing insights on how to develop, implement, and govern a taxonomy.
SBFN brings together financial sector regulators, central banks, ministries of finance, ministries of environment, and industry associations from EMDEs. The International Finance Corporation (IFC) serves as the SBFN Secretariat and technical partner to advance sustainable finance at a national, regional, and global level.
Renewing collaboration: The new memorandum
Since 2022, sustainable finance has come a long way. Taxonomies have emerged as a key tool to improve comparability and transparency in sustainability efforts, with over 50 taxonomies either developed or under development globally. Investor demands for increased data availability, comparability, and standardization have driven the development of sustainability disclosure frameworks and standards. At the same time, markets and policymakers are learning and adjusting frameworks to ensure that they are fit-for-purpose and decision-useful. Especially in EMDEs, compliance with international standards is seen as an opportunity to attract foreign investors and prepare partner economies to trade with the European Union and its member states. Lastly, as understanding of climate has become more established, stakeholders are broadening the scope to assess other environmental as well as social factors.
In light of these developments and the ongoing demand for capacity building, SBFN and GIZ have renewed their collaboration. A Memorandum of Understanding (MoU) was signed at the Hamburg Sustainability Conference by Siby Diabira, IFC’s Head of Western Europe, and Bernd Lakemeier, GIZ’s Director of Economic and Social Development and Digitalization.
Through this renewed partnership, GIZ and SBFN will deepen their work on sustainability disclosures to ensure that the availability and quality of data is improved in EMDEs, supporting investment decision-making and risk management. Under the MoU, the parties will contribute to broad capacity building efforts, peer learning, and experience sharing across jurisdictions.
Taxonomies remain a key focus of the collaboration. In addition to providing country-level technical assistance, SBFN and GIZ will collaborate on knowledge products to scale the number of individuals reached. One such initiative is the Taxonomy Mapper, an interactive, open-source tool designed to enhance interoperability by enabling detailed comparison across taxonomies. Another is a Practitioners’ Guide on integrating gender into the design of sustainable finance frameworks.
By building the policy frameworks for sustainable finance, this collaboration aims to ultimately contribute to more private capital being channeled into sustainable economic activities in some of the regions most affected by climate change and environmental degradation of the world.
Partners
