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G-7 Coordination Seen as ‘Missing Piece’ for Sustainable Finance

Alastair Marsh

March 25, 2021, 8:00 AM GMT

The booming sustainable finance industry needs global standards and upcoming gatherings of world leaders provide the ideal forum for designing them, according to the world’s biggest industry body for sustainable investing.

The Principles for Responsible Investment, which is backed by the United Nations and has more than 3,500 member firms that together manage over $100 trillion of assets, said while many individual countries have developed their own policies, intergovernmental dialog remains “a missing piece of the jigsaw.”

In a report published Thursday, the PRI said meetings scheduled for later this year of the leaders of the Group of Seven industrialized nations and the Group of 20, as well as the UN climate conference in Glasgow, create opportunities for collaboration on best-practice sustainable finance regulations.

“This is big year for intentional collaboration, and though there is a lot happening on a national level within different countries, there isn’t much at a multilateral level,” Fiona Reynolds, chief executive officer of the PRI, said in an interview. “We can’t get to net zero without finance and we need finance ministers to understand the need for sustainability to be hardwired into financial policy.”

Sustainable finance, often referred to by the acronym ESG, has ballooned to a roughly $40 trillion industry as financial-services firms respond to the demands of a more climate-conscious investor base and increased pressure from policymakers and regulators to align their businesses with the goals of the Paris climate agreement.

The PRI said it recommends that the G-7 and the G-20 summits, which are planned for June and October respectively, have a “call for aligning mainstream financial and real economy policies with sustainability goals.” The investor group also said the conclusions from the summits should affirm that financial policies need to be aligned with sustainability goals and finance ministers should discuss policies that support a sustainable recovery and align markets with net-zero emissions.

The G-7 and the G-20 gatherings should commission detailed policy recommendations and implementation guidance on sustainable finance to multilateral organizations, such as the Organisation for Economic Co-operation and Development and the International Monetary Fund.

SOURCE: BLOOMBERG GREEN