How Policymakers Can Implement Reforms for a Sustainable Financial System | Thought Leadership

Second part

The PRI and the World Bank’s Financial Stability and Integrity team work to help policymakers and government regulators implement reforms to build a sustainable financial system. These reforms must align capital markets with the objectives of the Paris Agreement on climate change and the Sustainable Development Goals (SDGs).

This toolkit provides a high-level overview of five core sustainable investment policies, listed in Box 1, explaining why each is important, outlining their key features, and showing some examples of such policies in action.

BOX 1: PRIORITY ELEMENTS OF SUSTAINABLE INVESTMENT POLICY AND REGULATION

Sustainable investing policy and regulation should cover the following five areas:

  • Corporate ESG disclosures, including alignment with Task Force on Climate-related Financial Disclosures (TCFD) recommendations
  • Stewardship (Engagement and Voting)
  • Obligation of investors to integrate ESG considerations into their investment decisions, to provide sustainability information and to report on their ESG integration policies and performance objectives
  • Taxonomies of sustainable economic activities, defining common and clear criteria to classify projects or investments as green or sustainable
  • National/regional strategies for sustainable financing, which encourage and enable the low carbon transition and the achievement of the SDGs

The toolkit draws on the World Bank’s global sustainability agenda, the PRI policy agenda, in particular the recommendations of fiduciary duty in 21st century country roadmaps, and the experience of both organizations in national policy reform. It will be:

  • provide the basis for regulatory dialogue, involving the World Bank, PRI and emerging market regulators and policymakers, on the best way forward to align finance with sustainability;
  • contribute to the creation of a common language on the design, implementation and monitoring of sustainable financing and investment policies;
  • facilitate the adoption and promotion of these policy standards by multilateral organizations such as the OECD, IOSCO and IOPS.

Other publications are planned:


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Don F. Davis