Webinar – Sustainability Disclosure Updates from Emerging Markets – Wednesday, 13 July 2022

IFC VP Ethiopis Tafara highlights SBN in the Financial Times – Sustainable finance: the path to growth: A network of emerging market countries shows how world can achieve goals by 2030

Ethiopis Tafara, IFC OCTOBER 20 2017

Advancing sustainable development across emerging markets is both critical and expensive. The UN estimates that up to $7tn in investment is needed each year to achieve the Sustainable Development Goals. Countries around the world are looking to their domestic banking sector to provide much of this funding. But a lot of hard work lies ahead, not only for banks but also for regulators, policymakers and development institutions. In emerging markets, banks hold assets estimated at more than $50tn, which means they have the potential to make a very large difference in sustainable development. At the same time, as recent financial crises have taught us, an indiscriminate expansion in bank lending can be dangerous. Risk management — with respect to financial, environmental, social, and governance matters — is crucial for stability and good outcomes. The role of regulators is key, and the recent record of these watchdogs in emerging markets is encouraging. beyond brics Emerging markets guest forum beyond brics is a forum on emerging markets for contributors from the worlds of business, finance, politics, academia and the third sector. All views expressed are those of the author(s) and should not be taken as reflecting the views of the Financial Times. In 2012, 10 countries turned to the International Finance Corporation for help in establishing the Sustainable Banking Network, which unified banking regulators and associations around an important goal: creating markets for sustainable finance. In just five years, the network has grown to 34 member countries that account for $42.5tn in bank assets, or 85 per cent of the total in emerging markets. The network connected countries of all sizes and levels of development, and it quickly became an important player on the global stage. In 2016, it became a key partner to the G20’s Green Finance Study Group, which has significantly advanced the global Green Finance agenda and underscored the importance of environmental risk management within financial systems. Fifteen of the member countries — including China, Brazil, South Africa, Indonesia and Nigeria — have developed policies and guidelines in line with international best practices on sustainable finance. They work consistently to refine policies and strengthen implementation. This year, five additional countries — Fiji, Ghana, Nepal, Pakistan and Sri Lanka — are scheduled to launch sustainable finance road maps and regulations. This week, the network held its fifth annual meeting in Washington DC, marking the largest global gathering of regulators and associations dedicated to sustainable finance in emerging markets. The meeting focused on two important milestones that have the potential to accelerate the growth of sustainable finance. First, the network unveiled an innovative framework to track and measure the adoption and impact of sustainable finance policies across member countries. This stands out for several reasons. It measures progress from a country’s initial determination to create a market for sustainable finance to its execution of policies — focusing on how much of the banks’ lending can legitimately be described as sustainable finance. The goal is to provide practical indicators and tools for countries to apply to their own domestic markets, regardless of their size or stage of development. This is important because it facilitates learning by all members and accelerates the pace of change. This approach has been agreed by all 34 member countries, a remarkable achievement that is a milestone for measuring progress on the global scale. Second, the network established a group to accelerate growth of the green bond market across member countries. One area of focus will be to provide countries options for consolidating and standardising the array of approaches and definitions that have sprung up in this space. This will help emerging markets tap into a vast market of climate-smart investment opportunities, which IFC estimates to be at $23tn between now and 2030. As a major issuer of green bonds, IFC will provide technical advice and support to the network in this effort. The Sustainable Banking Network’s record shows it is possible to unite a wide array of countries in support of sustainable finance — and to achieve significant progress in a very short time. The measurement tools it has developed will create incentives for many more countries to grow their sustainable finance markets, better positioning the world to achieve the Sustainable Development Goals by 2030. Ethiopis Tafara is vice-president and general counsel for legal, compliance risk and sustainability at the International Finance Corporation, part of the World Bank Group